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26BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Sun Apr 17, 2011 9:34 pm

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

tubal wrote:
seyon wrote:
tubal wrote: When the interims start coming out, we will find that once you deduct the extra-ordinary items, eps growth is very ordinary.

You will also find that the central banks increase in the reserve ratio will have a negative impact on the banks bottom line.

That is true I agreed tubal.. This we could see from SAMP out of 3.3Bn bottom line Rs.2bn reported by non recurring income. However COMB and HNB are very attractive in terms of bottom line... What do u say...



Not trying to knock down Seyon's work, but I think looking solely at the bottom line is a big mistake. As we have already discussed banks and indeed many companies in the CSE have artificially inflated bottomlines. Inflated due to mark to market adjustments or sales of their investments.

Usually whenever you find an artificially inflated bottom line you can find 25 press releases saying how wonderful that company is doing (yeah, you read the ones that LOLC, Browns et al sent out). They never mention capital gains or mark to market adjustments.

Sometimes you see companies that have dramatic declines in their bottom line from the previous year. They are often followed by 50 press releases that mention the previous year had extra ordinary items in P&L and when you deduct them, the company has actually seen 2.5% growth in profitability. You will see many of them in the coming weeks.



Yes.. "looking solely at the bottom line is a big mistake" that is very much true... I think ideal would be the operational profit to measure the performance... isn't it....

27BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Sun Apr 17, 2011 10:29 pm

Rocky


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

seyon wrote:
hybrid_OS wrote:
tubal wrote:I do appreciate Seyon's hard work. Well done.
buf if you ask me (and no one is asking me :-) ), unimaginative brokers are promoting the banking sector and most investors are falling hook line and sinker for it. When the interims start coming out, we will find that once you deduct the extra-ordinary items, eps growth is very ordinary.

You will also find that the central banks increase in the reserve ratio will have a negative impact on the banks bottom line.

Agree with tubal to some extent. Banking sectors has seen better days.
In my opinion Sampath is the most secure investment though you will not lose with others mentioned above.

Prudency in showing higher provisions for bad debts is not a negative sign. Actually, to the contrary it gives an investor more confidence.

Profits will be marginal though. Cannot expect anything exceptional.

Hi hybrid

For the SAMB don"t u think the opening of 30 branches during the year of 2010 will impact the cost income ratio negatively in coming quarters. Then this impact would hit the bottom line...

How do u look into this...



Seyon, you have already answered your own question subsequently.
My opinion...

If I think like a big investor, where can I invest my millions without blinking an eye?
Are there any other options available?
A big investor will want to improve his ROI with a reputable, progressive and a company that has big plans for the future.

Sampath bank has that in their vision. They are not going to sit back and let HNB, COMB, SEYB,BOC get their share of the banking business.
They must have good LTP's for the next 5-10 years. Yes it may hit the bottom line hard, but the major investors are informed and they are on board.

What if Sampath just waits? It's like offering the new business / customers on a platter to the rest of the big banks! Like Gambir said:Quote: we are here not just to participate in the game. We are here to win" Unquote.


So I prefer if Sampath does something with my money that I cannot do and they are best geared to do. May I have good ROI in the years to come.

Go long term with Sampath.






28BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Mon Apr 18, 2011 2:57 am

UKboy


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Good point hybrid_OS.

29BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Mon Apr 18, 2011 7:24 am

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

hybrid_OS wrote:
seyon wrote:
hybrid_OS wrote:
tubal wrote:I do appreciate Seyon's hard work. Well done.
buf if you ask me (and no one is asking me :-) ), unimaginative brokers are promoting the banking sector and most investors are falling hook line and sinker for it. When the interims start coming out, we will find that once you deduct the extra-ordinary items, eps growth is very ordinary.

You will also find that the central banks increase in the reserve ratio will have a negative impact on the banks bottom line.

Agree with tubal to some extent. Banking sectors has seen better days.
In my opinion Sampath is the most secure investment though you will not lose with others mentioned above.

Prudency in showing higher provisions for bad debts is not a negative sign. Actually, to the contrary it gives an investor more confidence.

Profits will be marginal though. Cannot expect anything exceptional.

Hi hybrid

For the SAMB don"t u think the opening of 30 branches during the year of 2010 will impact the cost income ratio negatively in coming quarters. Then this impact would hit the bottom line...

How do u look into this...



Seyon, you have already answered your own question subsequently.
My opinion...

If I think like a big investor, where can I invest my millions without blinking an eye?
Are there any other options available?
A big investor will want to improve his ROI with a reputable, progressive and a company that has big plans for the future.

Sampath bank has that in their vision. They are not going to sit back and let HNB, COMB, SEYB,BOC get their share of the banking business.
They must have good LTP's for the next 5-10 years. Yes it may hit the bottom line hard, but the major investors are informed and they are on board.

What if Sampath just waits? It's like offering the new business / customers on a platter to the rest of the big banks! Like Gambir said:Quote: we are here not just to participate in the game. We are here to win" Unquote.


So I prefer if Sampath does something with my money that I cannot do and they are best geared to do. May I have good ROI in the years to come.

Go long term with Sampath.




Yes for the long term it is ideal...

30BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Mon Apr 18, 2011 8:28 pm

ShareShares


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

seyon wrote:Hi Friends

This brief analysis is connected to my previous analysis (http://forum.srilankaequity.com/t2231-banking-sector-analysis-combhnbseybntbsambdfcchdfcndbpapc-and-mbsl) and this analysis in briefing the financials comparing with previous year and including main features (key balances and numbers) of the retail largest banks. I excluded the DFCC,NDB and HDFC , as their scope is mainly focus on development banking. Further I give certain measures ( KPI- Key Performance Indicators) to interpret the performance. I do not restrict with these KPI, if u have additional measures related to banking industry, Pls share with us..

This is good time to discuss about banking sectors, as expected to see the first quarter results with the new improvement due to tax saving and economic growth. Here we have veteran analyzers with different views, which would help us to have good investment decision and to sharing our knowledge and views.

Following are the my selected KPIs
* Interest Margin
* % of Other Income Out of Operating Profit Operational Cost to Income Ratio
* % Loan Loss Provision out of Total Non Performing Loan
* NPL Raito
* PER
* PBV
* Number of Employees (comment in terms of total assets)


This is My View……………….

When I do the analysis of banks (SEYB,NTB,SAMP,PABC) KPIs ,I took the indicators of COMB and HNB as industry norms ( I may be wrong) as these two banks are relatively strength in the banking industry and analyzed COMB and HNB by comparing each others.

1.SEYB…

Interest Margin – Line with industry

% of Other Income Out of Operating Profit- Very High, out of that 1Bn bad debt written back and recovered

Operational Cost to Income Ratio – Very high % comparing with other banks

% Loan Loss Provision out of Total Non Performing Loan – Comparably High

NPL Raito - Highest Ratio in the Banking Sectors ( this might be improved due to the recent restructured program taken place in the bank and Bank strategic target to reduce to 10% during the year.)

PER - Trading @ 15X which is slightly low comparing with other retails banks. This impact is due to the recent Rights issue

PBV- Very Low… This also may be due to the recent Rights issue

Number of Employees – Very High

2.NTB

Interest Margin – Line with industry

% of Other Income Out of Operating Profit- Very High, out of that 1.3Bn reported as fees and other income ( no details given) this may
be due to the unrealized gain on fair value adjustment.

Operational Cost to Income Ratio – Very high % amongst other banks

% Loan Loss Provision out of Total Non Performing Loan – Comparably High, However comparing with previous year good improvement.

NPL Raito – Good, line with industry…

PER - Trading @ 18x, Fairly trading @ Industry average

PBV - Line with Industry

Number of Employees - Comparably high

3.SAMP

Interest Margin – Line with industry

% of Other Income Out of Operating Profit- Slightly High, out of that Capital Gain on Sale of LBFL shares 654Mn , Bad Debt Recoveries
1.2Bn and Recovery of Impairment of Investment 1.3Bn. Hence Recovery of impairment and Capital gain are non recurring items amounts to Rs.2Bn.

Operational Cost to Income Ratio – Par with industry
% Loan Loss Provision out of Total Non Performing Loan – Very High reporting @ 12% due to the bank made additional specific credit
loss provisions of Rs. 1,344.9 Mn, over and above the amounts recommended by the Central Bank of Sri Lanka ignoring collateral values.

NPL Raito – Good, and Well managed

PER - Trading @ 14x, is Low comparing with other bank, However, taking out the non recurring income Rs.1.3Bn, then PE would be trading above the average.

PBV - Line with Industry

Number of Employees – Fairly ok. We could see there were new recruitment about 300 staff due to addition of 30 new branches during the year.

4.PABC

Interest Margin – Slightly high margin with other banks

% of Other Income Out of Operating Profit- Fairly Good

Operational Cost to Income Ratio – Par with industry

% Loan Loss Provision out of Total Non Performing Loan – Improved comparing with previous year. Par with the industry

NPL Raito – Above the industry average, however it is improved comparing with previous year.

PER - Trading @ 21x, is high comparing with other bank.

PBV - Line with Industry

Number of Employees – Comparably High..

5.HNB

Interest Margin – Par with industry

% of Other Income Out of Operating Profit- Comparing with COMB contribution is high, that is due to the capital gain of sales quoted investment amounts 600Mn

Operational Cost to Income Ratio – Reporting @76% comparing with COMB, ratio is high

% Loan Loss Provision out of Total Non Performing Loan – Well Maintained at very low level

NPL Raito – Reporting at 5% , Very lower level

PER - Trading @ 20x, is high comparing with other bank.

PBV - Line with Industry

Number of Employees – Little bit high compare to COMB employees with the total assets.


6.COMB

Interest Margin – Par with industry

% of Other Income Out of Operating Profit- Reporting at 33%, Lowest contribution to operational profit.

Operational Cost to Income Ratio – Reporting @ 61% very lowest amongst the banks.

% Loan Loss Provision out of Total Non Performing Loan – Well Maintained at very low level

NPL Raito – Reporting at 7% , a little bit higher compare to HNB

PER - Trading @ 19x

PBV - Line with Industry

Ok, there can be some differ view on the interpretation and comparison of KPI or additional measures to be brought to have good analysis.

So Pls share ur thoughts and views on the KPI or If u have some additional / different measures to be adopted… Pls contribute that with the analysis

Thanks in advance

Find the attachment of Brief Analysis of Banking Sector












Thanks for the analysis. All banks should show momentum. I am looking for movement for several months, so many different banking sector shares. Next quarter results should initiate a real momentum. Still only few shares are moving in the portfolio. There should be an overall improvement in the share market. After 20th, real growth can be expected as many investors discussed in this forum. Turn over was gradually improving.

31BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Mon Apr 25, 2011 7:28 am

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics

http://www.ft.lk/2011/04/25/banks-bask-in-profit-boom/

32BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Mon Apr 25, 2011 7:58 am

Soundchips


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

With market recovery it is time for banking sector to do well... all stocks need to perform equally well . ..

33BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Mon Apr 25, 2011 8:13 am

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics

Thanks Seyon, SAMP looks good for me as well.. We require a banking run Wink when n how is the question...

34BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Mon Apr 25, 2011 8:22 am

Soundchips


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

yes, ...time to see a momentum.

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

smallville wrote:Thanks Seyon, SAMP looks good for me as well.. We require a banking run Wink when n how is the question...

Just For Info.........

Sampath to create banking history by opening 10 branches in one day

As a leading bank in the country, which transformed the banking industry with its innovative and revolutionary products, Sampath Bank is no stranger when it comes to writing the pages of banking history in Sri Lanka.

It has always been a key intention for the bank to expand its network to reach out to its customers; ensuring cutting edge banking services are provided, even in the rural villages.
Taking this initiative one step ahead, Sampath Bank takes a momentous step forward on 29 April 2011, with the opening of 10 new branches on the same day at different parts of the island. It is indeed, the very first time a Sri Lankan bank has embarked on such a mission, thus writing a new page in the history of banking in Sri Lanka.
The 10 branches being opened in order are Akuressa (179), Beliatta (180), Habaraduwa (181), Ahangama (182), Maradagahamula(183), Menikhinna (184), Ninthavur (185), Thirunelveli (186) Hettipola (187) and Rambukkana (188), completing 188 branches in the electronically-linked islandwide network. All branches are equipped with the latest technology such as internet facilities, ATMs and e-banking facilities to provide fast and easy service around the clock. A complete range of products and services are on offer for savings accounts, current accounts, fixed deposits, foreign currency accounts, business, personal and home loan facilities, leasing facilities, credit card services etc., Sampath Bank offers innovative savings schemes for children, teenagers, young executives and senior citizens with a host of facilities, which can be customised to suit the individual needs of the account holders.

Winning The Banker – ‘Bank of the Year’ Award presented by The Financial Times Magazine in UK consecutively in 2009 and 2010 bears ample testimony for the level of service and quality of products and services of Sampath Bank.
Several other national and international accolades won by Sampath Bank such as the National Business Excellence Awards, Best Corporate Citizen Award and National HRM Awards are the proof to the continuous improvements the Sampath team undertakes, challenging themselves to reach higher and higher levels of service surpassing the mediocre and the expected.
Taking on its role in social responsibility, Sampath Bank will continue to play an active part in the development of the localities in which its branches are based, while focusing on uplifting the lifestyles of the people by providing guidance in cottage businesses with suitable financial solutions though the bank and encouraging thriftiness among the people through the various savings options which offer novel benefits and high interests.
Sampath Bank has emerged as a dynamic and fast growing bank with a solid financial stability and a leading market share creating value for all stakeholders.
Sampath Team takes the honour of inviting the people of these areas to step in to its branches to experience banking as never before. With friendly, professional and well versed team members to assist you with a smile at your every query and a host of facilities driven by the latest technology, Sampath Bank is well geared to meet the demands of the changing pace of business and the world.

36BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Wed Apr 27, 2011 9:04 am

Rocky

Rocky
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

VIVA.VIVA.



37BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Thu Apr 28, 2011 9:14 pm

tubal


Vice President - Equity Analytics
Vice President - Equity Analytics

So a few results are out and as predicted it's the extra ordinary items column that makes the results look extra ordinary. How long can they keep repeating it? Specially since the reserve ratio has recently been increased and the central bank is increasing pressure on the banks to reduce the spread between the lending and deposit rates?

By this time next year banks will be running purely on extra ordinary items hope they have enough family jewels left to sell Twisted Evil

38BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Thu Apr 28, 2011 9:48 pm

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

tubal wrote:So a few results are out and as predicted it's the extra ordinary items column that makes the results look extra ordinary. How long can they keep repeating it? Specially since the reserve ratio has recently been increased and the central bank is increasing pressure on the banks to reduce the spread between the lending and deposit rates?

By this time next year banks will be running purely on extra ordinary items hope they have enough family jewels left to sell Twisted Evil

Hi Tubal

Yes agreed...

when u analyze SAMP reporting net profit for the quarter is 980Mn out of that 858Mn represents for other income including 403Mn from Fees and commission ( related to bank operation) balance might be the mark to mark adjustment and capital gain or other adjustments. Hence only 500Mn resulting from the operational profit, based on that share price trading at PE 21...

How do u think current price level to enter....

Appreciate ur comments

39BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Fri Apr 29, 2011 7:32 am

tubal


Vice President - Equity Analytics
Vice President - Equity Analytics

seyon wrote:
tubal wrote:So a few results are out and as predicted it's the extra ordinary items column that makes the results look extra ordinary. How long can they keep repeating it? Specially since the reserve ratio has recently been increased and the central bank is increasing pressure on the banks to reduce the spread between the lending and deposit rates?

By this time next year banks will be running purely on extra ordinary items hope they have enough family jewels left to sell Twisted Evil

Hi Tubal

Yes agreed...

when u analyze SAMP reporting net profit for the quarter is 980Mn out of that 858Mn represents for other income including 403Mn from Fees and commission ( related to bank operation) balance might be the mark to mark adjustment and capital gain or other adjustments. Hence only 500Mn resulting from the operational profit, based on that share price trading at PE 21...

How do u think current price level to enter....

Appreciate ur comments


Realy can't answer that question since I am bearish about this sector overall (and have been that way for a while)

40BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Sun May 08, 2011 8:28 am

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics


Just for ur info http://www.thesundayleader.lk/2011/05/01/sampath-opens-62-branches/

Sampath Opens 62 Branches


Sampath Bank continued with the growth momentum in 201l 1st quarter (1Q) by posting impressive results over the previous year. Sampath Bank’s pre-tax profit rose to Rs. 1,348.6 mn. in 1Q 2011, reflecting a 70.4% increase year on year (YoY). Bank’s post –tax profit recorded a 60.9 % YoY growth to Rs.898.8 mn. in 2011.
Increase in Bank’s operating expenses over the previous year was managed at Rs. 365.4 mn. or 24.8%, despite the additional expenditure incurred on account of the ambitious branch expansion programme, which entailed opening of 62 branches during the last two years ended 31.03.2011, new recruitments of over 600 staff to manage this expansion drive, higher number of staff promotions and the cost of annual wage increases given effect during the periods under review.
Currently Sampath Bank operates with a 178 branch network and 229 automated teller machines. The Bank opened 40 new branches during 2010, which was a record in Sri Lanka’s banking history plans are underway to continue with the accelerated branch expansion program in year 2011as well.
Meanwhile Sampath Bank Group’s financial results which comprise the Bank and four subsidiary companies were even better. Group 1Q pre-tax profit grew 71.3% YoY to Rs.1,460.8 mn. with Sampath Bank contributing the bulk (92%) as the Group’s main entity. Group post –tax profit grew 64.2% YoY to Rs. 992.5 mn. Marked performance improvements of all four subsidiaries during the review period facilitated recording this higher profit growth rate at group level in 2011.
Increased economic activity in the market and the rapid 42.2% growth achieved by the Bank in its lending activities during the one year period ended 31.03.2011 paved the way for generating a higher fee-based and commission income, which recorded a significant 45.6% YoY growth to Rs. 216.1 mn. in 1Q 2011. Nevertheless Exchange income recorded a negative 1.36% growth in 2011 largely due to the Rs. 36.9 mn. revaluation loss incurred in 2011 on FCBU’s retained profits as against the Rs. 26.0 mn. revaluation loss incurred in 2010. This was solely due to the appreciation of LKR against the US Dollar; from Rs 113.95 as at 31.03.2010 to Rs 110.40 as at 31.03.2011.
The Bank was successful in managing the net charge on loan losses in 2011. As a result of the Bank’s improving credit quality (as indicated by reducing NPL volumes and NPL Ratios, detailed elsewhere in this report), it was possible to reduce provisions made on specific loan losses to Rs. 153.2 mn. in 2011 (even with additional provisions totalling Rs.100.0 mn. included therein), as against Rs. 702.6 mn. made in 2010, which too was inclusive of additional provisions totalling to Rs. 517.4 mn. These additional specific loan loss provisions were made in line with the Bank’s policy of making such provisions against identified NPLs, ignoring the collateral held, aimed at improving Bank’s provision cover. As the Bank achieved an 88.9% Provision Coverage Ratio as at 31.12.2010, the need for such additional provisions was naturally low in 2011.
In addition, based on higher credit growth during the period, a further sum of Rs. 101 mn. was provided as Regulatory General Provisions on loan losses in 2011, the effect of which was however reduced by Rs. 90.4 mn., o/a of a reversal of General Provisions, resulting from the applicable rate being reduced from 0.9% to 0.8% in 1Q 2011.
On the other hand the Bank was successful in making recoveries against NPLs. Consequently it was possible to reverse previous loan loss provisions made to the tune of Rs. 402.9 mn. in 2011, as against Rs. 424.5 mn. reversed in 2010, which figure however was boosted by a single recovery of Rs. 331.9 mn. made in 2010.
The Rs. 275.9 mn. impairment provision made in 2010 on account of the investment in ordinary shares of Union Bank Colombo as instructed by CBSL was reversed & taken to profits of 1Q 2011, since Union Bank shares are now being listed on the Colombo Stock Exchange and are being traded.
Despite the rapid growth recorded in the Bank’s fund based operation as reflected by the 22.2% and 42.2% growth rates achieved during the one year period ended 31.03.2011. in deposits and advances respectively, Bank’s Net Interest Income recorded a Rs. 139.0 mn. YoY drop to Rs.2, 060.5 mn. in 2011. This was mainly due to the return on interest earning assets dropping at a faster rate than the drop in cost of funds on deposits, shrinking the Net Interest Margin (NIM) from 5.59% in 1Q 2010 to 4.22% in 1Q 2011, consequent upon the significant changes that took place in the market’s interest rate structure. However the Bank is in the process of taking effective strategies, aimed at improving NIMs in future.
In addition, reduced Financial VAT tax rates (reduced from 20% to 12.0%) and Corporate Tax (reduced from 35% to 28%), too helped to improve Bank’s post tax profits in 2011.
Improved profits paved the way for most of the Bank’s key financial ratios to record significant improvements over the previous year. Prudent lending practices which included the centralized credit model introduced recently, effective post-sanctioning monitoring systems and intensified recovery efforts against existing NPLs resulted in reducing Bank’s NPLs both in absolute and percentage terms. NPL volumes net of IIS which stood at Rs 7,003 mn. as at 31.03.2010 was reduced to Rs 5,275.9 mn. (24.66%) as at 31.03.211. Similarly Bank’s NPL Ratio was reduced to 3.64% as at 31.03.2011, from 6.89% one year ago, as against the industry’s average NPL Ratio of 5.3% as at December 31, 2010. In addition to the improvement made in the Provision Cover referred to above, the Bank’s Net NPL / Equity Ratio (Open Credit Exposure Ratio) too was reduced to 6.87% as at 31.03.2011 from 20.84% as at 31.03.2010. Furthermore, almost all profit- based Ratios of the Bank such as ROA, ROE and EPS recorded significant improvements.
Sampath also remained as one of the well capitalized banks, with the Tier I Capital Adequacy Ratio at 9.51% and Total Capital Adequacy Ratio at 11.41% as at 31.03.2011, despite the higher 42.19% credit growth recorded during the one year period ended 31.03.2011.
Bank’s total deposit and total asset bases grew by 22.2% and 24.55% respectively during the one year period ended 31.03.2011. The growth rates in the two areas during the 1Q 2011 were 7.84 % and 9.37 % respectively. In addition, growth in customer advances were phenomenal, with advances volumes recording a significant 42.2% growth during the one year period ended 31.03.2011 and 13.3% in IQ 2011.
Taking in to account of the bank’s better performance in 2010, Bank paid a final dividend of Rs.6.60 per share in the form of scrip dividend in addition to the interim Rs. 3 per share scrip dividend already paid. Even after the two share-splits, which increased the number of shares by 120% in 2010, Sampath share is currently traded at around Rs 285 p.s. This price is well above the re-stated Rs. 103.78 net assets value per share after the share-splits. In terms of market capitalization, Sampath Bank’s ranking on the CSE has now improved to 14th position, as against the 15th position held on 31.12.2010.

41BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Mon May 09, 2011 8:26 am

Soundchips


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

seyon wrote:
Just for ur info http://www.thesundayleader.lk/2011/05/01/sampath-opens-62-branches/

Sampath Opens 62 Branches


Sampath Bank continued with the growth momentum in 201l 1st quarter (1Q) by posting impressive results over the previous year. Sampath Bank’s pre-tax profit rose to Rs. 1,348.6 mn. in 1Q 2011, reflecting a 70.4% increase year on year (YoY). Bank’s post –tax profit recorded a 60.9 % YoY growth to Rs.898.8 mn. in 2011.
Increase in Bank’s operating expenses over the previous year was managed at Rs. 365.4 mn. or 24.8%, despite the additional expenditure incurred on account of the ambitious branch expansion programme, which entailed opening of 62 branches during the last two years ended 31.03.2011, new recruitments of over 600 staff to manage this expansion drive, higher number of staff promotions and the cost of annual wage increases given effect during the periods under review.
Currently Sampath Bank operates with a 178 branch network and 229 automated teller machines. The Bank opened 40 new branches during 2010, which was a record in Sri Lanka’s banking history plans are underway to continue with the accelerated branch expansion program in year 2011as well.
Meanwhile Sampath Bank Group’s financial results which comprise the Bank and four subsidiary companies were even better. Group 1Q pre-tax profit grew 71.3% YoY to Rs.1,460.8 mn. with Sampath Bank contributing the bulk (92%) as the Group’s main entity. Group post –tax profit grew 64.2% YoY to Rs. 992.5 mn. Marked performance improvements of all four subsidiaries during the review period facilitated recording this higher profit growth rate at group level in 2011.
Increased economic activity in the market and the rapid 42.2% growth achieved by the Bank in its lending activities during the one year period ended 31.03.2011 paved the way for generating a higher fee-based and commission income, which recorded a significant 45.6% YoY growth to Rs. 216.1 mn. in 1Q 2011. Nevertheless Exchange income recorded a negative 1.36% growth in 2011 largely due to the Rs. 36.9 mn. revaluation loss incurred in 2011 on FCBU’s retained profits as against the Rs. 26.0 mn. revaluation loss incurred in 2010. This was solely due to the appreciation of LKR against the US Dollar; from Rs 113.95 as at 31.03.2010 to Rs 110.40 as at 31.03.2011.
The Bank was successful in managing the net charge on loan losses in 2011. As a result of the Bank’s improving credit quality (as indicated by reducing NPL volumes and NPL Ratios, detailed elsewhere in this report), it was possible to reduce provisions made on specific loan losses to Rs. 153.2 mn. in 2011 (even with additional provisions totalling Rs.100.0 mn. included therein), as against Rs. 702.6 mn. made in 2010, which too was inclusive of additional provisions totalling to Rs. 517.4 mn. These additional specific loan loss provisions were made in line with the Bank’s policy of making such provisions against identified NPLs, ignoring the collateral held, aimed at improving Bank’s provision cover. As the Bank achieved an 88.9% Provision Coverage Ratio as at 31.12.2010, the need for such additional provisions was naturally low in 2011.
In addition, based on higher credit growth during the period, a further sum of Rs. 101 mn. was provided as Regulatory General Provisions on loan losses in 2011, the effect of which was however reduced by Rs. 90.4 mn., o/a of a reversal of General Provisions, resulting from the applicable rate being reduced from 0.9% to 0.8% in 1Q 2011.
On the other hand the Bank was successful in making recoveries against NPLs. Consequently it was possible to reverse previous loan loss provisions made to the tune of Rs. 402.9 mn. in 2011, as against Rs. 424.5 mn. reversed in 2010, which figure however was boosted by a single recovery of Rs. 331.9 mn. made in 2010.
The Rs. 275.9 mn. impairment provision made in 2010 on account of the investment in ordinary shares of Union Bank Colombo as instructed by CBSL was reversed & taken to profits of 1Q 2011, since Union Bank shares are now being listed on the Colombo Stock Exchange and are being traded.
Despite the rapid growth recorded in the Bank’s fund based operation as reflected by the 22.2% and 42.2% growth rates achieved during the one year period ended 31.03.2011. in deposits and advances respectively, Bank’s Net Interest Income recorded a Rs. 139.0 mn. YoY drop to Rs.2, 060.5 mn. in 2011. This was mainly due to the return on interest earning assets dropping at a faster rate than the drop in cost of funds on deposits, shrinking the Net Interest Margin (NIM) from 5.59% in 1Q 2010 to 4.22% in 1Q 2011, consequent upon the significant changes that took place in the market’s interest rate structure. However the Bank is in the process of taking effective strategies, aimed at improving NIMs in future.
In addition, reduced Financial VAT tax rates (reduced from 20% to 12.0%) and Corporate Tax (reduced from 35% to 28%), too helped to improve Bank’s post tax profits in 2011.
Improved profits paved the way for most of the Bank’s key financial ratios to record significant improvements over the previous year. Prudent lending practices which included the centralized credit model introduced recently, effective post-sanctioning monitoring systems and intensified recovery efforts against existing NPLs resulted in reducing Bank’s NPLs both in absolute and percentage terms. NPL volumes net of IIS which stood at Rs 7,003 mn. as at 31.03.2010 was reduced to Rs 5,275.9 mn. (24.66%) as at 31.03.211. Similarly Bank’s NPL Ratio was reduced to 3.64% as at 31.03.2011, from 6.89% one year ago, as against the industry’s average NPL Ratio of 5.3% as at December 31, 2010. In addition to the improvement made in the Provision Cover referred to above, the Bank’s Net NPL / Equity Ratio (Open Credit Exposure Ratio) too was reduced to 6.87% as at 31.03.2011 from 20.84% as at 31.03.2010. Furthermore, almost all profit- based Ratios of the Bank such as ROA, ROE and EPS recorded significant improvements.
Sampath also remained as one of the well capitalized banks, with the Tier I Capital Adequacy Ratio at 9.51% and Total Capital Adequacy Ratio at 11.41% as at 31.03.2011, despite the higher 42.19% credit growth recorded during the one year period ended 31.03.2011.
Bank’s total deposit and total asset bases grew by 22.2% and 24.55% respectively during the one year period ended 31.03.2011. The growth rates in the two areas during the 1Q 2011 were 7.84 % and 9.37 % respectively. In addition, growth in customer advances were phenomenal, with advances volumes recording a significant 42.2% growth during the one year period ended 31.03.2011 and 13.3% in IQ 2011.
Taking in to account of the bank’s better performance in 2010, Bank paid a final dividend of Rs.6.60 per share in the form of scrip dividend in addition to the interim Rs. 3 per share scrip dividend already paid. Even after the two share-splits, which increased the number of shares by 120% in 2010, Sampath share is currently traded at around Rs 285 p.s. This price is well above the re-stated Rs. 103.78 net assets value per share after the share-splits. In terms of market capitalization, Sampath Bank’s ranking on the CSE has now improved to 14th position, as against the 15th position held on 31.12.2010.



Thanks

"Sampath Bank continued with the growth momentum in 2011` 1st quarter (1Q) by posting impressive results over the previous year. Sampath Bank’s pre-tax profit rose to Rs. 1,348.6 mn. in 1Q 2011, reflecting a 70.4% increase year on year (YoY). Bank’s post –tax profit recorded a 60.9 % YoY growth to Rs.898.8 mn. in 2011."

I think .. further expansion can be expected....

42BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Wed May 11, 2011 7:03 am

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Seylan aims greater expansion with Rights Issue

At an Extraordinary General Meeting held on May 9, Seylan Bank announced its launch of a Rights Issue through which it proposes to raise Rs. 4,691,533,285. All the proposed resolutions at the EGM were unanimously approved by the large number of shareholders present, thus endorsing their unwavering confidence in Seylan Bank’s future potential.

The Bank will offer 43,333,333 Ordinary Voting Shares to the registered holders of Ordinary Voting Shares in the ratio of one share for every three shares held in the Company at an issue price of Rs. 75/- per ordinary voting share.

It will parallely offer 41,186,666 Non Voting Shares to the registered holders of Ordinary Non Voting Shares in the ratio of one share for every three shares held in the Company at an issue price of Rs. 35/- per ordinary (non-voting) share.

Chairman of the Seylan Bank Eastman Narangoda said: “The objectives of the Rights Issue are primarily to increase the Tier 1 Capital of the Bank to have a strong capital base, and for mobilization of long term funds in a bid to fund the proposed increase in the long term lending portfolio of the Bank, especially the housing sector and also to facilitate the future expansion programme of the Bank”.

The Bank’s long term lending will also cover large scale investment projects along with agricultural, small and medium scale projects. Under a proposed expansion programme, Seylan Bank will also increase its branch network island-wide while parallely upgrading and refurbishing existing branches.

The Bank also looks forward to investing in advanced IT infrastructure to meet the demands of its expansion drive and to further add value to its customer service enhancement processes in order improve business efficiency as well and meet the envisaged future customer service requirements.

Seylan Bank’s General Manager / CEO Kapila Ariyaratne added, “With our new initiatives focused on productivity improvements, we will henceforth be able to run at a more optimal level of performance and thereby enjoy a further improvement in profitability. We’re looking to further introduce a series of strategic measures.

These include an investment in advanced technology, organizational restructuring and employee job enrichment and engagement processes by benchmarking international best practices from within and outside the country. There would also be further investment on continuous staff training and development”.

Seylan Bank recently posted an impressive Rs. 256.3 Mn profit in the first quarter of 2011 recording a sharp 38% increase compared with the Rs. 185.9 Mn in the corresponding period of the previous year.

The Bank’s pre-tax profit was Rs. 395 Mn, up by nearly 36% from the Rs. 291.7 Mn in the corresponding period of the previous year.

The Bank also recorded a net profit of Rs. 1.2 Bn for 2010 which was a 126% increase compared to Rs. 543 Mn for 2009. Pre-tax profit, at Rs. 1.9 Bn, was up by an impressive 124% from 2009, the highest ever profit figure earned by the Bank since its inception.

Riding high on this all-time high performance, Seylan is geared to further establish the much-envied position it commands as one of Sri Lanka’s top ranking brands.

“We have made great progress and I have no doubt that this latest initiative will facilitate our further maintaining that momentum and propel Seylan Bank forward to even greater levels of success”, Chairman Narangoda concluded.

43BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Wed May 11, 2011 7:56 am

Soundchips


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

seyon wrote:Hi Friends

This brief analysis is connected to my previous analysis (http://forum.srilankaequity.com/t2231-banking-sector-analysis-combhnbseybntbsambdfcchdfcndbpapc-and-mbsl) and this analysis in briefing the financials comparing with previous year and including main features (key balances and numbers) of the retail largest banks. I excluded the DFCC,NDB and HDFC , as their scope is mainly focus on development banking. Further I give certain measures ( KPI- Key Performance Indicators) to interpret the performance. I do not restrict with these KPI, if u have additional measures related to banking industry, Pls share with us..

This is good time to discuss about banking sectors, as expected to see the first quarter results with the new improvement due to tax saving and economic growth. Here we have veteran analyzers with different views, which would help us to have good investment decision and to sharing our knowledge and views.

Following are the my selected KPIs
* Interest Margin
* % of Other Income Out of Operating Profit Operational Cost to Income Ratio
* % Loan Loss Provision out of Total Non Performing Loan
* NPL Raito
* PER
* PBV
* Number of Employees (comment in terms of total assets)


This is My View……………….

When I do the analysis of banks (SEYB,NTB,SAMP,PABC) KPIs ,I took the indicators of COMB and HNB as industry norms ( I may be wrong) as these two banks are relatively strength in the banking industry and analyzed COMB and HNB by comparing each others.

1.SEYB…

Interest Margin – Line with industry

% of Other Income Out of Operating Profit- Very High, out of that 1Bn bad debt written back and recovered

Operational Cost to Income Ratio – Very high % comparing with other banks

% Loan Loss Provision out of Total Non Performing Loan – Comparably High

NPL Raito - Highest Ratio in the Banking Sectors ( this might be improved due to the recent restructured program taken place in the bank and Bank strategic target to reduce to 10% during the year.)

PER - Trading @ 15X which is slightly low comparing with other retails banks. This impact is due to the recent Rights issue

PBV- Very Low… This also may be due to the recent Rights issue

Number of Employees – Very High

2.NTB

Interest Margin – Line with industry

% of Other Income Out of Operating Profit- Very High, out of that 1.3Bn reported as fees and other income ( no details given) this may
be due to the unrealized gain on fair value adjustment.

Operational Cost to Income Ratio – Very high % amongst other banks

% Loan Loss Provision out of Total Non Performing Loan – Comparably High, However comparing with previous year good improvement.

NPL Raito – Good, line with industry…

PER - Trading @ 18x, Fairly trading @ Industry average

PBV - Line with Industry

Number of Employees - Comparably high

3.SAMP

Interest Margin – Line with industry

% of Other Income Out of Operating Profit- Slightly High, out of that Capital Gain on Sale of LBFL shares 654Mn , Bad Debt Recoveries
1.2Bn and Recovery of Impairment of Investment 1.3Bn. Hence Recovery of impairment and Capital gain are non recurring items amounts to Rs.2Bn.

Operational Cost to Income Ratio – Par with industry
% Loan Loss Provision out of Total Non Performing Loan – Very High reporting @ 12% due to the bank made additional specific credit
loss provisions of Rs. 1,344.9 Mn, over and above the amounts recommended by the Central Bank of Sri Lanka ignoring collateral values.

NPL Raito – Good, and Well managed

PER - Trading @ 14x, is Low comparing with other bank, However, taking out the non recurring income Rs.1.3Bn, then PE would be trading above the average.

PBV - Line with Industry

Number of Employees – Fairly ok. We could see there were new recruitment about 300 staff due to addition of 30 new branches during the year.

4.PABC

Interest Margin – Slightly high margin with other banks

% of Other Income Out of Operating Profit- Fairly Good

Operational Cost to Income Ratio – Par with industry

% Loan Loss Provision out of Total Non Performing Loan – Improved comparing with previous year. Par with the industry

NPL Raito – Above the industry average, however it is improved comparing with previous year.

PER - Trading @ 21x, is high comparing with other bank.

PBV - Line with Industry

Number of Employees – Comparably High..

5.HNB

Interest Margin – Par with industry

% of Other Income Out of Operating Profit- Comparing with COMB contribution is high, that is due to the capital gain of sales quoted investment amounts 600Mn

Operational Cost to Income Ratio – Reporting @76% comparing with COMB, ratio is high

% Loan Loss Provision out of Total Non Performing Loan – Well Maintained at very low level

NPL Raito – Reporting at 5% , Very lower level

PER - Trading @ 20x, is high comparing with other bank.

PBV - Line with Industry

Number of Employees – Little bit high compare to COMB employees with the total assets.


6.COMB

Interest Margin – Par with industry

% of Other Income Out of Operating Profit- Reporting at 33%, Lowest contribution to operational profit.

Operational Cost to Income Ratio – Reporting @ 61% very lowest amongst the banks.

% Loan Loss Provision out of Total Non Performing Loan – Well Maintained at very low level

NPL Raito – Reporting at 7% , a little bit higher compare to HNB

PER - Trading @ 19x

PBV - Line with Industry

Ok, there can be some differ view on the interpretation and comparison of KPI or additional measures to be brought to have good analysis.

So Pls share ur thoughts and views on the KPI or If u have some additional / different measures to be adopted… Pls contribute that with the analysis

Thanks in advance

Find the attachment of Brief Analysis of Banking Sector

Thanks for the analysis..









44BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Wed May 11, 2011 12:29 pm

Aamiable


Vice President - Equity Analytics
Vice President - Equity Analytics

hybrid_OS wrote:
seyon wrote:
hybrid_OS wrote:
tubal wrote:I do appreciate Seyon's hard work. Well done.
buf if you ask me (and no one is asking me :-) ), unimaginative brokers are promoting the banking sector and most investors are falling hook line and sinker for it. When the interims start coming out, we will find that once you deduct the extra-ordinary items, eps growth is very ordinary.

You will also find that the central banks increase in the reserve ratio will have a negative impact on the banks bottom line.

Agree with tubal to some extent. Banking sectors has seen better days.
In my opinion Sampath is the most secure investment though you will not lose with others mentioned above.

Prudency in showing higher provisions for bad debts is not a negative sign. Actually, to the contrary it gives an investor more confidence.

Profits will be marginal though. Cannot expect anything exceptional.

Hi hybrid

For the SAMB don"t u think the opening of 30 branches during the year of 2010 will impact the cost income ratio negatively in coming quarters. Then this impact would hit the bottom line...

How do u look into this...



Seyon, you have already answered your own question subsequently.
My opinion...

If I think like a big investor, where can I invest my millions without blinking an eye?
Are there any other options available?
A big investor will want to improve his ROI with a reputable, progressive and a company that has big plans for the future.

Sampath bank has that in their vision. They are not going to sit back and let HNB, COMB, SEYB,BOC get their share of the banking business.
They must have good LTP's for the next 5-10 years. Yes it may hit the bottom line hard, but the major investors are informed and they are on board.

What if Sampath just waits? It's like offering the new business / customers on a platter to the rest of the big banks! Like Gambir said:Quote: we are here not just to participate in the game. We are here to win" Unquote.


So I prefer if Sampath does something with my money that I cannot do and they are best geared to do. May I have good ROI in the years to come.

Go long term with Sampath.









I also think SAMP is a dependable, medium to long term stock..all the other banks COMB, DFCC, NTB..

45BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Fri Jul 15, 2011 10:14 am

Rookantha Rajapakse

Rookantha Rajapakse
Stock Analytic
Stock Analytic

Hey people so what is your opinion...best bank in Sri Lanka invest for and best bank in Sri Lanka work for? what is the best for employees?

could you please come back to me?

46BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Fri Jul 15, 2011 12:31 pm

Aamiable


Vice President - Equity Analytics
Vice President - Equity Analytics

HNB.X JKH is also green and heavily traded. COMB is green

47BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Sun Aug 14, 2011 10:02 pm

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics

Friends if you can have at least 3 year investment plan study about the banking sector, where you can find good shares

48BANKING SECTOR - Page 2 Empty who will buy seylan bank... DFCC or NDB ? Fri Jun 19, 2015 12:57 pm

dumifer

dumifer
Senior Equity Analytic
Senior Equity Analytic

http://www.randora.lk/index.php/lead-article/item/3962-%E0%B6%B4%E0%B7%91%E0%B6%B1%E0%B7%8A-%E0%B6%92%E0%B7%82%E0%B7%93%E0%B6%BA%E0%B7%8F-%E0%B7%83%E0%B7%99%E0%B6%BD%E0%B7%8F%E0%B6%B1%E0%B7%8A-%E0%B6%89%E0%B6%BB%E0%B6%AB%E0%B6%B8-%E0%B7%80%E0%B7%92%E0%B7%83%E0%B6%AF%E0%B7%99%E0%B6%B1-%E0%B6%AF%E0%B7%92%E0%B6%B1%E0%B6%BA-%E0%B6%85%E0%B6%AD-%E0%B7%85%E0%B6%9F%E0%B6%BA%E0%B7%92


read the above link and guess..........................................

49BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Fri Jun 19, 2015 1:10 pm

dumifer

dumifer
Senior Equity Analytic
Senior Equity Analytic

for me it is NDB

50BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Fri Jun 19, 2015 4:32 pm

Nuwan Prasad


Manager - Equity Analytics
Manager - Equity Analytics

http://www.economynext.com/An_NDB_Bank,_Seylan_merger_could_create_Sri_Lanka_s_third_largest_private_bank-3-2098-17.html

51BANKING SECTOR - Page 2 Empty Most affected Banking share Wed Nov 25, 2015 10:12 am

troy

troy
Moderator
Moderator

What is the most affected banking sector share?
In my opinion its NTB. Why I say so?

They have a staggering 25% of leasing out of loans to customers...

52BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Wed Nov 25, 2015 12:07 pm

capitallinkceylon


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Hands down its NTB, what makes it worse is that they don't have fully owned finance subsidiary under them.

UBC-Ub Finance
SAMP-siyapatha
Commercial-Indra finance
Hnb-prime grameen

53BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Wed Nov 25, 2015 12:12 pm

troy

troy
Moderator
Moderator

So Rs. 60 a good price to collect NTB by mid December or will the situation drag it further down?

54BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Wed Nov 25, 2015 12:42 pm

capitallinkceylon


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

I think from 80 it's good to collect, I don't think it will go down beyond 70.

55BANKING SECTOR - Page 2 Empty Re: BANKING SECTOR Wed Nov 25, 2015 2:22 pm

troy

troy
Moderator
Moderator

Banking sector the worst hit by Budget 2016: Analysts

Sri Lanka’s banking and finance sector seems to be the worst hit from the 2016 fiscal budget with an estimated total impact of a whopping Rs. 7 billion as a result of the proposed increase in taxes, analysts at Bartleet Religare Securities (BRS) said today. Sri Lanka’s Budget 2016 presented to Parliament on Friday had proposed to increase corporate taxes from 28% to 30%, increase Value Added Tax (VAT) on financial services from 12.0% to 12.5% and raise Nation Building Tax by an additional 2%.
“Our estimations suggest an incremental impact of approximately LKR 7bn from the proposed change in taxes for the banking sector. Our calculation is based on published statistics for the Banking industry for nine months 2015 released by the Central Bank of Sri Lanka,” BRS said in a Budget Review released today.
According to the breakdown of impact for the banking Industry for Financial Year 2015, the 2% increase in corporate tax would cost the sector an estimated Rs. 3 billion, the 0.50% increase in VAT would cost Rs. 1 billion while the proposed 2% increase in Nation Building Tax would have an impact of Rs. 3 billion.
Analysts said that their estimations indicate a Return on Equity hit of 110 basis points (1.1%) for the industry for Financial Year 2015.
Meanwhile, the budget also proposed banks should cease engaging in leasing business from 01 June 2016.
“We believe this proposal would be a serious challenge not only to banks, but to the consumer as well. Leasing; motor leasing in particular is preferred way to drive loan book growth, due to (1) attractive yields (2) asset backed (3) active second hand market (4) good asset quality as domestic banks refrain providing facilities to the subprime market. We believe almost all banks would see a serious volume impact from this policy decision, as the sector’s median exposure to leasing stood at 8% by end September 2015. NTB, in particular would need a change in strategic direction, as the bank’s loan book concentration to leasing is as high as 24%,” analysts said commenting on the proposals.
They noted that finance companies would be the clear winners/beneficiaries of this proposal growing in both volumes and margins although from a consumer’s point of view, this will restrict access to low leasing advance rates, as banks generally quote low rates due to their access to low cost funds.
The budget has also directed to establish an Export Import Bank (EXIM Bank) to facilitate international trade business. Towards this exercise, the Government plans to inject an initial capital of Rs 25bn, subscribed jointly by the government and the industry expected to be operational from 01 April 2015 and listed in the Colombo Stock Exchange.
“We welcome this much needed proposal as means of focused attention to improve international trade in the Country. While SL is a late entrant to EXIM banking space, the neighboring India established an EXIM bank 23 years ago and is now the apex body in India for coordinating working of institutions engaged in financing exports and finance.
In our view, the proposed EXIM bank might cannibalize the loan growth of the LCB loan book growth into the trade sector in the short run. However in the long run, we expect them to enjoy a higher ROE by deploying funds to focused areas like MSME (Micro and Small and Medium Enterprises),” analysts said.
Meanwhile, the Budget has also proposed banks to expand their existing branch network by 15% by opening branches in under-banked areas in the country and stipulated that these branches will have to employ at least 6 employees per branch.
“We believe this proposal forces banks for sub optimal growth, as most of the banks have currently paced down expansion activities that started in 2009 post war period and currently are consolidating their position in the industry,” the review noted.
Among other proposals related to the banking sector include the restrictions on cash withdrawals (cash withdrawals above Rs. 1 million will be taxed at 2% withdrawals above Rs.10 million will be taxed at 3%), introduction of new exposure limits on bank lending, encouraging industry consolidation, welcoming overseas expansion, establishment of a Colombo International Financial Centre (CIFC), introduction of a minimum dividend payout for listed entities of 15% of the distributable profits, establishment of Financial Institution Restructuring Agency and the imposition of a cap on interest rates offered by finance companies.

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