Sector - Banks, Finance & Insurance

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Re: Sector - Banks, Finance & Insurance

Postby NC+ » Wed Jan 03, 2018 9:15 am

Banking sector update by First capital

https://www.firstcapital.lk/wp-content/ ... 2017-2.pdf
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Re: Sector - Banks, Finance & Insurance

Postby nuwandwo » Wed Jan 03, 2018 10:25 am

Thanks

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Re: Sector - Banks, Finance & Insurance

Postby SHARK » Sat Jan 06, 2018 11:02 pm

Overseas Companies are acting and holding themselves out as insurance brokers, when they are clearly not authorized to do so. These companies are not Registered Insurance and Re-Insurance Brokers in Sri Lanka, as required by the Regulation of Insurance Industry Act No. 43 of 2000, industry sources said.

The said companies are not located in Sri Lanka nor do they have the required license from the Insurance Regulatory Commission of Sri Lanka. All institutions seeking insurance broking services and covers should check their registration with the IRCSL and other regulatory bodies as required by law.

“It is illegal and contrary to the express provisions of the Regulation of Insurance Industry Act, No. 43 of 2000 to hold out and/or retain and/or entertain such companies as Brokers especially in matters of requiring insurance services and Procurement” a veteran in the industry inducted to the SLII “Hall of Fame”, a founder/secretary of SLIBA, Mr. Upali Wickremaretne said. He was a pioneer insurance broker in Sri Lanka and also an author of insurance regulations.

He also pointed out that any broker appointment made to such overseas Companies is made illegally and contrary to the express provisions of the Regulation and best practices of the Insurance Industry around the world.

Mr. Wickremaretne further stated that if an overseas broker is interested in operating in any country in areas such as reinsurance, they should establish a registered broking company adhering to the regulations and laws or work with a registered local broker that would offer the local expertise, and collaborate in their activity.

The Industry Association sources also showed extreme concern on why when there is such a strict regime for registered brokers such overseas companies including fly by nights operate here go unchecked, they said: ‘They could run away, and there is no accountability for persons who are not registered in the country, as required by law.’ These sources added, ‘We will do our utmost to protect the industry and the interests of the large number of insurance brokers mainly with a view to safeguard the insured and public interest at large’. Sri Lanka has a very large number of insurance brokers and some specialists offering world-class services and there is no requirement for the presence or engagement of overseas companies not registered with IRCSL.

Industry sources say that what is quite clearly against the law is untenable, and that any lax enforcement in this regard would be detrimental to the industry and have serious repercussions. They say this would open the floodgates for many industry standards to be flouted, leading to an unregulated industry, which will in turn leading to fraudulent practice, corruption and chaos.

The Insurance Regulatory Commission of Sri Lanka meanwhile states that names of all registered Insurance Brokers are published in the newspapers periodically as well as on their website. Since overseas companies including fly by night entities are not registered brokers in the country, their names are not being published in the requisite IBSL list.

Section 79 of the Regulation of the Insurance Industry Act, No. 43 of 2000 (as amended) provides that;

“No person shall act or hold itself out as an insurance broker unless such person is a holder of a certificate of registration as a broker granted by the Board and is a member of an Association of Insurance Brokers approved by the Board.”

Meanwhile the IRCSL makes clear that there are mandatory requirements including adequate capital to register as an Insurance Broker, and failure to furnish the required information and documents for registration as a broker results in refusal of registration.

They also note that companies, which fail to register, are prohibited from acting or holding themselves out as insurance brokers and the names of such companies will not be in the list of approved brokers.
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Re: Sector - Banks, Finance & Insurance

Postby SHARK » Sat Jan 06, 2018 11:05 pm

ECONOMYNEXT – Sri Lanka’s listed banks are expected to have a steady phase of growth during the 2018-20 period with net interest margins stabilising, stock brokers First Capital said in a research report.

It attributed the forecast to stable credit growth, improving economic growth supporting lower non performing loans and lower interest rate volatility leading to stable NIMs.

“We expect the banking sector interest spreads to stabilize in 2017E and thereon,” it said.

The trend would be backed by the implementation of an inflation targeting framework by the central bank, improved government revenue streams and increased foreign inflows into government securities market, First Capital said.

The introduction of a Liability Management Bill is expected to reduce volatility and stabilize the interest rate and rate of inflation while the flexible exchange rate policy further supports it.

Improved government revenue and increased foreign inflows are expected to stabilize interest rates, the report on the anking sector said.

“The stable interest rate regime is expected to result in more stabilized interest margins in the banking sector.”

(COLOMBO, January 05, 2018)
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Re: Sector - Banks, Finance & Insurance

Postby SHARK » Mon Jan 08, 2018 10:01 pm

ECONOMYNEXT – Sri Lankan banks are likely to significantly increase issuance of Basel III-compliant debentures in 2018 to meet higher capital requirement rules coming into force the next year, Fitch Ratings said.

Most banks will need to raise capital to meet higher Basel III requirements that take full effect in January 2019, and to support balance-sheet expansion, it said in a statement.

“Banks will also need to undertake significant Basel III Tier 2 issuance, as a result of the phasing out of legacy instruments - and ongoing redemptions.”

The full statement follows:

Fitch Ratings-Colombo/Singapore-08 January 2018: Sri Lankan banks are likely to significantly boost issuance of Basel III-compliant Tier 2 instruments in 2018, says Fitch Ratings. Most banks will need to raise capital to meet higher Basel III requirements that take full effect in January 2019, and to support balance-sheet expansion.

Banks will also need to undertake significant Basel III Tier 2 issuance, as a result of the phasing out of legacy instruments - and ongoing redemptions.


Around LKR119 billion in qualifying legacy Basel II Tier 2 instruments that are subject to a 20% discount per year were outstanding at end-3Q17.

Fitch has rated Basel III instruments of four Sri Lankan banks since the framework was introduced in July 2017.

Only Sampath Bank has so far undertaken public issuance in the domestic market. Our approach to rating Basel III instruments is to notch down from an issuer's anchor rating based on non-performance and loss severity risk, as per our global criteria.

The anchor rating is usually based on the bank's standalone strength, because in most cases sovereign support cannot be relied upon to extend to a bank's junior debt. We have followed this approach for Sampath Bank's Basel III-compliant Tier 2 issuance and in our expected ratings of proposed issuance by Seylan Bank and Nations Trust Bank.

That said, there is a case to factor extraordinary sovereign support into the anchor ratings of Basel III Tier 2 instruments for banks that have strong state linkages and are also systemically important, as the state is likely to have a strong interest in supporting the instruments of these banks before loss-absorption features are triggered.

The anchor rating for instruments of such banks is their support-driven IDR or support-driven National Long-Term Rating. We took this approach in our rating of Bank of Ceylon's proposed issuance.

Fitch does not generally apply any incremental notching to Basel III Tier 2 instruments for non-performance risk, which is judged to be broadly similar to that of senior debt. These instruments usually specify that losses are triggered only at a bank's point of non-viability, and do not include any going-concern loss absorption.

In Sri Lanka, the loss-absorption trigger point for Basel III Tier 2 instruments is defined as a decision by the Monetary Board that a write-down or public-sector support is necessary to avoid a bank becoming non-viable.

Loss-severity risk is higher for Basel III Tier 2 instruments than for senior debt. Our usual approach is therefore to rate the instrument one notch below the anchor rating in cases of below-average recoveries, and by two notches in the case of poor recoveries - such as when there is a significant risk of full contractual write-down.

In Sri Lanka, triggered instruments are required to absorb losses either through conversion to ordinary shares or a write-down mechanism.

We rated the Basel III Tier 2 issuance of Sampath Bank, Seylan Bank, Nations Trust Bank and Bank of Ceylon one notch below their respective anchor ratings to reflect below-average recovery prospects.
(COLOMBO, January 08, 2018)
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Re: Sector - Banks, Finance & Insurance

Postby SHARK » Tue Mar 20, 2018 10:11 pm

ECONOMYNEXT - Earnings of listed Sri Lanka companies grew 17.4 percent to 86 billion rupees in the December 2017 quarter from a year ago, driven by growth in banking, finance and insurance, CAL Research says.

Corporate earnings totaled 60.5 billion rupees in the previous quarter, down 1.4 percent from a year earlier.

Combined profits of listed banks, finance and insurance companies grew 62 percent in the December quarter, to 46.7 billion rupees, contributing 55 percent to total market earnings up from a 40 percent share a year earlier, CAL research said.

Diversified Holdings accounted for 13 percent of market earnings at 11 billion rupees followed by 11 percent from Beverages, Food and Tobacco sector earning of 9.4 billion rupees.

Plantations recorded the highest growth in earnings at 2,411 percent to 1 billion rupees, followed by Land and Property growing 308 percent to 6 billion rupees and IT earnings growing 262 percent to 7 million rupees.

The services sector saw earnings fall 238 percent to a 94 million loss while combined earnings of oil palm companies (100 million rupees) halved.

In the construction sector, earnings of Access Engineering (304 million rupees) and Lankem Developments (82 million rupees) offset losses of 386 million reported by MTD Walkers.

Hotels earnings fell 62 percent to 760 million rupees in the quarter which is part of the peak season. Healthcare earnings grew 13.4 percent to 895 percent while manufacturing fell 19 percent to 5 billion rupees.

Power and energy companies saw combined earnings fall 400 percent to a net loss of 224 million rupees.

Dialog and SLT reported combined earnings of 3.9 billion rupees, up 182 percent from a year ago.

AIA Insurance Lanka was the highest contributor to total market profits at 8.2 percent, followed by Ceylinco Insurance (5.7 percent), Commercial Bank (5.6 percent), John Keells Holdings (5.6 percent), HNB (5.4 percent) and Ceylon Tobacco (5.2 percent).

Troubled The Finance reported the highest net loss in the December 2017 quarter of 598 million rupees, compared with a 484 million loss a year earlier.

Trailing 12-month market (TTM) earnings grew 8.7 percent to 274 billion rupees with the banking, finance and insurance sector contributing 48 percent.

LOLC was the largest contributor to 12-month earnings at 6.2 percent, followed by Commercial Bank (6.1 percent), John Keells Holdings (6 percent) and HNB (5.8 percent).

"The CSE currently trades on a TTM price-to-earnings ratio of 9.9 times and a price-to-book value of 1.2 times," CAL Research said. (COLOMBO, March 20, 2018)
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Re: Sector - Banks, Finance & Insurance

Postby SHARK » Wed Apr 11, 2018 10:15 am

nbfi.png


selected companies. cdb,vfin and alli top picks. based on PER ..... there could be other factors determining future price appreciation.
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Re: Sector - Banks, Finance & Insurance

Postby PAT » Wed Apr 11, 2018 4:45 pm

Thanks Shark
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Re: Sector - Banks, Finance & Insurance

Postby eagle_trader » Wed Apr 11, 2018 5:57 pm

@shark

Great Work
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Re: Sector - Banks, Finance & Insurance

Postby SHARK » Tue May 01, 2018 2:10 pm

This is a sector i expect to perform moderately well than its current levels..... with USFED expected to hold its RATES .... can we see our key interest rate levels to see some dip lets say 25 to 50 basis points down....
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Re: Sector - Banks, Finance & Insurance

Postby Blue Whale » Tue May 15, 2018 5:59 pm

Your focus should be on insurance sector with high exposure to life business. You have seen the movement of CTCE & UAL. Similarly you will see the upgrade of HASU as well as AINS. Don't forget CINS as well, very soon you will see it trading above 2500 level with surprising results to come. I recommend all of these counters as a medium term investments at CMP. By about another 2 or 3 quarters all these stocks will have moved by 20% minimum.
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Re: Sector - Banks, Finance & Insurance

Postby Blue Whale » Tue May 22, 2018 9:54 am

Blue Whale wrote:Your focus should be on insurance sector with high exposure to life business. You have seen the movement of CTCE & UAL. Similarly you will see the upgrade of HASU as well as AINS. Don't forget CINS as well, very soon you will see it trading above 2500 level with surprising results to come. I recommend all of these counters as a medium term investments at CMP. By about another 2 or 3 quarters all these stocks will have moved by 20% minimum.


Just a quick recap after five days.

Life Insurance Stocks.jpg


ගන්නෝ දිනන්නෝ........ :-bd
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Re: Sector - Banks, Finance & Insurance

Postby dhanurrox » Tue May 22, 2018 10:48 am

ATLL????

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Re: Sector - Banks, Finance & Insurance

Postby Blue Whale » Fri May 25, 2018 7:19 am

This sector will be the star for 2018 with more contributions from insurance sector stocks.
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Re: Sector - Banks, Finance & Insurance

Postby stocks hunter » Fri May 25, 2018 7:33 am

Blue Whale wrote:
Blue Whale wrote:Your focus should be on insurance sector with high exposure to life business. You have seen the movement of CTCE & UAL. Similarly you will see the upgrade of HASU as well as AINS. Don't forget CINS as well, very soon you will see it trading above 2500 level with surprising results to come. I recommend all of these counters as a medium term investments at CMP. By about another 2 or 3 quarters all these stocks will have moved by 20% minimum.


Just a quick recap after five days.

Life Insurance Stocks.jpg

ගන්නෝ දිනන්නෝ........ :-bd


HASU should perform well in coming months for many reasons.

Tx BW for the chart.

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Tax hike to trim profits of Sri Lankan life insurers: Fitch

Postby NC+ » Wed Jun 06, 2018 7:28 am

ECONOMYNEXT – Higher taxes are likely to reduce profits of Sri Lankan life insurance companies, Fitch Ratings said in a new report on the sector.

Fitch said it expects changes in the Inland Revenue Act, which came into effect on 1 April 2018, to lower the net profits of life insurers.

Under the new law, surplus distributions to shareholders from policyholder funds and investment income of shareholder funds (less allowable expenses) are taxed at 28%.

Earlier, most of the life insurers paid lower taxes under the ‘investment income minus management fees’ method, which resulted in a lower tax base.

“In addition, distributions to participating life policyholders, which were not taxed previously, are now taxed at 14% and will be increased to 28% from 2021,,” Fitch Ratings said.

However, the rating agency said Sri Lankan insurers are likely to cope with extreme weather events whose increasing frequency has raised risks and industry growth will continue given low insurance penetration.

“Fitch Ratings expects the exposure of Sri Lanka’s non-life insurers to extreme weather-related events to be manageable due to extensive use of reinsurance,” the report said.
“However, reinsurers are seen to be reducing ceding commissions to reflect the increasing risk of catastrophes.”
Sri Lanka has seen a recurrence of extreme weather-related events – back-to-back floods in May 2018 and over the past two years, and a prolonged drought in several parts of the country.

Fitch Ratings said it believes these extreme weather events may raise long-term risks for insurers’ capital.

But Fitch expects the insurance sector to continue its growth momentum, driven primarily by the rising per capita income, growing awareness on insurance, and considerably lower insurance penetration supporting the growth potential.
(COLOMBO, June 06, 2018)

http://www.economynext.com/Tax_hike_to_ ... 27-17.html
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Re: Sector - Banks, Finance & Insurance

Postby SHARK » Mon Jul 23, 2018 9:21 am

Sri Lanka to slam price controls on micro-finance

ECONOMYNEXT - Sri Lanka is planning to bring law to control interest rates on micro-finance to 30 percent, the finance ministry said, raising concerns that the sector may die and unbankable poorer borrowers will only have illegal money lenders as the remaining alternative.

Finance Minister Mangala Samaraweera intends to bring a proposal to place a ceiling interest rate of micro-finance loans of 30-percent a year, when current rates range between 40 to 220 percent a year, a statement aid.

He had made the statement at a ceremony in Jaffna in the Northern Province.

Concern over micro-finance has risen after a large number of borrowers in former war torn in areas ended up in debt traps after taking too many loans.

Unlike in the rest of the island, many borrowers in the North and East have not been used to easy lending, including hire purchase schemes and had taken consumer loans without caution, economists who studied the problem has said.

Minister Mangala Samaraweera had said a recent drought had put many farming families in debt in 13 districts.

The finance ministry said a debt relief program will be implemented for borrowers of less than 100,000 rupees and a new law to regulate micro-finance institutions a price ceiling on 30 percent a year will be placed.

Micro finance however has relatively high administration and collection expenses, which require somewhat higher rates than large loans.

Unlike banks, which take assets as security, micro-finance is loaned without security, usually to people who cannot access the formal banking system.

A 30-percent rate is around the same rate charged by the formal banking system for their micro-loans, which are called credit card lending. But customers usually need a steady job with a salary to get a credit card.

Analysts say if the 30-percent rate is too low, many formal micro-finance businesses may stop lending, leaving only village money lenders (polee mudalali) who employ mafia-style tactics for recovering loans as the only available alternative.

Sri Lanka has high interest rates generally partly due to unsound money, with the central bank permanently depreciating the currency creating higher levels of inflation than the US Fed to which the rupee is loosely pegged. (Colombo/July22/2018)
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Re: Sector - Banks, Finance & Insurance

Postby solace » Mon Jul 23, 2018 6:08 pm

It's high time to regulate micro finance and educate poor people about the real consequences when they borrow from local money lenders.


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