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Friday March 31st, 2023

Sri Lanka’s Commercial Bank net down 23-pct; loans contract

ECONOMYNEXT – Profits at Commercial Bank of Ceylon, Sri Lanka’s largest private bank by assets, fell 23 percent to 3.129 billion rupees in the March 2019 quarter from a year earlier, as credit contracted, bad loans grew and a new tax hit profits, interim accounts showed.

The group reported earnings of 3.05 rupees per share for the quarter down 25 percent.

Interest income grew 13.8 percent to 31.97 billion rupees interest in the quarter ended March 2019 from a year earlier, expense grew at a faster 16.07 percent to 19.95 billion rupees and net interest income grew at a slower 10.4 percent to 12.1 billion rupees.

Loans and advances contracted to 861 billion rupees from 867 billion rupees from three months earlier.

Cash balances grew 15.4 percent to 51.8 billion rupees and interbank loans grew 41 percent to 28.1 billion rupees.

Chief executive S Renganathan said the bank followed a "more cautious approach in expanding its advances portfolio" amid "challenging economic conditions."

"Despite the decline in advances, I am happy to say that the Bank has continued to support the SME sector, as reflected in the satisfactory growth of this portfolio during the quarter," he said.

Loan losses grew 68 percent to 1.89 billion rupees in the quarter from 1.126 billion rupees a year earlier.

At bank level the gross non performing loan ratio rose to 4.14 percent from 3.24 percent.

Total capital adequacy fell to 15.1 percent from 15.6 percent, but is higher than the minimum 14 percent.

Sri Lanka has seen monetary instability due to the operation of a soft-pegged exchange regime with real effective exchange rate targeting, which led to a collapse of the currency, killing an economic recovery, which was worsened by a political crisis in the last quarter of 2018.

Fee and commission income grew 2.5 percent 2.93 billion rupees.

Financial sector value added tax, nation building tax and a new debt repayment tax rose 39 percent to 1.78 billion rupees.

The bank grew deposits 3.14 percent during the quarter to 1,025 billion rupees, as credit contracted.

When a country recovers from a balance of payments trouble, deposits at bank grow faster than loans, while during a currency crisis, loans will growth with printed money from term reserve repurchase injections from the central bank or its outright treasury bill purchases.

The when banks or other savers buy Treasury bills previously held by the central bank, the currency strengthens, imports and economic activity falls and a balance of payments surplus is generated.

Total assets grew 1.78 percent to 1,221 billion rupees during the quarter. Net assets grew 0.73 percent to 121.4 billion rupees. (Colombo/May15/2019 – Update III)

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Sri Lanka tax hike: no response from president, professionals to discuss next steps

GMOA Secretary Haritha Alutghe

ECONOMYNEXT – Sri Lanka’s trade unions and professional associations who have been agitating against an International Monetary Fund (IMF) backed progressive tax hike will meet to discuss further union action after a letter to the president went unanswered.

Government Medical Officers’ Association (GMOA) secretary Dr Haritha Aluthge told reporters on Friday March 31 that the unions will meet as the self-styled Professionals’ Trade Union Alliance (PTUA) collective which have so far been organising strikes and demonstrations demanding a revision of the taxes.

The PTUA has been awaiting a promised meeting with President Ranil Wickremesinghe for some days now. Aluthge previously said on Monday that if the meeting did not materialise, the unions would be compelled to go on strike.

The issue has become stagnant due to government inaction, said Aluthge at Friday’s press conference.

“The PTUA informed the president in writing yesterday for the last time to please understand the gravity of this situation and to immediately give us a meeting and present the government’s interim solution, through which the government can take measures to ease the sense of tension among professionals,” he said.

The purpose of the meeting is to discuss an “interim solution” to the professionals’ grievances over the progressive income tax hike until a reported revision that’s due in six months when the country’s recently approved 17th IMF programme comes up for review.

“Sadly, there has still been no response,” the GMOA official said.

All unions and professional associations will meet Friday evening together with a number of other unions to discuss further action, he added.

The privately-owned English-language weekly newspaper The Sunday Times reported on March 26 that the IMF had indicated the possibility of revising some of the taxes imposed as part of the IMF’s staff-level agreement with Sri Lanka when the programme comes up for review in six months.

According to the newspaper, IMF officials had conveyed this to representatives of trade unions during a virtual roundtable held last Friday March 24. The virtual meeting was held on the initiative of the IMF and was attended by trade unions and professional associations representing the PTUA including the GMOA. (Colombo/Mar31/2023)

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Sri Lankan transport associations cut haulage and transportation fees after fuel price cut

ECONOMYNEXT –  Sri Lanka Association of Container Transporters and fuel bowser owners has decided to reduce the haulage charges and transportation fee, after the government cut the auto diesel prices by 80 rupees, association officials said.

“Due to the recent reduction in Auto Diesel price from March30, 2023, the committee has decided to reduce haulage charges by 7 percent,” association said.

Sri Lanka Private Petroleum Tanker owners has also decided to reduce the transportation fee of fuel by 8 -10 percent from April onwards.

“We will be meeting with the association members and will be deciding on exactly how much we will be reducing,” the General Secretary of the association Nimal Amarasekera told EconomyNext.

“We hope to reduce it by 8-10 percent and will be applied.”

Meanwhile United Lanka Fuel Transport Bowser Owners Association said, the price reduction will be done, and the specific amount will be calculated using the cost per kilometer for a transporting bowser.

“We have different types of bowsers such as 13,200 litre and 19,800 litre likewise,” Association President K.W. Charles told EconomyNext.

“So the cost per kilometer per bowser is different and after we calculate only we can give a specific percentage.

“It will come to effect from this month and the payments for the next month will be based on the new prices.”

Charles said, this is only based on the price reduction of fuel, however several costs as maintenance and spare part costs should also be considered when deciding the transportation cost, which is also being discussed with the Ceylon Petroleum Corporation.

Sri Lanka slashed fuel prices with effect from Wednesday (29) midnight, Power and Energy Minister Kanchana Wijesekera said, after a protest by trade unions of state-run fuel retailer Ceylon Petroleum Corporation (CPC) resulting in queues at filling stations due to supply disruption.

The price of Petrol 92 Octane will be slashed by 15 percent or 60 rupees to 340, Petrol 95 Octane 95 will be reduced by 26.5 percent or 135 rupees to 375, Auto Diesel by 19.8 percent or 80 rupees to 325, and kerosene by 3.3 percent or 10 rupees to 295. (Colombo/ March31/2023)

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Sri Lanka’s shares edge up in mid day trade

Stock Market. Free public domain CC0 image.

ECONOMYNEXT – Sri Lanka’s shares edged up in mid day trade on Friday, Colombo Stock Exchange (CSE) data showed.

All Share Price Index was up 1.09 percent or 100.69 points to 9,329.19, while the most liquid index was up 1.23 percent or 32.86 points to 2,697.12.

The market generated a turnover of 895 million rupees.

Top gainers during mid day trade were Commercial Bank, Hatton National Bank and Expolanka. (Colombo/Mar31/2023)


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