The Investor Sentiment - Equity and investments forum for Sri Lankans
The Investor Sentiment - Equity and investments forum for Sri Lankans
Would you like to react to this message? Create an account in a few clicks or log in to continue.
Please send an email to contact.lankaninvestor@gmail.com if you face any technical difficulties when posting
Search
Display results as :
Advanced Search
Latest topics
ACL CablesWed Dec 30, 2020 7:22 pmsubash
Merry Christmas to AllTue Dec 29, 2020 4:53 pmchutiputha
Trading Journal Sat Dec 12, 2020 11:33 pmxmart
HVA FoodsFri Dec 04, 2020 10:25 amThe Invisible
Tokyo CementMon Nov 23, 2020 9:42 amRajapaksap
Insider Dealings Fri Nov 20, 2020 2:30 ampjrngroup
UML United MotorsTue Nov 10, 2020 8:50 amThe Invisible
ExpolankaMon Nov 09, 2020 8:46 pmsmallville
Plantation Sector UpdatesSat Nov 07, 2020 8:15 amRajapaksap
HAYC - HaycarbFri Nov 06, 2020 12:11 pmsubash
LWL.N0000 (Lanka Walltiles PLC)Fri Oct 16, 2020 12:50 amsubash
CSE Daylight Robbery !Mon Sep 21, 2020 9:54 pmYin-Yang
Disclaimer


Information posted in this forum are entirely of the respective members' personal views. The views posted on this open online forum of contributors do not constitute a recommendation buy or sell. The site nor the connected parties will be responsible for the posts posted on the forum and will take best possible action to remove any unlawful or inappropriate posts.
All rights to articles of value authored by members posted on the forum belong to the respective authors. Re-using without the consent of the authors is prohibited. Due credit with links to original source should be given when quoting content from the forum.
This is an educational portal and not one that gives recommendations. Please obtain investment advises from a Registered Investment Advisor through a stock broker

Go down
avatar
CSE.SAS
Posts : 263
Join date : 2014-02-23

FC Research - Sri Lanka Banking Sector Report - 15 06 2016 Empty FC Research - Sri Lanka Banking Sector Report - 15 06 2016

on Fri Jun 17, 2016 8:16 pm
Message reputation : 100% (3 votes)
SRI LANKA BANKING SECTOR

“Multiple Shocks Dampen Beat”

Detailed report could be accessed through the below link.

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

FC Research expects the banking sector to have a slow phase during 2016E-18E with slow GDP growth, tax attacks, sluggish credit growth and rising non-performing loans. Hence we expect our banking sector universe to provide 15% average return over 1-Year period slightly slower than the expected market return.

Slow GDP growth and Tax Attack: The current tight monetary policy and tax increase are unlikely to help the GDP growth numbers to improve. We expect 2Q & 3Q2016 GDP also to remain weak while growth is likely to pick up towards 4Q2016 amidst the rise in the construction led by Government starting off most of the stalled projects. VAT has been increased to 15% resulting in an incremental impact for the banking sector.

Credit growth to slow down to 16%: We expect private sector credit growth to slow down to 16% during 2016E gradually slowing down while 1H2016 continuing to remain on the high side. CBSL is comfortable with credit growth of 12%-15% in the sector. However, private sector credit growth shot up to 25% for 2015 amidst lose monetary stance.

NPLs to be on the rise in 2H2016 onwards: We expect Banking sector non-performing loans to increase with increase in the interest rate and weak economic condition: Non-performing loans and GDP always have a negative relationship. Downturn in the economy growth, real exchange rate appreciation and the rise in real interest rate contributes to increase in the Non-Performing loans.

Banking Sector on a HOLD with 15% avg. return over 1-Year Period: With Average sector return at 15%, current interest rates make valuations unattractive on expected return (Refer 5.1) despite comparatively cheap frontier market valuations. Banking Sector HOLD. We recommend a STRONG BUY on SAMP and NTB, BUY on COMB.X, HOLD on COMB.N, HNB.X, SEYB.N and SEYB.X. HNB.N and NDB are recommended as a SELL.
Back to top
Permissions in this forum:
You cannot reply to topics in this forum