Equity brokerage firm, Asia Securities recently hosted its inaugural financial sector investment conference titled ‘Shifting Gears: But Which Way?’
The conference marked the seventh event under the ‘Wealth Insights’ series of investor events which is now in its third year. This inaugural conference generated value-added insights for the capital markets community in Sri Lanka.
The Governor of the Central Bank, Dr. Indrajit Coomaraswamy was the keynote speaker.
One of the key themes at the event was low capitalisation constraining the growth potential of state banks and the urgent need for state banks to raise external capital in order remain competitive with private banks.
Asia Securities’ Non-Bank Financial Institution (NBFI) analyst and Economist, Lakshini Fernando touched on the fact that NBFIs need to diversify in order to drive growth in a period which is seeing muted demand for financing consumption needs.
Several panel discussions were held at the conference. The first panel discussion titled ‘Looking ahead to 2018: Challenges and Opportunities for Banks’ saw the Governor of the Central Bank of Sri Lanka.
A key message which came out of the panel discussion was that State Banks would need to raise at least Rs. 50 bn to stay in business with the higher capital requirements and double that in order to deliver meaningful growth.
The panel discussion titled ‘Financial Sector Valuations: Cheap or Challenged? ‘saw leading industry practitioners, Head of Investments, Softlogic, Ms. Niloo Jayatilake; Head of Research, Asia Securities, Kanishka Perera; Partner, Head of South Asia, Actis Private Equity, Asanka Rodrigo; Managing Director, Morgan Stanley, India, Sachin Wagle engaging in a vibrant discussion on the topic.
The panel highlighted that the valuations of banks has have fallen making them an attractive investment opportunity.
The session titled ‘State-Owned Banks in the Post-Basel III World’, featured Managing Director, Morgan Stanley, India, Sachin Wagle and Managing Partner/CEO, PwC, Sri Lanka, Sujeewa Mudalige.
Sharing learnings from the Indian Financial Sector, Wagle said that majority of fund inflows have been directed towards the banking sector when compared with others, but that low capitalization has been a constraint on the growth potential for state banks when compared with private banks and has led to market share losses.