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
Beyond arrivals: Can tourism and hospitality power Sri Lanka’s next growth phase?
The Australian High Commission in Sri Lanka recently hosted the latest edition of its ConnectED Thought Leadership Series at the Australian High Commissioner’s Residence in Colombo, bringing together senior leaders from Sri Lanka’s tourism, hospitality, travel, events, education and related sectors.
The discussion, themed “Beyond Arrivals: Can Tourism and Hospitality Power Sri Lanka’s Next Growth Phase?”, focused on the role of tourism and hospitality beyond visitor arrival numbers, examining how the sector could contribute to Sri Lanka’s broader economic development.
The distinguished panel comprised Shiromal Cooray, Chairman and Managing Director of Jetwing Travels; Angeline Ondaatje, Chairperson of Tangerine Beach Hotels PLC, Royal Palms Beach Hotels PLC and Tangerine Tours; and Grant Dreher, Chief Executive Officer of William Angliss Institute Australia.
The discussion was moderated by Wayne Crosbie, Director – International and Business Development, William Angliss Institute Australia, who facilitated the conversation around the evolving needs of the tourism and hospitality industry and the importance of connecting education, skills development and workforce readiness with industry demand.
Adding a practical and experiential dimension to the evening, students from the Colombo Academy of Hospitality Management (CAHM) played an active role in delivering the cocktail reception for the distinguished guests.
Business
SL’s ‘Global Destination Marketing and Communication Campaign’ gets into top gear
A high-level discussion on the implementation of Sri Lanka’s Global Destination Marketing and Communication Campaign, supported by the World Bank, was held at the Ministry of Foreign Affairs, Foreign Employment and Tourism. The initiative marks a significant step towards strengthening Sri Lanka’s position as a competitive and attractive destination in the global tourism marketplace.
The meeting focused on the importance of adopting a long-term, data-driven approach to destination marketing, underpinned by comprehensive analysis of tourism demand and supply trends, visitor behaviour, destination branding, and international marketing strategies. Discussions also highlighted the need for a transparent procurement process and institutional capacity-building to ensure the successful implementation and sustainability of the campaign.
Participants welcomed the technical expertise and strategic guidance to be provided by MTI Consulting and Skift Inc./JD, whose support will contribute to the development and execution of a globally competitive destination marketing programme. Through strong collaboration between public and private sector stakeholders, the initiative seeks to establish a sustainable roadmap to guide Sri Lanka’s tourism promotion efforts and enhance the industry’s competitiveness in key international markets.
The campaign is expected to play a vital role in strengthening Sri Lanka’s tourism sector, supporting increased visitor arrivals, generating economic opportunities, and contributing to broader national economic growth.
The discussion was attended by Aruni Ranaraja, Secretary to the Ministry of Foreign Affairs, Foreign Employment and Tourism; Chairpersons and Chairmen of tourism institutions under the Ministry; representatives of SLAITO, TAASL, the Tourism Advisory Committee, the World Bank, MTI Consulting, and Skift Inc./JD; as well as H.P. Somathilaka, Director General of National Planning.
Business
Labour shortages are pushing Plantation Companies towards machines, data and a different kind of worker
Sri Lanka’s plantation sector is entering a new phase of transformation, as technology and innovation reshape how estates operate, manage resources and sustain productivity. Across the country’s tea estates and other plantations, machines are increasingly complementing skilled workers in tasks once done almost entirely by hand, while software and data bring new precision to decisions traditionally guided by experience.
Automated harvesters, pruning machines and drones are being deployed alongside GIS mapping, digital weighing systems and enterprise software. Though the technologies vary, they point to a common shift: plantations are finding smarter ways to meet rising demands with a changing workforce.
Mechanisation, however, is not without challenges. Sloping terrain, fragmented fields and crop variability limit where machinery can be effectively deployed. Still, as operating costs rise and labour availability tightens, the ability to combine human expertise with technology is becoming essential to sustaining productivity, competitiveness and the long-term viability of the industry.
Addressing the labour shortage
Sri Lanka’s plantation companies face a labour market that has changed from the one on which the industry was built. Migration, demographic changes and attraction from other sectors have made it increasingly difficult to retain workers for plantation work.
That is why mechanization is spreading beyond the most obvious applications. At Bogawantalawa Tea Estates PLC, machinery is being used for land preparation, pruning, weeding, harvesting, and agrochemical application. Selective machine harvesting and mechanical pruning have been introduced in tea, while mechanized and semi-mechanized methods are being extended to other crops.
Agarapatana Plantations PLC has taken a similar approach. Fuel-powered and battery-operated harvesters are being used in the field, while backhoes assist with uprooting and levelling new clearings. Drones are being deployed for foliar spraying. In factories, automation and energy efficient machineries are being introduced where production volumes justify the investment.
The changing face of plantation technology
Beyond mechanisation, plantations are steadily evolving into data-driven businesses, with RPC’s increasingly adopting technologies that are reshaping day-to-day operations. Agarapatana Plantations is rolling out automated green-leaf weighing systems with facial recognition and planning fertigation-based irrigation. Ten factories already operate on solar power, with six of them being carbon neutral.
Likewise, Elpitiya Plantations PLC has introduced Ballotronix tea-leaf readers to assess leaf composition, supported by iHarvest and Microsoft Dynamics 365 Business Central, giving managers real-time visibility across thousands of hectares.
Talawakelle Tea Estates PLC has similarly pursued transformation since 1992, introducing hot-water boilers across all factories from 2008, electronic weighing with real time data collection since 2015, as well as tablets, computers and a new payroll system for employees. Rooftop solar along with three in-house hydro power plants located in Palmerston, Radella and Somerset estates provide renewable energy. State of the art, modern colour separators have been provided to its Low Grown factories. Since 2025, drones are been used for chemical/ foliar spraying. These developments highlight how the plantation sector has steadily embraced technology for greater efficiency and sustainability.
The technological shift does not stop at the edge of the field as factories are becoming increasingly automated, giving special emphasis to energy efficient equipment. At Elpitiya, more than 80% of their factories are mechanized with state of the art machineries, with the intention to raise both capacity and efficiency.
On the other hand, Malwatte Valley Plantations PLC illustrates another possibility. After expanding its cinnamon cultivation, the company encountered a shortage of skilled peelers. Its engineers responded by developing and patenting cinnamon-peeling machinery.
That is more than a labour-saving exercise. It shows how a constraint can encourage technological innovation- and potentially allow an industry to expand beyond the limits imposed by the supply of specialised labour.
The company is also investing in automated factory systems and machinery for “matcha” production. Technology, in this case, is being used not merely to reduce costs but to strengthen value addition to products.
Machines will not make workers obsolete
Workers are being trained to use harvesters, pruning equipment and spraying machinery, while new roles are emerging around upkeep, data collection and digital reporting.
Horana Plantations PLC, for instance, has introduced machine plucking to address labour shortages. The company reports improvement in yields, consistency and labour productivity, while technology-driven harvesting has also been used to make plantation work more attractive to younger workers.
“Technology has become a prerequisite requirement for the plantation sector as we deal with labour shortages and the need to improve productivity,” Secretary General of the Planters’ Association of Ceylon, Lalith Obeyesekere stated. He noted that priority should be given to technologies suited to Sri Lankan conditions, supported by training and enabling workers to use them effectively. “That is a more useful way of thinking about mechanisation than simply counting the jobs a machine might replace”, Obeyesekere went on to note. He is confident that these changes will raise the productivity and profitability in the sector.
The next harvest
The direction of travel is becoming clearer. Precision agriculture, digital crop forecasting, automated weather monitoring, smart irrigation, digital traceability and further mechanisation are likely to become more common.
That does not mean the end of the plantation worker, nor the disappearance of generations of agricultural knowledge. It means that both will increasingly operate alongside technology.
For an industry whose competitiveness has long depended on its ability to extract value from land and labour, the new imperative is simpler: create more avenues, waste less and make each worker- and each hectare- more productive.
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