Sri Lankan banks trading at ten year lows

Sri Lankan banks trading at ten year lows

Sri Lankan banks trading at ten year lows

Written by Staff Writer

19 Feb, 2020 | 6:35 pm

Colombo (News 1st) – Equity researchers point out that, Sri Lankan banks are trading at ten year lows compared to their most recent earnings, with stronger profits expected in 2020, due to tax cuts and a pick up in credit growth.

Sri Lankan banks have the lowest price to earnings ratio, compared to frontier and emerging markets, a Research by First Capital Holdings showed.

Researchers further pointed out that with the government removing the Nation Building Tax and the Debt Repayment Levy, net profits at banks will rise 9 percent.

Profits at banks which fell 4 percent in 2019 with constrained capital and rising bad loans, will grow at a compounded 19 percent up to 2021

Sri Lankan banks had ended 2019 at a price to trailing earnings multiple of 5.4 and a price to book value multiple of 0.7.

In comparison, the price to earnings multiple of India-based Axis Bank Ltd was 17.3 at end-December, while Bank of the Philippine was 12.3 and Malayan Banking Berhad was 11.5.

Credit growth is expected to pick up in the latter half of 2020 and early 2021.

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