Primary dealer operations boost First Capital 2Q

First Capital Holdings PLC saw its net profit for the September (2Q18) quarter increasing 18.6 percent year-on-year (YoY) to Rs.340.4 million, largely helped by the primary dealer operations of the group, the interim financial accounts released to the Colombo bourse showed.

The earnings per share (EPS) for the period improved to Rs.3.36 from Rs.2.84.

For the six months ended September 30, 2017, the group almost doubled its net profit to Rs.700.8 million from the corresponding period of the previous year. The EPS improved to Rs.9.92 from Rs.3.81.

The primary dealer business dominated the group’s earnings reporting a profit after tax of Rs.538 million for the first half.

The company said it capitalized on opportunities created by declining interest rates in the secondary market, realizing significant trading gains. 

With a track record of over 25 years, the company was the first licensed primary dealer appointed by the Central Bank and is also the only listed and rated primary dealer in Sri Lanka, with a capital base of Rs.2.2 billion.

A strategic approach has led to improved activity in the corporate finance business, mobilizing Rs.13 billion for clients through structuring and placement of corporate debt securities and recording a fee income of Rs.42 million, compared to Rs.30 million a year ago during the period under review. 
First Capital Asset Management Limited recorded a substantial growth in funds under management to end with Rs.6.7 billion as at September 30, 2017. 

The group’s equity arm, First Capital Equities, took several steps to strengthen its business by establishing strategic partnerships with brokering houses based in Asia and the United States, in addition to reinforcing its local efforts through the group’s expanding branch network. 

“Whilst we are pleased with our performance to date, we expect the earnings to moderate in the second half with interest rates stabilizing, resulting in lower trading opportunities for the primary dealer business,” said Director/Group CEO Dilshan Wirasekara.

“However, we will continue to work throughout the year towards ensuring that our fundamentals remain strong to sustain our business in the long term. Our main focus is to enhance the fee-based activities and the management of risk,” concluded Wirasekara.

The credit rating of First Capital Holdings PLC and First Capital Treasuries PLC was reaffirmed by ICRA Lanka Limited in October 2017 at ‘A-’.