Corporate

NSB reports impressive half-year results

NSB’s net interest income reported an increase of Rs. 2.8 billion from Rs. 2.1 billion in the first half 2009. Total deposits increased to Rs.330 billion, or 6 percent, on solid increase in savings deposit.

Commenting on the Bank’s performance, Hennayake Bandara General Manager/CEO of NSB said: “The Bank continued to pursue its efforts to achieve its strategic targets at all levels and continued to improve its performance of operational activities and realise significant levels of profitability.”

Chairman NSB Pradeep Kariyawasam

Total interest income increased by 7 percent to Rs.21.4 billion driven by investment in government securities, loans to financial institutions and other investments.

Interest expense decreased by Rs.1.4 billion from Rs.17.9 billion as per the same period last year, mainly due to decrease of market interest rates.

Trading-related profits were Rs.458 million compared with income of Rs.90 million in the first half 2009, driven primarily by Rs.370 million in equity market investments.

Total operating income for IH’10 reported an increase of 34 percent over IH’09, reaching Rs. 4.5 billion.

The healthy growth in total operating income was mainly attributed to stronger net interest income which registered as an increase of 131 percent compared to IH’09. Net interest margin increased to 4.2 percent reflecting an increase of 40 bps over IH’09 NIM of 3.8 percent.

Non interest income was Rs. 656 million in 1H’10, 177 percent increase compared to 1H’09, attributed to capital gains on trading securities.

Operating expenses increased by 10 percent to Rs.2.8 billion in 1H’10 compared to Rs.2.5 billion in 1H’09, which was mainly due to the expenses on branch expansion and refurbishment.

Despite the increased expenditure,the Bank was able to improve Cost to Income ratio to 51 percent compared to 56 percent in 1H’09.

The Bank’s effective tax rate increased to 57 percent in 1H’10 compared to 54 percent in 1H’09 and this was mainly due to the increase of VAT on Financial Services by 33 percent.

Performing Loans and advances increased to Rs.84.2 billion recording a growth of 10 percent from Rs.76.9 billion at the end of 2009. Even though total non-performing loans and advances showed a marginal increase of 2 percent, Non Performing Loan (NPL) ratio improved to 3.4 percent from 3.8 percent at the end of 2009 mainly due to increased efforts on recovery. Bank’s NPL ratio is well below the industry average.

As of end June, the Tier 1 and Tier 2 capital of the Bank amounted to 21.0 percent and 16.3 percent compared with the regulatory minimum of 5 percent and 10 percent.

The Group’s Operating Profit from Ordinary Activities Before Taxes increased to Rs.4.7 billion recording a growth of 11 percent over the 1H’09, while Profit after Tax for the period increased marginally to Rs.2.7 billion.

Currently NSB has 169 branches and during the period bank installed 15 new ATMs increasing total ATMs to 167. The Bank opened 12 new branches during the period and plans are under way to accelerate the expansion program.

In opening new branches, the Bank mainly focused on the Northern and Eastern provinces since people in those areas have long been deprived of banking facilities. Out of 12 branches opened, five are located in the North and East.

Hennayake further said: “We are continuing to invest in growth initiatives across the Bank, and believe our core strengths - including our investments, liquidity and capital - place us in a strong position to withstand the jolts to the system and emerge even stronger when conditions improve.

We are bringing innovative new products to the market, taking market share and expanding customer relationships across the Bank.’

Union Bank records 65% increase in pre-tax profits

Union Bank has reported a significant upturn in its performance for the half year ended June 30, 2010.The Bank’s pre-tax profits improved by 65 percent to record Rs. 110.3m up from Rs 66.8m for the period ended June 30,2009 whilst post-tax profits increased by 54 percent to Rs 50m corresponding to the results achieved for the identical period last year.

Net interest income increased by 54 percent over the preceding year. Similar growth was also achieved in the Bank’s core activities. Gross loans and advances increased by 16 percent year on year to reach Rs 9.2b whilst deposits increased to Rs 12.6b as at June 30, 2010.

Chairman Union Bank Ajita de Zoysa said that these results were achieved despite a re-pricing of assets and liabilities against a backdrop of declining interest rates and sluggish market conditions. He spoke of the Bank’s future potential and its ability to emerge as a strong performer following the recent fresh capital infusion of Rs 2 b partly subscribed by the Genting Group, Malaysia. The Bank is now strategically positioned to embark on an aggressive growth strategy in addition to comfortably surpassing the regulatory minimum capital requirements for commercial banks. The Bank is investing significantly in brand building and network expansion as well as value addition to its existing portfolios and launching of new banking solutions.

Janashakthi records Rs. 145.4m profits in 1H 2010

Janashakthi recorded a Profit after Tax of Rs. 145.4m for the first half 2010. This is a remarkable achievement, given the nature of the industry which has 19 players competing.

Managing Director Janashakthi Insurance PLC, Prakash Schaffter said “Irrespective of fierce competition in the market with a large number of players and challenging economic conditions, we have managed to record the highest profit quantum”.

“This was mainly due to the company’s strategy to focus on the bottom-line while offering a wide array of insurance products and services with unmatched benefits to policyholders, exceptional service standards which helped us to retain our existing customers, together with timely settlement of claims which amounted to over Rs. 2.6b in 2009 and Rs. 1.6b during the first half of 2010. The total claims incurred increased by Rs. 413 m as against the same period of last year”, he said. Schaffter said, “Compared to the corresponding period of 2009 the company has experienced a decline in Profit after Tax in spite of being the most profitable listed insurer.

This was a result of heavy claims incurred during this period in the category of natural disasters due to the recent floods where over 400 claims were intimated”.

“During the review period our flagship brand Janashakthi Full Option has shown a steady growth of seven per cent which is the highest growth among the top three players in the motor insurance market in revenue.

The company’s Life Insurance business grew marginally by 0.8 percent whereas the Non-Motor business recorded a decline of 0.4 percent mainly due to our consolidation efforts to make the General Insurance business profitable by discouraging loss making product lines”.

“Our proven track record undoubtedly enabled us to build confidence among the public.

Shareholders welcome CLPL’s Rs. 8.6 b rights issue

Lalith Heengama

Shareholders of Ceylon Leather Products PLC (CLPL) unanimously approved the 1:1 rights issue to raise Rs. 8.6 billion in capital at the Extra-ordinary General Meeting of the company held recently.

The rights issue comprised of 12.5 mllion ordinary shares at a fair price of Rs. 73 per share together with 12.5 million warrants executable in 2011, 25 million executable in 2014 and a further 25 million executable in 2015 at exercise prices of Rs. 102, 118 and 142 per share, respectively. The new shares shall rank pari passu with the existing Ordinary Shares of the Company and will be entitled to dividends declared after the final allotment of shares. “The rights issue will help to take CLPL to greater heights by way of expansion of our facilities and modernisation of the factory whilst exploring lucrative new business opportunities internationally in line with our mission to be the leader in the industry” said Chairman, CLPL Lalith Heengama. “CLPL also has plans to diversify and invest in other lucrative and growing industries with significant potential in order to achieve our strategic corporate objectives.”

The Environmental Resources Investment PLC - an investment holding company owns 72 percent of CLPL.

JKH leases Dhonveli Island

The John Keells Hotels Group has divested the head lease of Alidhoo Island in the Maldives and as consideration received the head lease of Dhonveli Island for a period of 18 years. The group previously had a sublease of Dhonveli until 2021. While the transaction itself will not result in a capital gain or loss in the profit and loss statement of the group, the sale of the loss making Alidhoo Island, which is located in the northern-most atoll in the Maldives and the acquisition of the head lease of Dhonveli Island, which is profitable and just fifteen minutes by speedboat from the capital Male, will have a positive impact on the profitability of the group going forward.

Cathay appoints country manager

Cathay Pacific Airways recently appointed Andrew Pattison as Country Manager - Sri Lanka and the Maldives. Pattison brings years of experience and expertise at the airlines hub, Hong Kong, to build and promote operations in Sri Lanka.

Pattison studied Natural Sciences (Chemistry) at Cambridge University, where he received his MSC and MA. In 2005 he joined John Swire & Sons Overseas Ltd. and was seconded to Cathay Pacific in Hong Kong. Previous experience at Cathay Pacific Airways includes duties as Airline Planning Officer (Hong Kong) in 2005-6, Assistant to Country Manager India, Bangladesh and Nepal (Mumbai), Executive Assistant to Chief Executive in 2007-8 (Hong Kong), Business Improvement Manager in 2008-10 (Hong Kong).

Cathay Pacific recently hosted an event for the airline’s affiliated travel partners to provide an opportunity to bid farewell to former Country Manager, John Holden and welcome Andrew Pattison.

* Pattison’s duties as Country Manager,Sri Lanka and the Maldives will be to promote Sri Lanka as a business and tourism destination, work with GSA and Finlays to ensure smooth operations at the airport to maximise passenger and cargo sales and build and maintain close relations with key clients and officials - passengers, travel agents, cargo agents and the government.

* Pattison said “I am excited and honoured to have the opportunity to work in Sri Lanka. It’s an exciting time for both Sri Lanka and Cathay Pacific, with the tourism industry and the business sector set to boom in the years ahead. My main goals are to promote Sri Lanka as a world class business and tourism destination while continuing to build the reputation of Cathay Pacific as the airline of choice to Singapore, Bangkok, Hong Kong and beyond.” Photo Caption : Andrew Pattison, far right, with Cathay Pacific representatives and travel agents.