CORPORATE

Sampath Bank records 60.9% PAT in 1Q

Sampath Bank's pre-tax profit which rose to Rs. 1,348.6 million in 1Q, reflected an increase of Rs. 557.1 million or 70.4 percent over the pre-tax profit of Rs. 791.5 million for 1Q 2010. The post-tax profit of the Bank recorded a growth of 60.9 percent over the corresponding period of last year, rising from Rs. 558.6 million to Rs. 898.8 million.

Financial results of the Group, which consists of the Bank and four subsidiary companies, were even better. Pre-Tax Profit of Rs. 1,460.8 million of the Group for 1Q 2011 was a growth of Rs. 608.3 million or 71.3 percent, over the previous year's pre-tax profit of Rs. 852.5 million, with Sampath Bank contributing the bulk (92 percent) of the profit.

The post-tax profit of the Group amounted to Rs. 992.5 million, recording a growth of Rs. 380.0 million or 64.2 percent, over the post-tax profit of Rs. 604.5 million for the last year. Marked improvements in the performance of all four subsidiary companies during the period under review facilitated recording this higher profit growth rate at group level.

Seylan Bank to propose Rights Issue to raise Rs. 4.6b

Seylan Bank has posted an impressive Rs. 256.3 million profit in the first quarter of 2011 recording a sharp 38 percent increase compared with Rs. 185.9 million in the corresponding period of the previous year. The Bank's pre-tax profit was Rs. 395 million, up by nearly 36 percent from Rs. 291.7 million in the corresponding period of the previous year. Chairman of Seylan Bank, Eastman Narangoda said, "Today we enjoy both stability and profitability. Our aggressive recovery drive which encompassed many areas, coupled with our far-reaching Strategic Plan and the commitment of our staff, have largely been responsible for successfully restoring investor confidence." The Bank plans to go in for a Rights Issue of 43,333,333 Ordinary Voting Shares and 41,186,666 Non Voting Shares in May through which it proposes to raise Rs. 4,691,533,285, which will be proposed at an EGM to be held this month.

Commercial Bank reports stellar 1Q performance

Commercial Bank has reported a profit before tax of Rs. 2.959 billion for the three months ended March 31, reflecting a growth of 56.45 percent over the corresponding quarter of 2010. Profit after tax was up 87.08 percent to Rs. 2.060 billion.

The Performing Loans and Advances portfolio of the bank increased by Rs. 6.2 billion in the three months reviewed, from Rs. 213.4 billion as at December 31 2010 to Rs. 219.6 billion at the end of 1Q 2011, as against an increase of Rs. 316 million in the first quarter of 2010.

Consequently, interest income from this source grew by Rs. 864.1 million (15.69 percent) to Rs. 6.371 billion, contributing to net interest income of the bank growing 20.83 percent to Rs. 4.3 billion.

Post tax profit growth was boosted further by a reduction in the income tax rate from the 35 percent that prevailed last year to 28 percent, resulting in tax expenses increasing by only 13.78 percent to Rs. 899 million for the three months.

Total deposits of the bank grew by Rs. 14.794 billion at an average of nearly Rs. 5 billion a month in the three months reviewed to reach Rs. 274.572 billion as at March 31.

Despite this significant increase, the comparatively lower interest rate regime that prevailed in the quarter resulted in total interest expenses declining by 6.21 percent, enabling the bank to improve its net interest margin to 4.59 percent from 4.43 percent a year ago.

Housing financer Freddie Mac returns to profit

The US government-controlled housing financer Freddie Mac reported its first quarterly profit in three and a half years Wednesday, after years of losses on its huge mortgage portfolio.

Bailed out at huge cost to the government during the housing crisis of the past three years, Freddie Mac reported $676 million in net income for the period to March 31, compared to a loss of $6.7 billion a year earlier, and a shortfall of $113 million in the quarter to December 31.

It was the first net gain in 14 quarters for the company, 80 percent owned by the government, after it and its larger sister, Fannie Mae, were rescued to the tune of hundreds of billions of dollars at the height of the crisis.

Freddie Mac said it had achieved a positive worth of $1.2 billion in the quarter after write-offs of $2.98 billion (up from $2.77 billion a year earlier) and a $500 million injection from the US Treasury late last year. It also said it had paid a $1.6 billion quarterly dividend to the Treasury. Non-performing assets, mainly home mortgages in default, rose to $124 billion dollars - 6.4 percent of its total mortgage portfolio - from $117 billion a year earlier.

"Our support of the US housing market remained steadfast during this critical period, funding one out of every four home loans originated and helping more than 62,000 struggling borrowers avoid foreclosure," said Chief Executive Charles Haldeman in a statement. But he warned the US housing sector was not clearly recovering.

"Continued improvements on the employment front and in early-stage delinquencies were positive signs during the quarter, but we believe large inventories of unsold homes and a high number of distressed sales will continue to put downward pressure on home prices in many neighborhoods."

Renren shares soar on Wall Street debut

Shares in Renren soared Wednesday as the social network seen as China's answer to Facebook made its debut on Wall Street.

Renren, which is trading in New York under the symbol "RENN," raised $743.4 million through the sale of 53.1 million American Depositary Shares.

The Beijing-based company initially priced the shares at between $9 and $11 but later raised the price to $14.

Renren shares soared as high as $24 during the day's trading on Wednesday before closing at $18.01.

Renren Chairman and Chief Executive Joseph Chen, who rang the opening bell at the New York Stock Exchange, said the listing of the company is "a great moment for Renren."

"Today, Renren became the first social networking services company to be listed on the New York Stock Exchange," Chen said.

"I believe this will enhance our brand and further validate our position as the leading real name social networking Internet platform in China," he said.

"This listing brings us an important step closer to realising our vision to define social networking experience and to revolutionise the way that people in China connect, communicate, entertain and shop," Chen said.

Renaissance Capital said Renren, as the first major social network to launch an initial public offering was "poised to benefit from significant investor enthusiasm surrounding social networking.

"Investors are clearly excited by the secular story of China's increasing Internet penetration and the country's rapid forecasted online advertising growth," it said. Not all Wall Street analysts were enamoured with Renren.

"Due to the restated growth targets of last week and then due to the head of the audit committee resignation we are having a hard time jumping on the enthusiasm train," said Jon Ogg of 247WallSt.com.

"Our biggest concern is that Chinese companies have been under a flag due to a blurring of fact and fiction when it comes to company numbers and finances," Ogg said.

In papers filed with the US Securities and Exchange Commission (SEC), Renren said it had 117 million activated users as of March 31 and has been adding approximately two million new users a month over the past three months.

Renren reported net revenue of $76.5 million in 2010, up from $46.7 million the previous year, and a net loss from continuing operations last year of $61.2 million.

The Chinese site, whose name means "everyone," was founded in 2005 and is the top social networking site in China, where government censors have blocked Facebook.

Citing its risk factors in the SEC documents, Renren said it may face "potential competition from global social networking service providers that seek to enter the China market.

"The websites of some global social networking service providers, such as Facebook, are currently not accessible in China," it said. AFP

Australia's NAB rise 15.9 percent

Australia's biggest lender National Australia Bank (NAB) recorded a 15.9 percent rise in half-year profits Thursday on lower bad debts and disciplined cost management.

The bank booked a profit of Aus$2.43 billion ($2.6 billion) for the six months to March 31 from Aus$2.09 billion a year earlier.

Cash earnings, which strips out volatile items, increased 21.7 percent to Aus$2.67 billion.

NAB said the rise in cash profit was mainly down to market share gains and disciplined margin and cost management, combined with improved asset quality.

Charges for bad and doubtful debts fell by 19.7 percent to Aus$988 million from a year earlier. The bank declared an interim dividend of 84 cents per share, up from 74 cents a year earlier.

"Further sustainable improvement in NAB's shareholder returns remains the core focus of our strategic agenda," said Chief Executive Cameron Clyne.

AFP