Priyantha Talwatte Director
Nations Trust Bank PLC announced the successful oversubscription of its Unlisted Debenture prior to its opening, aggregating LKR 5 Bn in applications. Structured, managed and placed internally;the Bank planned to raise up to LKR 3 Bn through the issue of 30 million Unlisted, Rated, Unsecured, Senior, Redeemable Debentures at the par value of LKR 100 each.
Approved by the Securities and Exchange Commission of Sri Lanka and announced in June 2021, the issue was structured by Nations Trust Bank’s Structured Finance Unit and its Management and Placement was done by the Bank’s Treasury Unit. The Bank had options to issue up to a further 10 million debentures valued up to LKR 1 billion, in the event of an oversubscription of the initial issue, and succeeded in exceedingthe initial offer value by LKR 2 Bn.
Commenting on the oversubscription of the Debenture Issue, Nations Trust Bank Chief Executive Officer/ Director, Priyantha Talwatte stated, “This Unlisted Debenture issue’s success is a testament to investor confidence in Nations Trust Bank’s financial stability, and the capabilities. One of the key objectives of the issue is to utilize the provided medium-term stable funding towards the expansion of the Bank’s lending portfolio. We hope that the funds would further reduce the tenor mismatch between the shorter-term liabilities and the medium-term assets andoverall, strengthen the Bank’s funding profile.”
Under the issue, the Bank offered two types of debentures: Type A– a five-year tenurewith a fixed rate of 8.9% per annum and interest paid semi-annually and Type B – a five-year tenurewith a fixed interest rate of 9.15% payable annually.
Nations Trust Bank PLC is among the top 15 business establishments in Sri Lanka as ranked by Business Today. Stemming from its vision of “helping people and businesses by providing financial services and information to achieve their goals and aspirations in a sustainable way”, the Bank serves a diverse range of customers across both individual and corporate, with an enviable portfolio of banking and financial products and services. Strongly focused on digital empowerment through cutting-edge digital banking technologies, the Bank is a pioneer in many innovative customer centric banking solutions such as extended banking hours, and FriMi – Sri Lanka’s first digital banking experience.
Sri Lanka Insurance enters into a strategic tie up with Sri Lanka Medical Association
Sri Lanka Insurance signed a Memorandum of Understanding (MoU) with the Sri Lanka Medical Association (SLMA) to improve healthcare knowledge, enhance safety and ensure providing best insurance solution for healthcare professionals in Sri Lanka.
The agreement between the two organizations intends to facilitate the upcoming International Medical Congress which will be conducted virtually on the 21st of September 2021, with the participation of medical practitioners, medical students, and researchers in the field of medicine. Further the agreement will facilitate awareness building initiatives on road safety and introduce a special insurance scheme for the registered members of the Sri Lanka Medical Association.
The MoU outlines the shared and individual commitment of Sri Lanka Insurance to provide a unique insurance scheme for every registered member of the Sri Lanka Medical Association. The insurance scheme will make provisions for a vast variety of benefits suitable for the risk management requirements of modern-day professionals, including comprehensive motor insurance solution.
As part of the MoU signed by the two bodies, the Sri Lanka Medical Association (SLMA) and Sri Lanka Insurance will collaborate to facilitate educational programs to raise awareness on road accident, conduct media seminars and social media programs in collaboration with Sri Lanka Insurance Motor Plus to create a safe and healthy environment for all Sri Lankans.
The Sri Lanka Medical Association (SLMA) is the national professional medical association in Sri Lanka, which brings together medical practitioners of all grades and all branches of medicine. The SLMA is the oldest professional medical association in Asia and Australasia with a proud history that dates back to 1887. Comprised with around 4000 members, SLMA serves as the leading body of the medical community to achieve the highest standards of medical professionalism and ethical conduct in Sri Lanka and the Association aims to provide a forum for its members to further their professional and academic development.
Sampath Bank to expand its lending activities as economy rebounds
Samath Bank’s adequate capital buffer may enable it to sail through the tough times and help in boosting the credit growth in the near term when the economic activity recovers to a greater extent, First Capital Research said yesterday.
Elaborating on Sampath Bank’s capital buffer in a report titled, ‘Robust show despite nagging macro pressures’, First Capital said, ” Sampath Bank’s earnings increased by 83% YoY in the 2Q2021 to LKR 2.4bn while the surge was attributed to the rise in total operating income by 38.4% to LKR 14.7 bn despite the increase in impairment by 50.1%YoY to LKR 4.3 bn.”
“Total operating income was led by the improvement in NII, Net Fee and Commission and Net Other Operating Income. Considering the strong performance in 1Q and 2Q of 2021, we maintain the earnings forecast of Sampath for 2021 at LKR 13.7bn (+62%YoY) and 2022 at LKR 16.5bn (21%YoY). With the strong capital buffer, we expect Sampath’s lending portfolio to grow with the gradual resumption of economic activities while margins to enhance amidst the potential rise in interest rates.”
The report further said: “However, taking into consideration the higher risk-free rate applicable for valuations, with the potential rise in interest rates, we have downgraded Sampath’s fair value for 2021 to LKR 62.0 (from previous LKR 68.0) and 2022 to LKR 73.0 (from previous LKR 80.0).”
“Sampath’s’s net interest income for 2Q2021 was LKR 10.9bn reflecting an increase of 34.1%YoY, led by the decrease recorded in interest expenses as a result of timely re-pricing of liability products despite a decline in interest income by 0.5%YoY owing to low interest rate regime. Net fee and commission income comprises of income from various sources such as credit cards, trade, and electronic channels while the growth in this segment was driven mainly by higher engagements in card-related activities.”
“Net other operating income grew by 173.8%YoY backed by the increase in realized exchange income stemming from the 1.1% depreciation of the LKR against the USD reported during 2Q2021. We estimate NII and Net fee and commission income to grow by 12%YoY and 10%YoY to LKR 41.3bn and to LKR 9.9bn for 2021 respectively.”
“Impairment rose by 50.1%YoY for 2Q2021 as a result of prudent provisioning for risk categories. Credit granted for 1H2021 amounted to LKR 30.0bn with 4.1%YTD growth mainly driven by term loans, pawning & gold loans and overdrafts although loan book growth was relatively lesser compared to the private sector credit (which grew by nearly 6.7% during 1H2021) as a result of Sampath’s conservative nature in lending. Sampath provided LKR 4.3Bn in 2Q2021 as the impairment, up by 50%YoY, relative to 2Q2020 on the back of additional provisions taken despite signs of an economic recovery apparent in 1Q202.”
“Following a reassessment of the impairment assumptions, SAMP decided to apply a more prudent approach in 2Q2021, in light of the evolving impact of COVID 19 third wave and the extension of the moratorium framework. Accordingly, we have estimated an impairment of LKR 11.6bn (-12%YoY) for 2021 and LKR
10.0Bn (-14%YoY) for 2022.”
Well above capital ratios will boost lending portfolio when the economic activities improve
As at 30th Jun 2021, SAMP’s Tier I and Total Capital Adequacy Ratios stand at 12.5% and 15.7% respectively which are well above the minimum regulatory requirement of 8.0% and 12.0%,” First Capital said.
Tea exports in first seven months of 2021 amounts to Rs.23 billion
By Steve A. Morrell
The Tea Exporters Association ( TEA), indicated in their market report last week that tea exports to end July 2021 amounted to Rs. 23. 02 billion. However, the report further indicates that it showed a decrease of Rs. 1.03 billion compared with the corresponding period in 2020 which was Rs. 24.33 billion.
Forbes and Walker Tea Brokers, (FW) and John Keels Tea (JKH) report as well confirmed these findings and further said Iraq emerged the no 1 importer of Ceylon Tea.
Additionally, Turkey, Russia, and the UAE were recorded in the top category of countries importing Ceylon Tea. China, Iran, Azerbaijan, and Libya were listed in this list. Saudi Arabia and Chile were also in the major buyer list, but recorded statistics were that these latter countries reduced their buying. Reasons for this were not known at the time of writing.
Meanwhile, reduced exports to the US was reported due to the Covid pandemic still affecting the country.
Tea consumption is expected to be dominant in Asian Countries particularly India and China, consuming some 55 percent of global demand. Of importance was also the weak market outlook from European countries following economic downturn. In this instance however, the TEA report said tea consumption in these countries would not be affected. Sources also informed us that after water, tea was the most consumed beverage worldwide.
Expectations were that Sri Lankan tea production was likely to recover in 2021, however production recorded in 2010 and 2015 would not be achieved, ( Production at that time exceeded 300 million kilos)
In Consequence to the fertilizer debacle, reports from planting areas were that production is gravely affected. Clearly, yellowing of foliage resulted in reduced bulk crop . Repercussions were that before the year was out crop shortage would reach alarming levels. Such results were also applicable to the tea smallholder sector. Tea Factory Owners Association, was not available for comment in this regard.
The FW report further said tea exports also included tea bags, instant tea, green tea, tea packets and sundry value added teas. green tea, instant tea, and bulk tea exports were in the plus variance category. Tea bags showed decline in production.
However, the FW report further said offerings show that 6.2 million kilos would be auctioned next week.
Last week’s auctioned quantity was 6.3 million kilos.
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