domestic bank loans to private sector up 17.4%pdfs.island.lk/2010/12/04/b1.pdf · billion (us$5.4...

Saturday 04th December, 2010www.island.lk business@unl.upali.lk (T) 2497500 (F) 2497543

“One of the reasons that most people may perceive themselves

as being worse off even though averageGDP is increasing is because they are

indeed worse off.”- Joseph Stiglitz,Amartya Sen and Jean-Paul Fitoussi

(Mis-measuring Our Lives, 2010)

Trading was sluggish on the CSE yes-terday with the indices closing margin-ally in opposite directions and turnoverbarely topping Rs.1 billion, with 89 los-ers outpacing 59 gainers.

“It was a very quiet day with busi-ness volumes coming off JKH wherethere were two crossings at a price ofRs.301,” Prashan Fernando of AcuityStockbrokers said.

The All Share Price Index was up8.84 points (0.14%) while the Milankalost 3.47 points (0.05%) on a turnover ofRs.1.05 billion, down from the previousday’s Rs.3.3 billion.

JKH with over 0.6 million sharesdone between Rs.296 and Rs.301 was up30 cents to close at Rs.300.50 generatingthe day’s top turnover of Rs.191.5 mil-lion.

Touchwood followed with nearly 2.6million shares done between Rs.29 andRs.33 losing Rs.2.80 to close at Rs.30 con-tributing Rs.79 million to turnover.

Among the stocks that showed pricegains and some volume were GrainElevators (one million shares) up Rs.2.90to Rs.66, Tokyo X up Re.1 to Rs.35.50 onnearly 1.9 million shares and Three AcreFarms up Rs.7.10 to Rs.65.80 on nearly amillion shares.

Dialog and LOLC held previous clos-ing levels while SLT (0.4 million shares),Sampath (71,500 shares) and Ahungalle(0.1 million shares) were up slightly atclose of trading.

Dunamis Capital announced a onefor four rights issue at Rs.10 per share toraise Rs.240.6 million to repay debt andreduce gearing. The issue is subject toCSE and shareholder approval.

Sluggish dayon CSE,ASPIup marginally

In the first nine months ofthis year, the banking sectorexceeded the whole year’s tar-get for giving loans to smalland medium enterprises(SME) — but only thanks to anew definition ofSME loan,according to some bankers.

The bankers said the defi-nition included existing non-SME portfolios as SMEloans, helping raise dis-bursed funds to Taka 382.83billion (US$5.4 billion)against a target of Taka239.95 billion.

“If a trader borrows Taka100 million, it can be men-tioned as medium enterpriseloan because of the defini-tion,” said an official withthe SME credit departmentof a private bank.

He said many banks haveshown their loans up to Taka150 million as SME credit,which exaggerated the dis-bursed figure.

Bangladesh Bank datashows less than Taka 150 bil-lion was lent to the SMEs in2009.

The central bank rede-fined SMEs and loan limitslast year, and directed thebanks to give priority tosmall enterprises and womenentrepreneurs. The loanlimit for small entrepreneurswas set at Taka 50,000 to Taka5 million.

For the medium enterpris-es no limit has been men-tioned. The banks decide theamount for such entrepre-neurs on the basis of need.

“Disbursing Taka 382.83billion to the SMEs in ninemonths is absurd. If thisamount of money was lent tothe SMEs, there would be ahuge impact on the economyand employment,” said a sen-ior official of a private bank.

“How can there be such ademand without any new gas

and electricity connectionthis year?” he asked.

The banks have a finan-cial incentive to exaggeratethe SME loan figure.

“Provisioning and capitaladequacy demand is less forthe SME loans than for oth-ers,” said ShahjahanBhuiyan, managing directorof United Commercial Bank.

According to the bankers,if a bank keeps 125 per centprovisions against loan toan unrated borrower, itwould be 60 per cent for theSMEs.

The central bank gover-nor, Atiur Rahman, said theBangladesh Bank (BB) hasset the SMEdefinition in linewith the country’s industrialpolicy.

“We will strengthen moni-toring to check whether othersectors’ loans are included asSMEcredit to get advantage,”he told The Daily Star.

Although there are noexact figures, sector peoplesaid the estimated number ofSMEs in the country at400,000 to 500,000.

According to BangladeshEconomic Review 2009, theSMEs are the largest sectorin terms of employment gen-eration, even though they areabout 6 per cent of the coun-try’s US$100-billion economy.

Aftab ul Islam, chairmanof SME Foundation, said theSME sector now contributesup to 25 per cent of the coun-try’s GDP, about 40 per cent ofmanufacturing output, 80 percent of industrial jobs, andnearly 25 per cent of the totallabour force.

Currently, the bankscharge the SMEs interestrates between 14 per cent and20 per cent. The central bankwants the rates to come downto a single digit.

-ANN

Total credit to the private sec-tor increased by 15.5 percent toRs. 1.36 trillion year-on-year inSeptember with domestic banksincreasing their lending by 17.4percent to Rs.1.21 trillion andforeign banking units increasing

their lending 1.8 percent toRs.150.1 billion.

A year ago, total credit to theprivate sector had declined 5.3percent amounting to Rs. 1.17trillion, with domestic bankingsector loans decreasing by 4.4

percent to Rs. 1.03 trillion.Net credit to the government

increased by 6.8 percent toRs.693.1 billion. Credit frommonetary authorities increased43.1 percent to Rs. 100 billion,increased by 9.4 percent toRs.495.4 billion from the domes-tic banking sector and increased9.4 percent to Rs. 97.7 percentfrom foreign banking units.

Total credit to public corpo-rations increased by 48.6 percentto Rs.104.6 billion with the creditfrom the domestic banking sec-tor increasing by 14.4 percent toRs. 80.5 billion.

The average weighted primelending rate, applicable to highnet-worth individuals and corpo-rations, was 9.43 percent as atNovember 26, 194 basis pointslower than 11.37 percent a yearago.

The average weighted depositrate of the banking sector was6.43 percent, 333 basis pointslower than 9.76 percent a yearago.

The average weighted fixeddeposit rate was 8.48 percent, 457basis points lower than 13.05 per-cent a year ago.

The total number of activecredit cards amounted to 816,521as at end September down 2.85percent from 840,509 a year ago.Outstanding balances amountedto Rs. 29.12 billion down 7.16 per-cent from Rs. 31.3 billion a yearago.

Excess liquidity in the bank-ing system averaged Rs.126.33billion each day during the weekended November 26.

Singer (Sri Lanka) PLC(Singer), successfully completed adebt issue amounting to Rs. 1.4 bil-lion through a mix of an unse-cured subordinated redeemabledebenture issue of Rs. 1 billion andRs.400 million in the form of anunsecured loan. The transactionwhich concluded recently was fullysubscribed with the participationof a consortium of banks, agentsto the issue NDB Investment Banksaid in a statement.

“Incidentally, this debt raisingis the single largest debt issue bySinger up to now in its 133 yearold history in Sri Lanka. Thedebenture issue was assigned aNational Long-term rating of ‘A-(lka)’ with a ‘Stable outlook’ byFitch Ratings Lanka Limited. Theproceeds from the issue would beused to refinance its existingshort term debt,” the investmentbank said.

NDB Investment Bank Limited(NDBIB), acted as the structuringand placement agent to the issueand Deutsche Bank AG, ColomboBranch was the Trustee.

NDBIB recently concluded thelargest securitisation to date inthe leasing sector, by securitisinga lease and hire purchase portfo-

lio of People’s Leasing CompanyLimited, amounting to Rs.1.4 bil-lion.

“NDBIB, who has been instru-mental in introducing innovativefinancial products to the SriLankan Capital Market, intends tointroduce a range of more novelproducts in the near future,” theinvestment bank said.

In addition to arranging debtfinancing for Singer, NDBIB iscurrently working with it’s sub-sidiary company, Singer Finance(Lanka) Limited to raise equityfinancing and obtain a listing onthe Colombo Stock Exchange viaan Initial Public Offering.

Singer Finance (Lanka) Ltd(SFLL) is offering a 25 percentstake to the public through an ini-tial public offering of little over26.6 million shares to raise Rs. 400million to finance the company’score business activities and fulfila regulatory requirement requir-ing authorised financial compa-nies to go public as the CentralBank attempts to strengthen thesector further.

The IPO opens on December 15and would close on January 4 if itis not oversubscribed by then.Employees of SLFF have been

allocated 10 percent of the shares.Singer (Sri Lanka) PLC is 86

percent-owned by Singer Asia,which in turn is 56.8 percent-owned by Retail Holdings N.V.

Singer has been in Sri Lankasince 1877, when the first Singersewing machines went on sale at aColombo store. Today, Singer is alarge, diversified company withunmatched presence throughoutSri Lanka. It remains a member ofthe worldwide franchise of Singer.

The Singer group’s primaryactivities are Retailing, Financingand Manufacturing of ConsumerDurables. The business segmentsinclude Sewing Products,Electronics, White Goods,Furniture, Agro Products,Kitchen Appliances, Computersand Communication Products.

The Board of Directors ofSinger comprises Messrs H.D.S.Amarasuriya (Non ExecutiveChairman), H.A. Pieris (ChiefExecutive Officer / ManagingDirector), Dr. G.C.B. Wijeyesinghe,Dr. Saman Kelegama, DeshabanduAjit Jayaratne, P.J. O’Donnell(Alternate M.P.A. Salgado), T.Brown (Alternate V.G.K.Vidyaratne) and G.J. Walker(Alternate M.H. Wijewardene).

KUALA LUMPUR,Malaysia (AP) — Oil priceshovered near $88 a barrelFriday in Asia, with lossestempered by hopes of stronggrowth in demand for crudeand Europe’s progress in con-taining its debt crisis.

Benchmark oil forJanuary delivery was down35 cents to $87.60 a barrel atlate afternoon Kuala Lumpurtime in electronic trading onthe New York MercantileExchange. The contract rose$1.25 to settle at $88 a barrelon Thursday, just shy of the2010 high of $88.29.

Signs the U.S. economy isgaining strength havespurred a rally on Wall Streetthis week, and that in turndrove oil prices up. U.S. man-ufacturing activity, retailsales and the housing marketall improved. And while moreAmericans applied for unem-ployment benefits last week,the average over the pastmonth fell to a two-year low.

Strong manufacturingdata from China, a majorcrude importer, also liftedsentiment and turned atten-tion away from Europeandebt problems to the underly-ing strength of global oildemand, Barclays Capitalsaid in a report.

“The momentum in globaleconomic growth remainsstrong,” it said. “Overall, thelatest U.S. data remain con-sistent with our view of con-

tinued steady demandincreases ahead.”

Europe’s progress on con-taining its debt crisis addedto the optimism. TheEuropean Central Bankcalmed markets after sayingit would extend the availabili-ty of emergency loans andoffer credit at a super-lowrate through the first half ofnext year.

The European Unionagreed on bailout loans forIreland last weekend, the sec-ond country after Greece fol-lowing soaring budgetdeficits. There are fearsPortugal and Spain may haveto follow suit.

Analysts said the crudemarket will take cues frommonthly U.S. unemploymentfigures later Friday.

Ritterbusch andAssociates foresaw rosyprospects for crude. It pre-dicted prices could driftbefore hitting $90.50 a barrelin the near term. GoldmanSachs was even more san-guine, forecasting crudeprices to hit an average $100 abarrel in 2011 and $110 in2012.

In other Nymex trading inJanuary contracts, heatingoil fell 1 cent to $2.45 a gallonwhile gasoline shed 1 cent to$2.35. Natural gas fell 1.1 centto $4.33 per 1,000 cubic feet

In London, Brent crudefell 18 cents to $90.51 a barrelon the ICE futures exchange.

NDB Investment Bank structuresRs.1.4bn debt issue for Singer

Bangladesh banks cash inon SME loan definition

Actual disbursements exaggerated

Oil hovers near $88 in Asiaamid economic optimism

By Ifham NizamOn the instructions of Power and

Energy Minister Patali ChampikaRanawaka, all government and nongovernmental institutions willembark on an ambitious programmeto ‘save energy’.

In this regard, brochures andbooklets have been circulated by theCeylon Electricity Board.

Minister Ranawaka said thatmore than 50 per cent of electricityis generated through thermal powerand the cost per day is Rs. 168 mil-lion.

“Industries and other tradeestablishments waste Rs. 20 million

per day while in the domestic frontRs. 15 million is wasted per day,”Ranawaka added.

He said careful planning andsheer responsibility among industri-alists and consumers will save Rs. 35million per day.

Ranawaka believes that by usingCFL bulbs the cost could be cutdown by 80 per cent. “CFL’s willreduce the light bill significantly, ifit replaces incandescent bulb whichare used in excess of four hours aday. If incandescent bulbs are usedin the kitchen, living room or foroutdoor security in the nights, doreplace them with CFL bulbs,” he

advised.He also said that electricity bill

depends on the number of bulbs, thewattage of each bulb and the num-ber of hours each bulb is lit.Therefore, by switching off unneces-sary lights cost of electricity couldbe reduced.

Speaking on refrigerators, he

said: Think before opening it. Decideon the items you need to take out.Keep the other things you are goingto put into it ready and close athand, before opening the fridge.”

The government is proposing toincrease electricity tariffs by 8 per-cent next year for consumptionabove 90 units.

In the wake of govt. announcement to increase electricity tariff

Minister spearheads campaign to save energy ‘Industries waste Rs. 20mn each day, households Rs. 15mn’

Minimize opening De-frost frequently.Set the thermostat according to what is

stored.Check the beading for damages. Replace it

immediately if found damaged. Leakeydoors make the refrigerator motor run morefrequently than necessary, thus consumingmore electricity.

Do not overcrowd the cold compartments.Do not expose refrigerator to direct sun light.

Do not place it close to any source of heat.Do not place any warm food inside the refrig-

erator.When ironing start by ironing delicate/syn-

thetic cloths, while the iron is getting heat-ed up.

End by ironing delicate/synthetic cloths,while the iron is getting cooled down, with itswitched-off.

Iron as much as possible cloths in one go. Donot leave the iron standing vertical. Steamiron are more efficient.

Use a heat reflecting ironing board cover.Think twice, either needed to iron a particular

garment or a cloth. When TV is on “stand-by”, it consumes 7.3W

This means for a day, it will consume 0.175units. That is 5.3 units. That is 5.3 units permonth.

It is wise to keep the TV switched off, and toswitch on only when you want to watch it.

In Sri Lanka, average monthly householdelectricity consumption is only 63 units.Thus, one deserves to save for those aver-age users.

Pedestal or table fans generally use lesselectricity than ceiling fans.

Some older fan regulators use same amountof electricity regardless of the fan speed.

Electronic fan regulators can save electricity.Improving natural ventilation also can signifi-

cantly reduce the use of fan.Use 36W/18W linear fluorescent lamps in

place of 40W/20W lamps.

Recommendation to cut down the electricity bill

Domestic bankloans to privatesector up 17.4%

Domestic bank lending to the private sector increased by 17.4percent year-on-year in September after contracting 4.4 percent

a year ago, data from the Central Bank showed.