In Breaf
Banks’ Profits Up 111%
The banking industry achieved a considerably high level of profits in 2010. Profit after tax amounted to Rs. 57.5 billion last year, a 111% growth in comparison to a Rs. 27.2 billion profit in 2009. The significant growth in profitability was mainly attributed to a higher increase in fee-based income, a lower increase in non-interest expenses and loan loss provisions reversal due to reduced provisioning requirement.
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Insurance Thrives
The insurance sector, which comprised 19 insurance companies, 48 insurance broking companies and about 37,000 insurance agents showed improved performance in 2010, as reported by several key indicators. The increase of total assets by 22%, income by 40% and pre-tax profit by 232% to Rs. 16.6 billion shows insurance business expansion.
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Diversified Investments
Government has planned to reduce the budget deficit to GDP ratio from 8% last year to 6.8% in 2011. One percentage point reduction in the budget deficit will lower the government borrowing requirement by about Rs.60 billion.
Since the budget deficit is expected to decline further in the medium to long-term resulting in reduced borrowing by the government, shifting a part of the funds of the EPF to other profitable investment avenues such as listed and unlisted equities, debentures and mortgage backed securities is a prudent investment strategy in managing the funds of the EPF.
EPF which has a Rs. 902 billion asset base is predominantly exposed to investments in Government securities.
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Forex Outflow
Last year Central Bank of Sri Lanka (CBSL) bought US$ 753.2 million from the domestic foreign exchange market. However, CBSL had to sell US$ 819.80 million mainly towards the latter part of the year as a result of the increase in import bills mostly due to oil bills following the rise in crude oil prices in the international market.
This resulted in net sales
of US$ 66.6 million in 2010 when compared to net purchases of US$ 2,291.9 million in 2009 (Source: Central Bank of Sri Lanka 2010 Annual Report).
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China Eyes BAA
UK Competition Commission ordered British Aviation Authority (BAA) to sell London Stansted and either Glasgow or Edinburgh Airport. BAA, the airport operator, a unit of Spain’s Ferrovial, had challenged the plan, which was announced in 2009. In other news, a potential bidder in Ferrovial’s offering of 10% of BAA reportedly is China’s HNA, parent of Hainan Airlines. BAA also controls Heathrow Airport (Washington Aviation Summary).
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Visit
Riga Stradins University (RSU) representatives will be in Sri Lanka for over six days beginning from Tuesday. They will be represented by Professor Juta Kroica and International Student Department Dean Dr. Smuidra Zermanos.
During their stay at Cinnamon Lakeside, Colombo, Kroica and Zermanos will conduct seminars for students considering to enrol in RSU for the next academic year on May 1.
Latvia’s Honorary Consul General in Sri Lanka Thomas F. Daetwyler said that all application procedures regarding studies at RSU will be handled by them.
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Avurudhu Bonanza
Nokia Avurudu seasonal rewards is valid for all customers who buy an original Nokia handset from Softlogic, authorized dealer of Nokia in Sri Lanka, upto the end of this month.
The grand prize on offer is a new “Viva Elite” car.
In addition to the Elite car, 1st, 2nd and 3rd prize winners selected from each province will be rewarded with a 32” LCD TV, a 21” LCD TV and a X2-01 mobile phone respectively. The grand prize winner for the “Viva Elite” car and other winners from each province will be chosen at a final Grand Draw. With three winners from each province, the Nokia Avurudu seasonal rewards will reward 27 lucky winners across the country.
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Private Sector Credit Up 30%
Credit to the country’s private sector by the banking system increased by 29.7% year on year (YoY) to Rs. 1,571 billion in February. Its YoY increase in January was 28.1% to Rs. 1,530.4 billion; while in February 2010 it witnessed a YoY decline of 2.8% to Rs. 1,211.2 billion. That YoY decline could be attributed to the crisis in the island’s financial sector, rise in non performing loans and the global recession that swept the world at that time.
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CBSL’s T Bill Stock Up 80%
Central Bank of Sri Lanka’s (CBSL’s) Treasury (T) Bill holdings in the week ended Wednesday increased by 80.1% (Rs. 1,406 million) week on week to Rs. 3,162 million.
Increase in CBSL’s T Bill stock means that money equivalent to that increase has been pumped into the economy. The danger in such an exercise is that it may stoke inflationary pressure in the economy.
Howbeit, year on year, CBSL’s T Bill stock has decreased by 91.1% (Rs. 32,251 million) to Rs. 3,162 million. A decline in CBSL’s T Bill stock means that amount of money has been drawn out from the economy, possibly on maturity or having had been sold to the market. If on maturity such stocks have been retired, then it swells CBSL’s bank balance by an equivalent amount without any addition to money circulation in the economy. On the other hand if CBSL has in turn re-sold those T Bill holdings to the market, then the market may lay claim to those balances when such T Bills mature (Source of data: CBSL).
