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| HNB's
national long term rating on Rating Watch 'The increase was largely due to a more realistic classification by HNB, rather than new NPLs. Whilst this included the classification of a few large accounts which the bank had not classified previously, but identified as weak by FRL, it also included others not identified previously. Provisioning increased by 25% in 2002, and this level of provisioning was maintained during the first quarter of 2003, but yet falls short of what would have been expected to meet prudential norms, in the face of the significant level of NPLs, and the low loan loss reserves. HNB's loan loss reserve coverage as at March 2003 was 25%, whilst its Net NPLs to equity was a high 161%. Included amongst the large accounts that was classified as sub-standard NPLs as at Dec. 2002, were exposures to a large textile manufacturer (40% of equity) and the Browns Group (26% of equity). Brown's is also a key shareholder of HNB and effectively a related party. The bank, as per an agreement signed with Brown and Co expects to reduce this exposure by 35% by end 2003, whilst ensuring that the facilities are current," Fitch said in a statement. HNB's capitalisation is only marginally above the minimum regulatory levels. Despite this HNB's dividend payout ratio in 2002 was a high 71%, depleting equity further. HNB's announced plans to raise Rs. 2 billion of subordinated debentures and this month would go some way towards addressing this. HNB's loan book continues to carry concentrations with the six largest exposures accounting for 240% of equity as at March 2003. FRL said it recognises the recovery in HNB's profitability. Pre-provisioning profits increased threefold during the first quarter of 2003, (compared to the comparative quarter of 2002). Whilst the bank is likely to benefit from an improved environment, and increased credit demand, profitability will yet be constrained by higher capital adequacy requirements and an increased tax burden; a 10% VAT (without input credit) payable on net profits plus staff remuneration has been imposed. In this light the bank will be challenged to increase loan loss reserves and equity to prudent levels through retained earnings alone. FRL is presently in the midst of ascertaining the measures adopted by HNB to address key issues, inclusive of those mentioned above, in order to determine the impact on the banks financial strength. Dependent on the outcome of its review FRL will make a decision on HNB's assigned National Long Term Rating within the next few weeks, the statement said. Society
of Dyers and Colourists to form local chapter It was founded in 1884 and was granted a Royal Charter of Incorporation in 1963. The SDC supports education and training in colour science and technology and encourages individuals to improve their professional status through education and training and to seek recognition through the Society's scheme of qualifications. Coke
introduces "Double Bothale" As a common practice, most Sri Lankans like to consume soft drinks at the particular place where they buy the bottles from, whether it is a food outlet or corner grocery shop. Sri Lankans also have a tendency to share the bottle between two or more individuals. This strong consumption habit and behaviour has inspired Coca-Cola Beverages Sri Lanka to introduce the Double Bothale, the company said. Coca-Cola Beverages Distributors Sri Lanka hopes this pack identity that will get deeply rooted amongst Sri Lankans. Two-day
workshop on packaging for export This will be of use for exporters, manufacturers and people responsible for the actual packing process in an organization, specially those in the areas of home decorations, gifts, toys, ceramics, coir, other handicraft items and processed foods. Among the topics to be discussed are the packaging chain, risks and stress in transport, costs of packaging and methods, materials and packing lists. |
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