Sri Lanka stocks gain for eighth day with buying in banks

ECONONMYNEXT – Sri Lanka stocks closed 0.34 percent higher on Thursday with gains in banking pushing the market up for the eighth straight day.

Colombo’s All Share Price Index closed 19.45 points up at 5,715.14 and the S&P SL20 of more liquid stocks closed 0.80 percent or 21.89 points up at 2,762.89.

The market turnover was 712 million rupees with 102 stocks gaining and 55 stocks declining.

There was a crossing (negotiated trade) of 75 million rupees in the country’s largest conglomerate John Keells Holdings.

Commercial Bank closed 2.80 rupees higher at 101.30 rupees a share, Commercial Leasing and Finance closed 30 cents up at 2.80 rupees a share and Sampath Bank closed 2.10 rupees up at 155.00 rupees a share, contributing to ASPI gain.

The banking and finance stock index closed 1.2 percent higher on Friday.

Sri Lanka’s banks are experiencing high non-performing loans, which were 4.8 percent of total loans at end-June, compared to 3.3 percent a year earlier, and 4.2 percent at end-March.

Banking sector profits had fallen in the March quarter from a year earlier despite a growth in interest margins.

With below-target credit growth, the central bank is pushing for banks to lower lending rates.

The central bank had cut deposit rates for banks in order to reduce their cost of funds, hoping that this would lead to a 200 basis point fall in lending rates.

Banks had been increasing lending rates prior to the price controls, despite a fall in other benchmark rates. (Colombo, 19 July, 2019)