Foreign Factor

Mar 11, 2013 (LBO) – Sri Lanka’s larger listed banks have improved margins as interest rates rose in 2012 helped by a bigger current and savings deposits base and foreign borrowings, an equities research report said. At Commercial Bank foreign borrowings as a share of total funding had risen to 3.0 percent from 2.3 percent, at HNB from 2.2 to 3.6 percent, at Sampath from 3.1 to 6.7 percent and at NDB from 3.3 to 7.5 percent. At DFCC it had fallen from 2.1 to 1.4 percent.

The report said the in December quarter, faced with the credit ceiling, most banks had concentrated on high yield clients to increase margins.

Sri Lanka banks p/e multiples

The report said Commercial, HNB and NTB had seen 18 percent loan growth, NDB and UBC 17 percent, DFCC 20 percent. Sampath had grown its loan book 24 percent with foreign borrowings and PABC had grown 24 percent with US dollar lending.

Most Sri Lankan banks were now trading at price to earnings multiples of less than 10 times profits, the report said.

Net interest margins at Hatton National Bank had grown from 4.7 in December 2011 to 4.9 percent b