2. C O N T E N T S
BANKING & FINANCE
ComBank announces new Chairman and Deputy Chairman
ComBank among Sri Lanka’s ‘10 Most Admired Companies’ for 3rd year
ComBank donates milestone 200th IT Lab
Fitch expects banking sector loan growth to accelerate next year
ECONOMY & BUSINESS
Economic performance in 2Q and 3Q, 2020
Corporate earnings swell post-COVID first wave
S&P downgrades Sri Lanka sovereign rating to ‘CCC+’, over budget, excess liquidity
Browns and CHEC join forces for USD 450mn CIFC
Sri Lanka named World number one according to Aussie publication ‘Escape’
New guidelines in the offing to welcome tourists from 1 Jan
Colombo stock market ends November with 9% gain
Govt. extends validity period to open Special Deposit Accounts
Restrictions on outflow of foreign exchange to remain till June 2021
Economic News Snippets
INTERNATIONAL
Japan approves ¥21.8 trillion extra budget to fund pandemic support
China’s exports grow by 21% in November
UK and US in talks over mini trade deal
COVID 19 Vaccine
Global News Snippets
4. ComBank announces new Chairman and
Deputy Chairman
Research & Development Unit
The Commercial Bank of Ceylon PLC has
announced the appointment of former Chief
Justice Kanagasabapathy Sripavan as
Chairman and senior academic Prof. A. K. W.
Jayawardane as Deputy Chairman with effect
from 21st and 29th December 2020
respectively.
Justice Sripavan and Prof. Jayawardane
succeed Messrs. Dharma Dheerasinghe and
Preethi Jayawardena, who retire from the
positions of Chairman and Deputy Chairman
of Sri Lanka’s benchmark private bank after
completing their tenures.
5. ComBank among Sri Lanka’s ‘10 Most
Admired Companies’ for 3rd year
Research & Development Unit
The Commercial Bank of Ceylon was recently named among the ‘10 Most Admired
Companies in Sri Lanka’ in 2019-20 by the International Chamber of Commerce Sri
Lanka (ICCSL) in collaboration with the Chartered Institute of Management
Accountants (CIMA).
The Bank has been ranked among the Top 10 companies in this prestigious list in
every year since the two organizations launched the list in 2018.
6. ComBank donates milestone 200th IT Lab
Research & Development Unit
The Commercial Bank of Ceylon’s nationally-scaled
community initiative to elevate computer literacy levels
in Sri Lanka reached an important milestone this week
with the opening of the 200th IT lab donated by the
Bank, a landmark achievement in the year that the
Bank celebrates its 100th anniversary.
The recipient of the fully-equipped and furnished IT Lab
was the Janadhipathi Vidyalaya, Matara, which also
received a STEM (Science, Technology, Engineering and
Mathematics) classroom from Sri Lanka’s benchmark
private bank.
Funded as a flagship corporate social responsibility
initiative of the Bank’s CSR Trust, the 200 IT labs
donated by Commercial Bank to schools and other
institutions across the country are intended to raise IT
literacy and facilitate the digital learning aspirations of
students.
7. Fitch expects banking sector loan growth
to accelerate next year
Research & Development Unit
Fitch Ratings expects loan growth of Sri Lankan banks to accelerate from where it will end in 2020,
reflecting better prospects for the banking sector and more broadly for the economy.
Loan growth, particularly private sector credit growth, is an effective gauge to ascertain the dynamism
and the robustness of economic activities such as investments, business spending and consumption.
Fitch said the banks rated by them had expanded their loan books by a robust 11.4% in the nine months
to September.
According to Fitch, Sri Lanka’s banks operate with adequate liquidity, much higher than what is required
by the regulator, as they built up massive funding buffers during this year from customer deposits and
foreign funding agencies
Sri Lankan banks’ asset quality has been improving since the September quarter amid pickup in loan
growth while the relief measures backstopped borrowers from defaulting.
9. Economic performance in 2Q and 3Q,
2020
Research & Development Unit
The GDP growth rate recorded a sharp
decline of 16.3% (YoY) in the second
quarter of 2020 due to the impact of
COVID - 19. This is the largest ever
drop recorded in the country’s history.
However, GDP growth recovered in the
third quarter to record a growth of
1.5% (YoY) in that quarter.
On a cumulative basis the GDP
declined by 5.3% in the first nine
months of 2020 compared to the
corresponding period in 2019.
11. Corporate earnings swell post-COVID first
wave
Research & Development Unit
• Earnings of listed companies in the third
quarter of 2020 have swelled to Rs 73.7bn,
the highest for a three month period since late
2018, and reflect significant recovery after the
resumption of the economy following the
COVID-19 first wave-induced shutdown.
• The Rs 73.7 billion combined earnings
reflected a robust 53% gain year-on-year and a
massive 287% jump in comparison to the
2Q figure of Rs 19 billion, and more than
double the 1Q of 2020. Besides, this was the
largest quarterly earnings since the fourth
quarter of 2018.
Quarterly Corporate Earnings
12. S&P downgrades Sri Lanka sovereign
rating to ‘CCC+’, over budget, excess
liquidity
Research & Development Unit
Standard and Poor’s, said it was downgrading
Sri Lanka from ‘B-’ to ‘CCC+’ saying a high
budget deficit and excess liquidity is likely put
pressure on the exchange rate and make it more
difficult to repay debt. The outlook remained
‘Stable’
“The latest expansionary budget measures are
likely to further weaken the government’s fiscal
position,” the rating agency said.
Rating
Agency
Rating Outlook Previous
Rating
Previous
Outlook
S&P CCC+ Stable B- Stable
Fitch CCC N/A B- Negative
Moody’s Caa1 Stable B2 Negative
Sri Lanka Sovereign Rating Summary
S&P forecasts the economy to contract sharply by 5.3% in 2020, largely due to the COVID-19
pandemic. But the rating agency expects the real GDP growth to accelerate to 4.3% in 2021, albeit
from a low base and average 4.5% during 2021-2023.
13. Browns and CHEC join forces for USD 450mn
CIFC
Research & Development Unit
The development of the Port City took a significant step with Browns Investments PLC entering into a
landmark agreement with China Harbour Engineering Company (CHEC) to commence the Colombo
International Finance Centre (CIFC) mixed development project, which will involve an initial investment of
USD 450mn.
The CIFC Mixed Development Project will be piloted over two phases. Browns Investments is partnering with
CHEC for Phase One via the incorporation of a Special Purpose Vehicle (SPV) company, a subsidiary of Browns
Investments, the company said in a statement.
The total investment in Phase One amounts to USD 450mn with a buildable land area spanning 3.06
hectares, which is leased from CHEC Port City Colombo Ltd. to the new SPV that will be jointly managed by
Browns and CHEC. Phase one comprises the construction of residential, commercial and retail asset
components set to break ground in mid-2021. Phase two will be a commercially-oriented development with
office and retail space offerings that will commence construction parallel to the start of Phase One.
This is a milestone project with an investment value totaling (phase 1 and phase 2) USD 1bn, representing
important long-term implications on the economic growth of Sri Lanka, and has been accordingly declared
a Strategic Development Project under the Strategic Development Projects Act No. 14 of 2008.
14. Sri Lanka named World number one
according to Aussie publication ‘Escape’
Research & Development Unit
Sri Lanka has been named number one in “Travel
+ Leisure’s World’s Best Islands”– a reader-
generated list based on activities and sights,
natural attractions and beaches, food, friendliness
and value.” according to popular Australian
publication Escape.
Escape is Australia’s number one travel brand, a
one-stop destination that inspires travellers with
great holiday stories, exclusive deals, advice,
trends and news.
Source: Daily FT
Top 10 list
Sri Lanka
Palawan, Philippines
Bali, Indonesia
Milos, Greece
Maldives
Anguilla
Crete, Greece
Cape Breton Island, Nova Scotia – Canada
Koh Island, Thailand
Azores, Portugal
15. Research & Development Unit
New guidelines in the offing to welcome
tourists from 1 Jan
The Health Ministry’s COVID-19 Clinical Management Expert Committee in collaboration
with Sri Lanka Tourism has prepared all-inclusive guidelines to resume tourism gradually.
Source: Daily FT
Key points
Travel from any country permitted for minimum stay of 14 days
Influx of daily travelers limited to maximum of 300 with priority for citizen repatriation
All international airlines will be allowed with prior approval from COVID-19 Taskforce and Civil Aviation
Authority.
Permit visa for long-stay travelers, dual passport holders, resident permit holders, film tourism and sports
tourism
Sri Lanka Tourism proposes to issue visa for 6 month instead of one month
Issuance of ‘On Arrival’ visas suspended until further notice
All passengers require COVID-19 insurance for minimum period of one month, expenses relating to health not
to be borne by Govt. during stay
Travelers will only be allowed in certified hotels, use of public transportation disallowed
Tourist sites will be reopened for travelers.
16. New guidelines in the offing to welcome
tourists from 1 Jan (cont)
Research & Development Unit
Source: CBSL
17. Colombo stock market ends November
with 9% gain
Research & Development Unit
The Colombo stock market gained 9%
during the month of November.
• During the month of November, the ASPI and
S&P SL20 gained 9.03% and 7.52%, whilst
recording an average daily turnover of Rs.
2.54 billion.
• The November gain was after a 4.3% dip by
ASPI in October.
18. Govt. extends validity period to open
Special Deposit Accounts
Research & Development Unit
The Special Deposit Accounts (SDAs) introduced in April this year had drawn over USD
270mn by early October as the Government extended the validity period to open same till
April next year.
• The Government introduced the SDAs on 8 April to seek assistance for the national effort
to overcome the effects of COVID-19 outbreak in the country.
“As at 7 October, total deposits in SDAs amounted to approximately USD 272mn,” the
Central Bank said.
• Considering the favorable effects of retaining such foreign exchange within the country,
the Government has allowed SDA holders, who wish to keep maturity proceeds of SDAs
in Sri Lanka beyond the designated date of maturity, to renew and continue SDAs as
normal deposits with authorized dealers.
Source: Daily FT
19. Restrictions on outflow of foreign
exchange to remain till June 2021
Research & Development Unit
The restrictions imposed on the outflow of
foreign exchange from the country will be
extended for a period of six more months.
• The regulations were issued under Section 22 of
the Foreign Exchange Act No. 12 of 2017
imposing limitations of capital transactions
causing flow of foreign exchange out of the
country.
Source: CBSL
20. Research & Development Unit
NewTea Board funding scheme
for high shade trees
Sri Lanka Tea Board has stepped up its
support of the industry by setting up a
funding scheme for high shade trees for
tea lands of over 10 acres.
It is offering subsidies for tea plucking
lands falling in the medium and large-
scale tea estate categories of over 10
acres, where tea has been cultivated
already and establishment of high shade
trees has not been made.
However, the relevant estates should be
registered under the Sri Lanka Tea Board.
The Sri Lanka Tea Board will provide Rs.
100 per high shade tree planted in the
field for a maximum of 28 plants per
acre.
Cabinet nod for Int’l Gem and Jewellery
Trade Centre
Cabinet approved Rs. 365mn to construct an
International Gem and Jewellery Trade Centre in
Ratnapura to develop the industry.
Funds had been earmarked to construct the
International Gem and Jewellery Trade Centre in
Demuwawattha, Ratnapura by investing the funds
of the National Gem and Jewellery Authority to
enable sellers and buyers to avail all the services
and facilities under one roof.
Economic News Snippets
Govt. eyes USD 2.5bn in
FDIs next year
The government yesterday
announced a foreign direct
investment (FDI) target of USD
2.5bn for next year
Investments are expected to
come into the country with
projects such as the Hambantota
tire factory, and those proposed
for the pharmaceutical sector and
the education sector.
22. Japan approves ¥21.8 trillion extra budget to
fund pandemic support
Research & Development Unit
The Japanese Cabinet approved a ¥21.84tn third supplementary budget for fiscal 2020, to finance the
government's latest economic package aimed at ensuring the coronavirus-stricken economy stays on a
recovery track.
The stimulus entails new national bond issuance worth ¥22.40tn, which will also make up for an
expected shortfall in tax revenue for the fiscal year through March.
The government has revised down its revenue estimate from ¥63.51tn to ¥55.13tn given the impact of
COVID-19 on corporate earnings.
Source: The Guardian/BBC
23. China’s exports grow by 21% in November
Research & Development Unit
China’s exports grew by 21% in dollar terms in
November over the same month last year, the
fasted pace since February 2018.
Much of that came from exports to United States,
which rose by half, despite the stiff tariffs imposed
by Trump administration in the countries’ trade war.
Source: CGTN, Economist, CNBC
Meanwhile China’s official
consumer price index fell by
0.5% in November from a
year earlier, the country’s
first month of deflation since
October 2009. A drop in food
prices lay behind the fall.
24. UK and US in talks over mini trade deal
Source: BBC
Research & Development Unit
The outgoing US administration is in talks with the UK to
try to seal a mini-deal to reduce trade tariffs, Donald
Trump's trade chief has said.
The UK recently said it would drop tariffs against the US
over subsidies for aerospace firms.
This was in a bid to reach a post-Brexit trade deal with
Washington.
25. Research & Development Unit
Source: BBC
COVID 19Vaccine
Britain began the world’s first vaccination
programme for covid-19 using a fully tested vaccine.
Thousands of people, mostly the very elderly and
frontline health workers, received the
Pfizer/BioNTech jab in hospitals. Family doctors will
also administer the injections, as will care homes by
Christmas.
Canada became the second country to approve the Pfizer vaccine and will start distribution soon.
In America regulators were on the verge of approving it.
26. Global News Snippets
Source: Economist/Reuters
Research & Development Unit
India’s economy is still struggling,
contracting by 7.5% in the three
months ending September, year on
year.
Still, that was an improvement on
the previous quarter,
when GDP shrank by 24%.
The OECD’s latest outlook forecast that global GDP will return to
pre-pandemic levels by the end of next year, if outbreaks of covid-
19 are under control and vaccines are widely available. It
forecasts the world economy will grow by around 4% in both
2021 and 2022.
The recovery will be uneven, however. China and other Non-
OECD countries will chalk up faster growth rates than developed
ones.
Surging investor interest sends bitcoin to
peak past USD 23,000
Bitcoin on (16th) rose to a record high, just a
day after passing the USD 20,000 milestone
for the first time, amid surging interest from
larger investors.
The world’s highest-profile crypto currency
jumped 10.5% to USD 23,655, taking its gains
this year past 220%, buoyed by demand from
larger investors attracted to its potential for
quick gains and perceived inflation-hedging
qualities.
27. The views expressed in Economic Capsule are not necessarily those of the Management of Commercial Bank of Ceylon PLC
The information contained in this presentation has been drawn from sources that we believe to be reliable. However, while we have taken reasonable care to maintain accuracy/completeness of the information,
it should be noted that Commercial Bank of Ceylon PLC and/or its employees should not be held responsible, for providing the information or for losses or damages, financial or otherwise, suffered in consequence
of using such information for whatever purpose.
< Research & Development Unit >
