The performance of the stock brokers has declined in the first half of 2012 compared YoY due to the decline in market liquidity, the rise in interest rates and restrictions on broker credit, the Central Bank announced recently. Accordingly, total earnings, profits and capital funds of the 29 stock brokers declined in the first half of 2012, as the stock market experienced a bear run losing 20 per cent of market capitalisation during this period.
“The total income of the industry declined by 72 per cent to Rs. 994 million in the first half of 2012 from Rs. 3,542 million in the corresponding period in 2011. Hence, a net loss (before tax) of Rs. 443 million has been recorded for the first six months of 2012, compared to the net profit before tax of Rs. 297 million for the same period in 2011,” the Central Bank stated in a report on the Recent Economic Developments. Total assets of the stock broking sector also declined by 36 per cent to Rs 10.9 billion, while their net capital increased by 4.4 per cent to Rs 3.9 billion as at end June 2012.
Meanwhile, the Central Bank added that despite the increase in the number of funds, the unit trust industry also lost value during the first nine months of 2012 due to the decline in prices of listed shares.
“Twelve new funds were launched during the period. There were 37 funds in operation managed by 11 unit trust management companies registered with the Securities and Exchange Commission of Sri Lanka (SEC).
However, the net asset value (NAV) of the unit trust industry declined by 13.4 per cent to Rs. 23.1 billion at end September 2012 from Rs. 26.6 billion at end September 2011, due to the price declines in listed shares,” the Central Bank announced.