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Sri Lanka quarterly growth slows to near 4-year low on political crisis

Reuters| 21 March 2019

Reuters: Sri Lanka’s last quarter economic growth slowed to a nearly four-year low, Government data showed on Tuesday, as a 51-day political crisis took a toll on the industrial sector.

Colombo posted 1.8% growth in the fourth quarter of 2018, slowing from 3.45% the previous three-month period, its slowest pace since early 2014.

The industrial sector, accounting for more than a quarter of the economy, contracted 3.6% in the fourth quarter of 2018, compared to 3.1% growth the previous period.

The sluggish quarterly growth dragged the island’s annual expansion to a 17-year low of 3.2%, compared to 3.4% the previous year.

Sri Lanka faced a political crisis after President Maithripala Sirisena abruptly sacked his Prime Minister Ranil Wickremesinghe and dissolved Parliament. That was later ruled unconstitutional, and Wickremesinghe was reinstated.

The crisis created panic and uncertainty among investors, who dumped Sri Lankan Government bonds and other assets, sending the rupee currency to record lows.

“Most of the people say the manufacturing orders had an impact, both domestically and on the export side, with the huge currency depreciation mainly due to the political turmoil,” said First Capital Holdings Research Head Dimantha Mathew.

The weak economic data may have a big negative impact on markets and businesses in the short-term, he added.

During the political crisis, all three major rating agencies downgraded Sri Lanka.

Foreign bondholders and share investors sold a net Rs. 66.6 billion ($ 373.32 million), while the International Monetary Fund suspended discussion to disperse the fifth tranche of a $ 1.5 billion loan.

Finance Minister Mangala Samaraweera expects growth to pick up this year to a pace of 3.5%.

Economists say tight monetary and fiscal policies, plus intermittent floods and drought, also contributed to lower growth last year. The rupee fell 16% in 2018 mainly due to foreign outflows from Sri Lankan securities.


First Capital records Rs. 231 Mn PAT 2016/17

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Director / Group CEO, Dilshan Wirasekara

Colombo 19th June 2017: First Capital Holdings PLC, a full service investment bank providing a diverse range of advisory services and financial products through its subsidiaries, (First Capital Group) reported a consolidated profit after tax of Rs. 231Mn for the year 2016/17 compared to Rs. 47Mn in the previous year.

The Group’s primary dealer arm, First Capital Treasuries PLC, was the main contributor towards the financial results recording a profit after tax of Rs. 343Mn for the year 2016/17 (2015/16 – Rs. 11Mn) attributed to net interest income and fair valuation gains on government securities. First Capital Treasuries, is the pioneer non-bank Primary Dealer appointed by Central Bank in 1982 and is listed on the Colombo Stock Exchange. Further, the company’s credit rating was reaffirmed by ICRA Lanka as A- with stable outlook.

The capital markets advisory of the Group, First Capital Limited, which specialises in structuring and placement of corporate debt securities, successfully mobilised Rs. 12.4Bn through structuring and placement of corporate debt securities. Despite the above performance First Capital Limited was negatively affected as a result of higher funding cost and fair valuation losses on trading securities.

The performance of the Group’s subsidiaries were further impacted due to damped investor sentiments as a result of the proposed changes to taxation via the budget proposal – 2017.

“Despite the setback experienced in the preceding quarters, the Group is optimistic in its outlook and have planned several calculated improvements to its operations” said Director / Group CEO, Dilshan Wirasekara.


First Capital Holdings PLC (the Company or First Capital) is a full service investment bank providing a diverse range of advisory services and financial products.

We currently serve an array of companies, institutions, government agencies, high net worth individuals and retail clients both international and local, who seek truly objective advice, innovative solutions and execution expertise. We operate throughout Sri Lanka via offices in Colombo, Kandy, Matara and Kurunegala. Our global outreach continues to expand through institutional trading and investment product placement.

As a company listed on the Colombo Stock Exchange (CSE) since 1994 (Ticker: CFVF), we exemplify requisite financial transparency and governance standards.

Reflecting credit fundamentals including a robust capital structure, liquidity, risk controls and earnings profile, we are rated A- by ICRA Lanka Limited.