The SEC Chairman, Faizal Salieh, along with top officials from the SEC and the CSE, recently held a productive engagement with the stockbroker community to discuss vital matters concerning the industry. The meeting which brought together owners and Chief Executive Officers of stockbroker firms was aimed at enhancing regulatory compliance, promoting healthy market practices and ensuring industry sustainability.
Salieh underscored the significance of establishing strong governance structures and the minimal governance standards that would apply to market intermediaries with effect from 4th July 2023, with a 6 months transition period to fully comply. To ensure Board independence and impartiality during a conflict of interest, all market intermediaries (including stockbrokers) are required to have minimum of three Directors of whom at least one shall be a Non-Executive Director.
Where the roles of Chairman and CEO are combined, an Independent Non-Executive Director shall be appointed as the Senior Independent Director (SID) with powers equal to the Chairman enshrined in a Board approved policy and Terms of Reference, so that intervention by the SID is facilitated during Board proceedings where there is a perceived conflict of interest.
In order to ensure that the industry offers sound client service, the quality of Registered Investment Advisors (RIAs) was discussed. The SEC Chairman mentioned that that the SEC will be increasing its focus on and strengthening the annual fit and proper assessments of RIAs at the point of renewing stockbroker licences. He encouraged the stockbroker community to work towards making the industry more attractive for the employment of high quality RIAs.
The importance of the compliance role at the market intermediary level was discussed. SEC officials stated that some intermediaries do not have a thorough understanding about the compliance requirements and the role of Compliance Officers. Compliance Officers are required to be independent of general operations and should directly report all compliance related matters to the Board.
They emphasized the need for all intermediaries to ensure that such reporting lines are effectively established.
The SEC Chairman highlighted that the main reason for inviting the owners of the stockbroker firms to the meeting was to draw their attention to the need for institution building in order to ensure the sustainability of the stockbroking industry. It is essential that the stockbroking industry moves forward with the development in technology and make continuous enhancements to their infrastructure. In this context, the SEC Chairman suggested that a considerable percentage of the profits, made by the stockbroker firm (atleast 25%) should be ploughed back towards institutional development expenditure.
Discussing the role of stockbroking firms in market development, the Chairman called upon the firms to submit their annual business plans to the SEC and stated that this will be a requirement at the point of renewing stockbroker licences. Licences will not be renewed for inactive stockbroking firms. (SEC)
Cargills Bank in ‘steady performance’ over nine months ended September 30, 2023 – PAT Rs. 432 Million
Economic conditions and challenges prevailing last year have moderated somewhat, given the steadfast approach by policy makers and regulatory authorities towards economic recovery. We appreciate their efforts, and our results bear testimony to the progress made. Nevertheless, the road ahead remains challenging. A meaningful government budget, continued success of the IMF program, general price stability and regained momentum in tourism, remittances and exports will be key in shaping the country’s short- to medium- term economic revival, a Cargills Bank press release said.
The release adds: ‘Cargills Bank’s results for the nine months ended 30 September 2023 reflected continuing QoQ improvement in profitability. Profit after tax at Rs. 432 Mn was higher by Rs. 324 Mn than in the corresponding period of 2022. We are pleased the Bank has been able to maintain this momentum of profitability growth, and are confident the results of 2023 will reflect the strong commitment of the Bank’s team, successful execution of its strategy, a continued rigorous focus on market trends and its adaptability to a volatile environment.
‘Net interest income grew 15% or Rs. 353 Mn in the nine months compared with the corresponding period of 2022. The Bank directed its resources towards higher yielding assets, hedging interest rate risk and prudently managing deposits. In addition, close monitoring of the Bank’s lending portfolio and timely solutions offered to financially stressed customers helped maintain a healthy NIM to date.
‘Net fee and commission income of Rs. 590 Mn for the nine months was lower than the Rs. 641 Mn in the previous year. The decrease of 6% related largely to lower trade volumes and reduced net income from card related services. Additionally, capital gains realized on derecognition of financial assets, and higher foreign exchange income boosted other income streams by Rs. 265 Mn, to Rs. 391 Mn in the nine months.
‘Total operating expenses increased 25% from Rs. 1.7 Bn last year to Rs. 2.1 Bn. Personnel expenses increased 15% largely due to adjustments to salary and welfare benefits considering increased costs of living and market conditions. Other operating expenses grew 44% mainly from the impact of the Social Security Contribution Levy which was effective from October 2022, the increased cost of utilities and the cost of repair and maintenance of IT assets, particularly where denominated in foreign currencies.
‘Impairment charges totaling Rs. 607 Mn reflected a reduction of 50% in the first nine months of 2023 evidencing a focused and proactive management of delinquencies and commendable overall team efforts in this direction. The Bank’s Stage 3 Loans (net of Stage 3 Impairment) to Total Loans Ratio stood at 6.64% while Stage 3 Provision Cover was 52.74% at 30th September 2023. Additional impairment overlays considered necessary have been incorporated after a careful scrutiny of the status of borrowers.
‘VAT on Financial Services and income tax expenses increased substantially mainly due to growth in profits and the increased corporate income tax rate effective 1 October 2022.
‘The Bank maintains Capital Adequacy and Liquid Assets Ratios well above the minimum requirements prescribed by the Central Bank. The total Capital Adequacy Ratio was 20.43% while the Statutory Liquid Assets Ratio stood at 37.72%.
‘Total assets of the Bank at 30 September stood at Rs. 64.7 Bn, an increase of 20% or Rs. 11 Bn in the first nine months of the year. Financial Assets measured at fair value through other comprehensive income grew by 92% to reach Rs. 19.6 Bn. Positive gains were reflected in Other Comprehensive Income. The loan book registered moderate growth, from Rs. 36.0 Bn to Rs. 36.8 Bn, given conditions prevailing. In this regard, the Bank exercised care in maintaining the quality of its lending in a high interest rate environment, where interest payments threatened borrowers’ viability. A shift in strategy commenced in the latter part of the period, to rebuild momentum in lending.
‘Deposits to customers grew 20% from Rs. 37.8 Bn at the end of 2022 to Rs. 44.9 Bn at the reporting date amidst continued reductions in market interest rates. The Bank will judiciously balance interest expenditure and income, as substantial reductions in interest rates and the time lag in repricing loans have a direct impact on NIMs.
‘In October 2023, Fitch Ratings affirmed Cargills Bank’s National Long-Term Rating at ‘A(lka)’; Negative Outlook.
‘Ms Ruvini Fernando, who has served as a Director since 1 August 2018, resigned from the Bank’s Board on 27 October 2023 due to personal circumstances. Mr Arjuna Herath has been appointed to the Bank’s Board effective 1 November 2023.
‘The Colombo Stock Exchange (CSE) has approved the listing of the Bank’s shares on the CSE. Steps are being taken to duly offer to the public 62.5 Mn shares of the Bank at Rs. 8.oo per share through an Initial Public Offering.’
Unilever Sri Lanka celebrates a Decade of Empowering Sri Lanka’s Youth
Empowering the younger generation, Unilever Sri Lanka recently inducted its 10th batch of Unilever ‘SPARKS’ student Ambassadors, welcoming 26 passionate undergraduates from 10 different universities into its impactful and sought-after student ambassadorship programme.
The SPARKS programme seeks to cultivate the leadership skills and innovative spirit of Sri Lankan undergraduates, encouraging them to become positive influencers among their peers. This is a voluntary student ambassadorship programme in which selected undergraduates from various universities are appointed to be ambassadors of Unilever in their respective institutions for a period of 1 year. The programme was launched in 2014 by Unilever Sri Lanka and was subsequently adopted by Unilever entities across the world.
Hajar Alafifi, Chairperson and Managing Director, Unilever Sri Lanka said, “We are looking forward to working with the selected talented youth in this year’s SPARKS programme. The program is a testament to our commitment towards empowering local youth. This year-long programme serves as an ambassadorship, with students acting as liaison between Unilever Sri Lanka and their respective university. The programme is designed to allow students to exhibit their strength as leaders in their institution. The program is highly sought after among undergraduates, with a remarkable 55% of SPARKS ambassadors transitioning to internships or permanent roles within Unilever in recent years. Celebrating its 10th year, this annual endeavor reflects Unilever’s sustainable approach to making a lasting positive impact on the nation’s youth, preparing them to be ‘future fit.’’
7th Great HR Quiz by CIPM
The Chartered Institute of Personnel Management (CIPM) announces the forthcoming 7th Great HR Quiz, a distinguished event showcasing the expertise of workplace professionals in Human Resources. Scheduled to take place today, at the Hotel Galadari, Colombo, the event is set to commence at 2:00 p.m.
Being a brainchild of Rohitha Amarapala, the past president of CIPM, the Great HR Quiz made its debut in 2014 and has since evolved into a prominent fixture in Sri Lanka’s HR sector. Anticipated to be more significant and more impactful this year, the event is expected to draw the participation of approximately sixty-five esteemed companies.
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