Re: SAMP.N0000 (Sampath Bank PLC)

[pjrngroup]

I am buying too. Current price looks reasonable.

[sereneTop contributor]

Coming week or two very crucial for SAMP.

[NIRMALSG]

Sampath Bank talking to investors to allot unsubscribed Rights

Sampath Bank is talking to potential investors to place the unsubscribed component of its Rs. 12.1 billion Rights Issue.

The Rights Issue involved 89 million shares on the basis of seven new shares for 23 existing shares at Rs. 136 each.

Sampath Bank said the number of shares allotted to shareholders and to be listed pursuant to the Rights Issue is 63.538 million shares, suggesting that 25.46 million shares worth Rs. 3.4 billion remain unsubscribed.

“The Board of Directors are discussing with a potential investor to place the balance undersubscribed shares of Rights Issue and will make a further disclosure regarding the process,” the Bank said in a filing to the CSE.

“Such allocations will be made after allocating Rights to shareholders who applied for entitled and additional shares in full satisfaction of their request and at the same price (Rs. 136) per share,” it added.

The Bank also said that it has not been able to allot the full entitlement of shares that certain large shareholders would have been entitled to under the Rights Issue, since the thresholds mandated by the Banking Act would have been exceeded by such full allocation, purely because of the under-subscription. The Board of Directors has therefore decided to inform such shareholders in writing that the Bank will retain the subscription funds sent with their application for Rights Shares, and if the Rights issue is not fully subscribed within a reasonable time frame, the Bank will refund the excess funds due to such shareholders, in accordance with the provisions of the CSE.

Funds raised from the Rights Issue will be utilised to improve Common Equity Tier 1 capital of the Bank under the Basel III regulations. Between January and March 2019 Sampath Bank shares traded between a high of Rs. 245 and 224 and the lowest ranged between Rs. 217.30 and Rs. 174.50. It closed March at Rs. 174.50, down from Rs. 239.10 by end January. On Friday the share closed at Rs. 138.50.

[pathfinderTop contributor]

Three rights in a row killed investor sentiment in a big time.If they correctly priced and timed those rights, results wouldn't be such bad.Management should take the responsibility.

Finding a investor in such a bad economic environment isn't easy. NDB had that issue.
Hope someone can rescue SAMP at this time.

[harieshaTop contributor]

Three rights in a row killed investor sentiment in a big time.If they correctly priced and timed those rights, results wouldn't be such bad.Management should take the responsibility.

Finding a investor in such a bad economic environment isn't easy. NDB had that issue.
Hope someone can rescue SAMP at this time.

Paths concern is understandable.

Agree with the 2nd point. But not with the 1st.

1. They are on a target. Some thing like Jack Welch's determinations. Why do exist if cannot become number One or Two in the industry. They came bit easily so far in terms of raising capital and even the shareholders doesn't loose. But last one became the real challenge. Many are thinking, if they had a reasonable gap before calling the last one. But considering the April 21st incident, if they had delayed it, I think it would have been a much bigger failure. Looking at their announcement it seems most of their major shareholders have subscribed and they cannot take up the full entitlement and any additionals due to regulatory limits. Bank needs to find some investors for about 18m shares (Balance is existing shareholder's entitlement).

2. Rather than NDB (less than half the size of SAMP), SAMP might fit into a fund that is looking for a high growth company (There are few such funds still operating in Sri Lanka. ie: The funds that took stakes in AAIC and most recently in PAP). There can be Asian investors also. I am expecting that they will find some party shortly.

But in the current market conditions do not expect share price to be move fast.

[puliyanamTop contributor]

A general comment about banking sector. The ROE in Q1 2019 has dropped over 40% compared to 2018 Q1. It is a general indication of economy too, but from a fundamental point of view its alarming. If you are in for long term, carefully assess the numbers...

[harieshaTop contributor]

Would like to add to this as it can be misleading. Of cause sluggish economy had some weight in this, but its not the main reason.

In simple terms,

ROE = Net Income / Common Equity    

So, ROE may drop if,

  1. Net Income goes down
or,
  2. When Equity increases

For the last FY our banking sector ROE went down mainly because of the 2nd reason. They have to raise equity to comply with regulatory requirements and for aggressive growth attempts.

If ROE reduced only because of first reason, investors should worry. But if it's because of second reason, long term investors should be happy.

Of cause banking sector is going through a difficult period. But well capitalized entities will leap ahead the rest.

A general comment about banking sector. The ROE in Q1 2019 has dropped over 40% compared to 2018 Q1. It is a general indication of economy too, but from a fundamental point of view its alarming. If you are in for long term, carefully assess the numbers...

[Ethical TraderTop contributor]

Logical explanation. Thanks.

Would like to add to this as it can be misleading. Of cause sluggish economy had some weight in this, but its not the main reason.

In simple terms,

ROE = Net Income / Common Equity    

So, ROE may drop if,

  1. Net Income goes down
or,
  2. When Equity increases

For the last FY our banking sector ROE went down mainly because of the 2nd reason. They have to raise equity to comply with regulatory requirements and for aggressive growth attempts.

If ROE reduced only because of first reason, investors should worry. But if it's because of second reason, long term investors should be happy.

Of cause banking sector is going through a difficult period. But well capitalized entities will leap ahead the rest.

A general comment about banking sector. The ROE in Q1 2019 has dropped over 40% compared to 2018 Q1. It is a general indication of economy too, but from a fundamental point of view its alarming. If you are in for long term, carefully assess the numbers...

[sereneTop contributor]

Thanls Puli and Hariesha.

[puliyanamTop contributor]

@Hariesha

Do me a favour. Check and let me know the Q1 Net profits of all commercial banks in 2018 and 2019. and the increase or decrease. Then we can assess if it is only due to increase in equity

Would like to add to this as it can be misleading. Of cause sluggish economy had some weight in this, but its not the main reason.

In simple terms,

ROE = Net Income / Common Equity    

So, ROE may drop if,

  1. Net Income goes down
or,
  2. When Equity increases

For the last FY our banking sector ROE went down mainly because of the 2nd reason. They have to raise equity to comply with regulatory requirements and for aggressive growth attempts.

If ROE reduced only because of first reason, investors should worry. But if it's because of second reason, long term investors should be happy.

Of cause banking sector is going through a difficult period. But well capitalized entities will leap ahead the rest.

A general comment about banking sector. The ROE in Q1 2019 has dropped over 40% compared to 2018 Q1. It is a general indication of economy too, but from a fundamental point of view its alarming. If you are in for long term, carefully assess the numbers...

[harieshaTop contributor]

Since this thread is on SAMP, I will analyze SAMP to demonstrate.

                       
PBT  (2019)         19,121,365  (000') 
PBT  (2018)         17,510,228  (000')
Equity  (2019)     90,050,654  (000')
Equity  (2018)     68,908,450  (000')
ROE (2019)                   21%      
ROE (2018)                25.4%

@ PULI, read my previous comment again. I never said it's only reason. There are more...

1. Increased Equity
2. Increased Taxes
3. Applying a new accounting method which prompted high bad debt provisions
4. Difficult economic conditions

If you go through the results thoroughly you may realize that (4) is the least contributed factor. But current year it will be different.

[yellow knifeTop contributor]

Agree with you Hariesha. the last sentence is the most important.

But current year it will be different.

[harieshaTop contributor]

A very confidence boosting good news from SAMP.

As predicted bank has found the investors for the shares that remain unsubscribed.
Now its 100% subscribed and a success.

This is the difference when you are outperforming others. Even in very difficult conditions SAMP had investor confidence.

[You must be registered and logged in to see this link.]

Three rights in a row killed investor sentiment in a big time.If they correctly priced and timed those rights, results wouldn't be such bad.Management should take the responsibility.

Finding a investor in such a bad economic environment isn't easy. NDB had that issue.
Hope someone can rescue SAMP at this time.

Paths concern is understandable.

Agree with the 2nd point. But not with the 1st.

1. They are on a target. Some thing like Jack Welch's determinations. Why do exist if cannot become number One or Two in the industry. They came bit easily so far in terms of raising capital and even the shareholders doesn't loose. But last one became the real challenge. Many are thinking, if they had a reasonable gap before calling the last one. But considering the April 21st incident, if they had delayed it, I think it would have been a much bigger failure. Looking at their announcement it seems most of their major shareholders have subscribed and they cannot take up the full entitlement and any additionals due to regulatory limits. Bank needs to find some investors for about 18m shares (Balance is existing shareholder's entitlement).

2. Rather than NDB (less than half the size of SAMP), SAMP might fit into a fund that is looking for a high growth company (There are few such funds still operating in Sri Lanka. ie: The funds that took stakes in AAIC and most recently in PAP). There can be Asian investors also. I am expecting that they will find some party shortly.

But in the current market conditions do not expect share price to be move fast.

[sereneTop contributor]

A very confidence boosting good news from SAMP.

As predicted bank has found the investors for the shares that remain unsubscribed.
Now its 100% subscribed and a success.

This is the difference when you are outperforming others. Even in very difficult conditions SAMP had investor confidence.

[You must be registered and logged in to see this link.]

Three rights in a row killed investor sentiment in a big time.If they correctly priced and timed those rights, results wouldn't be such bad.Management should take the responsibility.

Finding a investor in such a bad economic environment isn't easy. NDB had that issue.
Hope someone can rescue SAMP at this time.

Paths concern is understandable.

Agree with the 2nd point. But not with the 1st.

1. They are on a target. Some thing like Jack Welch's determinations. Why do exist if cannot become number One or Two in the industry. They came bit easily so far in terms of raising capital and even the shareholders doesn't loose. But last one became the real challenge. Many are thinking, if they had a reasonable gap before calling the last one. But considering the April 21st incident, if they had delayed it, I think it would have been a much bigger failure. Looking at their announcement it seems most of their major shareholders have subscribed and they cannot take up the full entitlement and any additionals due to regulatory limits. Bank needs to find some investors for about 18m shares (Balance is existing shareholder's entitlement).

2. Rather than NDB (less than half the size of SAMP), SAMP might fit into a fund that is looking for a high growth company (There are few such funds still operating in Sri Lanka. ie: The funds that took stakes in AAIC and most recently in PAP). There can be Asian investors also. I am expecting that they will find some party shortly.

But in the current market conditions do not expect share price to be move fast.

Yap. Always Sampath with Share Holders side (High Dividends, Issuing SH identification Card etc.. ) except this Rights thing.
Will see this Zero cost funds will be able to pay back us in the future.

[puliyanamTop contributor]

[quote="hariesha"]Would like to add to this as it can be misleading. Of cause sluggish economy had some weight in this, but its not the main reason.

In simple terms,

ROE = Net Income / Common Equity    

So, ROE may drop if,

  1. Net Income goes down
or,
  2. When Equity increases

For the last FY our banking sector ROE went down mainly because of the 2nd reason. They have to raise equity to comply with regulatory requirements and for aggressive growth attempts.

Your comment that ROE wend down "because 2nd reason" is not totally correct. I didn't mention anything about SAMP. But agree with you in the case of SAMP

[sereneTop contributor]

Super buying amidst foriegn selling.
If we think only from bank's perspective rights is one of  the best things happened to them during this turbulant and challenging environment.
They some how managed to successfully completed three rights issues whereas some other banks unable to successfully complet at least one RIs.Trrue testimony about the confidence put on Sampath bank by its SHs. Especially they disclose that they unable to accept some of the rights subscribes due to restrain of maximum share holding of certain SHs.
We have to calculate the real effect of these zero cost funds on P&L which attracted through the rights.

True this year would be the most challenging and too early to make an opinion about the economic growth effect on banks.

However the plus point for Sampath is its share price had been plummeted by the Third Rights  to the price lower than the pruce which  its performance and economic condition would have taken down.

Hope the confidence put upon by Share Holders for rights would reflect in Share Price also.
Would be good times for Sampath as well as CSE as whole.
DISCLOSURE : Holding

[කිත්සිරි ද සිල්වාTop contributor]

I know nothing about technical stuff, so I will not go there.
But to say the least, I am disappointed with SAMP.
Their product range is inferior to what other entities offer.
No special treatment for Share Holders even, despite being issued Special Identity cards for them.
Even some of the guys' man branches have never heard or seen such cards.
Dropping from 350 to 135 is partly because of their poor management decisions, I believe.
But I am still holding on to it only because it was one of the first shares I bought, a long time ago.

[sereneTop contributor]

Kith according to you what is the best bank who look after their SH's?
What is the best bank who offers superior products?

To me apart from this Rights, SAMP gives good dividends 2017 Rs.12 / 2018 Rs.15 / 2019 Rs.16.

Atleast they give us a card eventhough real benefits yet to be seen.Indication that they do care SH's.

SAMP is at the fore-front when it comes to innovation.
They have active middle management compare to other Major banks who can get the Business through relationships.

But I accept Rights is Disaster for Small SHs and time to redeem.

[කිත්සිරි ද සිල්වාTop contributor]

For me, Commercial is far better.
Mear mentioning that we hold shares in this bank, they offered my wife & I better service and products.
Not at SAMP, even after waving my card in front of the guy's nose, so to say.

Kith according to you what is the best bank who look after their SH's?
What is the best bank who offers superior products?

To me apart from this Rights, SAMP gives good dividends 2017 Rs.12 / 2018 Rs.15 / 2019 Rs.16.

Atleast they give us a card eventhough real benefits yet to be seen.Indication that they do care SH's.

SAMP is at the fore-front when it comes to innovation.
They have  active middle management compare to other Major banks who can get the Business through relationships.

But I accept Rights is Disaster for Small SHs and time to redeem.

[sereneTop contributor]

For me, Commercial is far better.
Mear mentioning that we hold shares in this bank, they offered my wife & I better service and products.
Not at SAMP, even after waving my card in front of the guy's nose, so to say.

Kith according to you what is the best bank who look after their SH's?
What is the best bank who offers superior products?

To me apart from this Rights, SAMP gives good dividends 2017 Rs.12 / 2018 Rs.15 / 2019 Rs.16.

Atleast they give us a card eventhough real benefits yet to be seen.Indication that they do care SH's.

SAMP is at the fore-front when it comes to innovation.
They have  active middle management compare to other Major banks who can get the Business through relationships.

But I accept Rights is Disaster for Small SHs and time to redeem.

Hmmm.. No matter what, the superior products which are at Company's disposal and the standards they want to maintain, all depends on the culture and the standards maintains by the Manager and the Staff of particular Branch.

In my experience COMB is specific about their client base and they provide superior service to their main clients. But the service offered for small clients are not that good. And the lending rate of COMB is better than that of other private banks.

[pjrngroup]

It is good to know they managed to fully  subscribe the third right issue.

I do have accounts with both Sampath and Commercial.

In terms of innovative products, Sampath is advanced like opening of FD through online.

but Commercial bank too have that facility now.

In terms of customer service, Sampath was giving better customer service than Commercial. but Sampath bank's customer base increased, but same amount of staff. so the customer service quality dropped down.

Same case happened to commercial bank when they increased the branch network and customers around 7/8 years ago. Commercial realized thier customer service lackings and now they are trying to focus on customer service .

Sampath bank opened so many branched island wide and increased customer base. now time for them to increase the staff and focus on Customer Service.

I do my complaints directly to branch manager, and get it corrected via Whatsup message. i have not visited the branch for last 7 months.

[pathfinderTop contributor]

Full subscription of rights  is a good news for SAMP.

@Serene-Looks like you are in an eternal love with SAMP. Such a love isn't advised for a good investor/Trader

@pjrn-I also had similar experience with HNB few years ago.Now I see same sort of things happening in SAMP too.Management should think more on customer care.

Technically SAMP is trying to form a base around 140. Longterm investors can take positions now.
Traders may wait till a new identifiable positive trend begins.

[sereneTop contributor]

Full subscription of rights  is a good news for SAMP.

@Serene-Looks like you are in an eternal love with SAMP. Such a love isn't advised for a good investor/Trader

@pjrn-I also had similar experience with HNB few years ago.Now I see same sort of things happening in SAMP too.Management should think more on customer care.

Technically SAMP is trying to form a base around 140. Longterm investors can take positions now.
Traders may wait till a new identifiable positive trend begins.

Hitha giya thena maligawa kiyanawane.
No love below 137 mate...
Now Its up to SAMP to keep me or get rid of.
To be frank Im commited.

[කිත්සිරි ද සිල්වාTop contributor]

Who will not fully subscribe an offer given at half of the one-time trading price?

[sereneTop contributor]

Who will not fully subscribe an offer given at half of the one-time trading price?