Financial Times

Inflation seen easing further towards year-end
Inflation indices eased in June, and the Central Bank said this signaled a lower inflation rate towards the end of the year. While the consumer prices are seasonally higher in June the monthly increase in prices registered for June 2003 was less than the historical average of the monthly changes observed for this month, a Central Bank statement said. "This marked a further moderation of consumer price inflation observed recently," it said.

The Colombo Consumer's Price Index (CCPI), the official measure of price changes within the Colombo Municipality for lower income groups published by the Department of Census and Statistics, increased by 1.3 percent over the previous month.

The Colombo District Consumer's Price Index (CDCPI), computed by the Central Bank, of the lowest 40 percent of income earning households, covering a wider geographical area, i.e., Colombo District, increased by 0.5 percent in June.

Micro-finance experts for SEEDS conference
Some of the world's leading rural development experts will arrive in Sri Lanka next weekend for a micro finance conference to be hosted by Sarvodaya Economic Enterprise Development Services (SEEDS), a large non-government micro finance organization.

"Rural development is critical if Sri Lanka is to achieve not just higher rates of economic growth, but also an improved quality of life for its people," said SEEDS managing director, Shakila Wijewardena. "Micro finance can play a key role in promoting rural development, by ensuring that all Sri Lankans have the opportunity to build their skills and obtain credit to grow their businesses.

This conference aims to build on the experiences of the past two decades to identify ways in which the micro finance industry and its clients are changing, and how those changes might be addressed."

Among the delegates at the conference, to take place from July 14 to 17, will be senior representatives of two of the world's largest micro finance organizations.
Bangladesh's BRAC, which has more than 3.5 million members, will be represented by Shabbir Ahmed Chowdhury, the head of BRAC's micro finance programme, as well as staff economist Ismet Quoyesh.

Also attending will be Mohamad Nazirwan, senior micro finance specialist at Indonesia's state-run Bank Rakyat Indonesia - the biggest micro finance provider in the world with more than 24 million deposit accounts.

SEEDS, the economic development arm of the Sarvodaya Movement, with almost 600,000 members spread though more than 3,000 village-based societies, recently expanded its operations into the north and east with the opening of an office in Batticaloa.

SEEDS builds a foundation for grassroots economic development by offering its clients access to credit, as well as entrepreneurship and skills training.

NDB Group in control of Eagle Insurance
The National Development Bank (NDB) Group last week acquired a controlling stake in Eagle Insurance with the support of the Bank of Ceylon. They bought the 58.44 percent stake of Zurich NDB Finance Lanka Limited, the holding company of Eagle Insurance, at a transaction price of Rs. 143.00 a share.

This was previously held by Zurich Insurance Company, Switzerland, which has exited from the local market.

The acquisition was made through Capital Development and Investment Company Ltd (CDIC), an NDB subsidiary and associate company of Bank of Ceylon. NDB's Director/General Manager, Nihal Welikala, said Eagle Insurance, as an associate company of the NDB Group, had contributed to NDB's profitability and provided an attractive return on investment.

"As we are consolidating our position in the consumer banking sector, the acquisition of Eagle will also enable us to offer innovative solutions to our retail banking customers," he said. Bank of Ceylon chairperson, Sumi Moonesinghe, said Eagle currently uses the 300-strong BoC network as collection centres for Eagle Life insurance premiums. "It is expected that this relationship will go beyond the present network facilitation to offer attractive products and solutions to the clients of BoC, thus adding value to stakeholders of BoC."

People's Leasing raises Rs. 300 mln through securitisation
First Capital Markets has raised Rs. 300 million by securitising the lease debt receivables of People's Leasing Co Ltd. The issue was a four-year instrument paying monthly capital and interest at market rates which were considered to be attractive to corporate investors.

The offer of Rs. 300 million was fully subscribed within one week. People's Leasing Company, incorporated in 1995, intends to raise further funds through securitization of lease receivables in the near future.

During the year ended March 31, 2003, the company recorded a net profit of Rs. 154 million, with earnings per share of Rs. 15.40. Last year's profit was Rs. 77 million.
Most of the major leasing companies have raised funds by securitizing their lease receivables, which offers a company access to competitive long term financing and reduces reliance on banks for its financing requirements.

The trustee to the issue was Deutsche Bank. Investors were found from Colombo as well as channeled through First Capital branches in Kandy and Matara.

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