Business
Sampath Bank on track to be ‘attractively’ valued by investors in 2025
Lending portfolio expected to grow by 6.5% in 2024
Significant decline in impairment charges forecasted for the current year
By Sanath Nanayakkare
First Capital Research says that it expects Sampath Bank’s lending portfolio to grow by 6.5% in 2024 followed by a 10.0% growth in 2025 as the researchers expect the GDP to record a positive turnaround of 2%-3% in 2024.In addition to that, the strong capital buffer of the Bank was attributed to the expected growth in its lending portfolio.
These key indicators hence signal a better value proposition from the Bank for its shareholders going forward.
“Sampath Bank recorded a robust 26.0%YoY increase in net earnings, reaching LKR 3.8Bn, driven by a 14.7%YoY growth in Net Interest Income (NII) and a notable reduction in impairment charges. However, a surge in the effective tax rate to 59.7% led to a QoQ decline in net earnings by 27.0%. Reflecting the economic recovery, the loan book marginally expanded by 2.6%QoQ to LKR 807.5Bn, while the deposit base improved by 5.2%QoQ to LKR 1.3Tn, with the CASA base reaching 33.6%,” First Capital says.
“Furthermore, we anticipate a projected 53.6%YoY decline in impairment charges in 2024, which is expected to drive a profit growth of 14.6%YoY to LKR 20.5Bn in 2024, followed by a growth of 12.0%YoY to LKR 23.0Bn in 2025. Given the positive sector outlook and potential re-rating, Sampath is forecasted to trade at 1.0x PBV, resulting in a fair value of LKR 135.0 for 2025, representing a significant 72.4% upside from the current market price of LKR 78.3,” the research group predicts.
“NII expansion and impairment contraction propel strong YoY earnings growth. Sampath’s net earnings rose by 26.0%YoY to LKR 3.8Bn in 1Q2024, driven by a notable growth in NII by 14.7%YoY and a significant reduction in impairment charges by 35.4%YoY. However, a spike in the effective tax rate to 59.7% led to a QoQ decline in net earnings by 27.0%. The growth in NII was primarily due to a reduction in interest expense (-12.1%YoY), outpacing the decline in interest income (-2.4%YoY).”
“However, NIMs contracted to 5.24% as of 31st Mar 2024, with an expected further decline to 4.03% in 2024. Net fee and commission income saw a 17.3%YoY decline to LKR 4.6Bn due to reduced income from trade-related activities, including lower commission rates for import-related transactions, decreased trade volumes, and LKR appreciation against the USD (c.7.0%YTD). However, fees generated from credit, electronic channels, cards, and remittance-related activities showed growth during the quarter. Moreover, Sampath reported a net trading loss of LKR 4.5Bn in 1Q2024, contrasting with a gain of LKR 1.7Bn in 1Q2023, primarily due to revaluation losses on forward exchange contracts. However, realized exchange gains of LKR 0.6Bn offset the turnaround, compared to the loss of LKR 4.2Bn recorded in 1Q2023.”
“Sampath’s loans and advances exhibited conservative growth QoQ, with a modest uptick of 2.6% to LKR 807.5Bn driven by a 2.8%QoQ expansion in LKR-denominated loans, while foreign currency denominated loans experienced a slight decline of -1.6%QoQ, amidst LKR appreciation against the USD during the period.
“With an uptick in Demand and Savings deposits on a QoQ basis, the bank’s CASA ratio improved to 33.6% during 1Q2024. We project the CASA ratio to normalize and further enhance to 40.0% from 2024 to 2026, positioning the bank with a cost effective source of funds compared to peers, thus widening the interest spread and bolstering its competitive edge.” First Capital Research’s projections indicate.
Business
SriLankan Airlines Resumes Flights to Riyadh and Dubai
09 March 2026; Colombo – SriLankan Airlines would like to inform passengers that it is resuming daily services to Riyadh tonight and Dubai tomorrow, while continuing to closely monitor the situation in the Middle East and prioritising the safety and wellbeing of its passengers and crew.
The following flights are scheduled to operate:
For more information please contact: 1979 (within Sri Lanka); +94 11 777 1979 (international); WhatsApp +94 74 444 1979 (chat only); your travel agent; visit www.srilankan.com; or follow us on social media.
Business
Oil prices jump above $100 for first time in four years
Global oil prices have jumped above $100 (£75.11) a barrel for the first time since 2022 as the escalating US-Israeli war with Iran has fuelled fears of prolonged disruption to shipments through the Strait of Hormuz.
Iran on Sunday named Mojtaba Khamenei to succeed his father Ali Khamenei as Supreme Leader, signalling that a week into the conflict hardliners remain in charge of the country.
The US and Israel launched fresh waves of airstrikes across Iran over the weekend, hitting multiple targets including oil depots.
Major disruption to energy supplies from the region threatens to push up prices for consumers and businesses around the world.
Early on Monday in Asia, Brent crude was around 15.5% higher at $107.16, while Nymex light sweet was up by more than 17% at $106.77.
Stock markets in the Asia-Pacific region fell sharply in early trading on Monday, with Japan’s Nikkei 225 index down by more than 5% and the ASX 200 in Australia more than 3.5% lower.
Many in the markets predicted that oil would hit the $100 a barrel mark this week.
In the event it took about a minute to jump 10%, and then another 15 minutes to rise a further 10% in early Asian trading.
Last week the markets had been relatively relaxed about the seeming nightmare scenario for millions of barrels of crude and liquefied natural gas trapped in the Gulf, unable or unwilling to transit the Strait of Hormuz.
But the escalations over the weekend, alongside scenes of destruction of energy infrastructure both in Iran and across the Gulf, saw the markets take rapid fright.
The question now is where does this go? Some analysts argue that if the shutdown in the strait lasts until the end of March, we could see record oil prices above $150 a barrel.
The existing rise is likely to further increase petrol prices, and those of important derivative products such as jet fuel and vital precursors for fertilisers.
The physical supplies from the Gulf are mainly consumed in Asia.
Already however there are signs that Asian consumers are bidding up prices for US gas, with some tankers originally heading for Europe turning around in the mid-Atlantic.
US President Donald Trump responded to the jump in prices by saying that short term rises were a “small price to pay” for removing Iran’s nuclear threat.
His energy secretary told US broadcasters on Sunday that Israel, not the US, was targeting Iran’s energy infrastructure, amid some concern about rising domestic pump prices caused by the war.
(BBC)
Business
CMTA warns buyers of long-term costs hidden in reconditioned vehicle imports
The Ceylon Motor Traders’ Association (CMTA) has issued a stark cautionary note to prospective vehicle buyers, warning that the initial price advantage of reconditioned imports often masks significant long-term financial risks.
By highlighting a “structural imbalance” in the current duty valuation system – which allows near-identical vehicles to be imported under a 15% automatic depreciation bracket – the CMTA argues that the lack of manufacturer-backed warranties and tropicalised specifications in the grey market could lead to a “reconditioned trap” for unsuspecting consumers. For the savvy buyer, the association suggests that the true cost of ownership is increasingly tilting the scales in favour of brand-new vehicles from authorised agents.
If two identical 2026 models are sitting on different lots, and one is significantly cheaper because it was technically “registered and de-registered” abroad, the frugal buyer’s instinct is to take the discount. But the CMTA argues that this 15% depreciation benefit – intended for genuine used cars – is being leveraged as a loophole for zero-mileage vehicles.
For the savvy buyer, this raises a fundamental question of transparency. If the entry price of a vehicle is built on a “procedural” technicality rather than actual wear and tear, where else is the transparency lacking? Does the lower price reflect a genuine saving passed to the consumer, or does it mask a lack of manufacturer-backed after-sales support?
When a buyer chooses an authorised agent, they are essentially purchasing an insurance policy against the unknown. With a five-year manufacturer warranty, the financial burden of a faulty transmission or a software glitch stays with the global giant that built the car, not the local owner. In an era where vehicles are increasingly “computers on wheels,” the technical specialised tools and genuine parts held by authorised agents are no longer a luxury – they are a necessity for longevity.
The CMTA’s perspective also invites the buyer to look at the “Big Picture.” Every time a vehicle is imported under an under-declared value or an artificial depreciation bracket, it isn’t just a loss for the Treasury; it is a blow to the country’s foreign exchange discipline.
“A savvy buyer today is more informed than ever. They realize that a “cheap” import with no service history and no tropicalised specifications may eventually become a “minus” on the balance sheet. Frequent repairs and lower resale value can quickly evaporate the initial few lakhs saved at the point of purchase. Ultimately, the choice between brand new and used is a choice between certainty and speculation,” the Association says.
The CMTA is advocating for a level playing field where duty is based on true transaction value. Until that day comes, the burden of due diligence rests on the consumer. To be a “savvy buyer” in 2026 means looking past the showroom shine and asking: Who stands behind this car if something goes wrong tomorrow?
In conclusion, CMTA says,” For those seeking long-term peace of mind, the “brand new” path – supported by a transparent duty structure and a solid warranty – remains the gold standard for steering Sri Lanka’s complex automotive landscape.”
Before signing the papers on a reconditioned vehicle, the CMTA suggests buyers evaluate the four “minus” factors against a “brand new” purchase:
By Sanath Nanayakkare
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