Financial Times

Fitch says NSB must move with the times

Fitch Ratings Lanka Ltd (FRL), while assigning a top rating to the National Savings Bank (NSB), says the state bank's long-term survival "as a viable institution" depends on widening its scope of activities.

"The development in the bank's operating procedures and risk management systems has not kept pace with peers and need re-engineering. Furthermore, the bank has been slow in addressing some of the more fundamental issues, such as setting a clear strategic vision, and developing/investing in the necessary skills and systems required to implement this," it said in a statement.

Fitch said last week it had assigned SL AAA (Triple A) national rating for Implied Long-term Unsecured Senior Debt of the NSB.

SL AAA long-term rating denotes a very low expectation of credit risk. The rating indicates a very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.

NSB's rating reflects, the explicit state guarantee on deposits, the low risk nature of the bank's activities and state ownership. NSB is the third largest bank in Sri Lanka in terms of assets, but commands a dominant position in the deposit mobilisation market, supported by its 13-million strong account holders. Consequently the bank exerts some influence as a 'price-setter' in deposit mobilisation, Fitch said.

The NSB has been a vehicle to mobilise retail savings, which in turn was largely used to finance the government budget deficit. Even at present, treasury securities and rupee loans make up 79% of its asset base.

NSB's overall financial performance compares well with its peers, largely due to minimal loan loss provisions by virtue of its high exposure to government securities as well as comparatively lower operating overheads in relation to its asset base. The bank's pre-tax return on assets (ROA) was 1.7% in 2002. Despite its influence in determining deposit rates, NSB's net interest income is volatile given the high exposure to long duration government securities, with fixed rates. At present the bank is not required to compute and report capital adequacy (CAR), but this is due to change, with the regulator expected to issue a guideline. “However, based on a simplified calculation we estimate NSB's CAR to be approx 30%,”Fitch said.

Messenger launches SMS marketing services

A Sri Lankan company has begun specializing in SMS marketing services. zMessenger is a fast-paced, privately held company, based in Colombo, and believes it is the first group in Sri Lanka to specialize in SMS marketing.

"Our vision is to redefine and expand the way a mobile phone/device is used in our day to day life. By using technologies such SMS, MMS, etc. we give our subscribers information that is accurate, informative and timely, " a company statement said

zMessenger's mission is to help companies create more rewarding interactions with their customers via mobile and digital channels. The company has built up a number of key strategic partnerships with respected marketing, telecommunications, and technology companies. As a member of the Mobile Marketing Association (MMA), which sets the standards by which the companies within this sector operate, zMessenger is a dedicated evangelist of permission-based communication and is always sensitive to customers' privacy.

Lankan exporters facing major crisis

The Exporters' Association of Sri Lanka (EASL) has told the government that the export sector is declining and in dire straits with the situation worsening if war breaks out in Iraq.

In a letter to Finance Minister K.N. Choksy, EASL chairman A.S.M. Muzzammil said they welcomed comments by the minister on recognition of the export sector as an under performing sector. He said that during 2001/2 the spiraling cost of energy and the rising cost of living further added to the costs of exporting companies making many of them even less competitive in world markets. In addition to this, further taxation on costs was introduced on exporters. "We are certain that a study would reveal that many markets have been lost to our country as a consequence. Many companies have suffered in silence and their investments rendered unproductive and employees made redundant. It must be emphasized that these companies have now become less viable due to circumstances beyond their control," the letter noted.

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