The financial sector comprising banks, insurance companies and financial companies, accounted for the largest share of annual profits for the 2010 financial year spurred by growth in retail loans, gold backed lending and leasing, NDB stockbrokers said in a report.
The report which considered the quarterly profits of 8 banking stocks (Commercial bank, HNB, MBSL, NDB, NTB, PABC, Sampath Bank and Seylan) showed that banks, finance and insurance companies contributed 36 percent to the total annual profits during 2010 financial year, followed by the diversified sector.
Average loan growth of listed commercial banks during the fourth quarter reached 22.52 percent. NDB Stockbrokers forecasts growth to reach 25 percent during the current financial year.
For the year ending December 31, 2010, gross loans and advances of listed banks grew 23 percent to Rs. 862 billion, compared to a negative growth rate of 6 percent the previous year.
The report said benefits of the reduction of Financial Services VAT from 20 percent to 12 percent and the Income Tax from 35 percent to 28 percent has translated in to higher profits during the first quarter of 2011.
For the three months ended March 31, 2011 the financial sector has recorded a profit growth of 82.
"The total benefit accrued from taxes and provision reversals were approximately Rs. 1.7 billion. Excluding them, the profit growth would have been around 27 percent approximately," NDB Stockbrokers said, forecasting lending to receive an additional boost this year from the Investment Fund Account introduced by the government in the 2011 budget with the intention of generating long term lending at low interest rates using the tax savings proposed in the budget.
source - www.island.lk
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