Standard Chartered Sri Lanka together with Standard Chartered China recently organised the ‘Showcase Sri Lanka: 2021 China – Sri Lanka Virtual Investor Forum’ to highlight the partnership potential between the two countries and the emerging strategic opportunities in a shifting global landscape. This webinar was the first initiative undertaken through the partnership between Standard Chartered Sri Lanka and the Board of Investment of Sri Lanka (BOI) to promote Sri Lanka as a preferred investment destination and work together to bring targeted Chinese investments into the country.
Setting the background for beneficial investments in Sri Lanka, Dr. Palitha Kohona, Sri Lanka Ambassador for the Republic of China said, “Sri Lanka has always had a close and warm relationship with China. We recently concluded the bilateral investment protection agreement to add an additional layer of security for Chinese investors as well as implemented a double taxation agreement to ensure that investors will not have to pay taxes in either country. Any Chinese investor coming into Sri Lanka should also note that we have signed free-trade agreements with India, Pakistan and Singapore and that we are well connected to Australia, South East Asia, Middle East and Africa by sea with more than 35,000 vessels sailing past the country annually.”
Emphasising on the timeliness of the forum was keynote speaker, Ajith Nivard Cabraal, State Minister of Finance, Capital Markets and State Enterprise Reforms. “There is no better way of protecting investors than giving them the signal that Sri Lanka will take the necessary steps to honour our commitments. Even during the pandemic, Sri Lanka passed the Colombo Port City commission law, which sets the bedrock for the value addition that would take place in our business ventures and business activities with the rest of the world. My invitation to investors from China comes with the reassurance that we will be providing them with new opportunities, supported by regulatory framework, to take their investments to a level that can really make projects very feasible here in Sri Lanka.”
Sanjaya Mohottala, Chairman, Board of Investment Sri Lanka, delivered a presentation to showcase how Chinese investors can take advantage of the diverse opportunities in Sri Lanka across sectors such as manufacturing – specifically in apparel and pharmaceuticals, ICT, tourism, agri and food processing and infrastructure. He said, “Sri Lanka is ranked one of the most peaceful countries in South Asia. With its progressive and investor-friendly laws, backed by a constitution that protects investors, it becomes a low-risk environment for anyone looking to invest in the country. As the apex agency for promoting and facilitating foreign direct investments in Sri Lanka, BOI will provide investors with end-to-end facilitation, and help them set up their business in Sri Lanka in the shortest possible time.”
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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