• Profits were driven by lower finance costs and banking sector impairment reversals
• The banking and food and beverage sectors were the largest contributors to the growth

Sri Lanka’s listed corporate earnings increased by 56% year-on-year (y-o-y) in Q2 to Rs. 152 billion, supported by a significant reduction in finance cost and impairments from the banks, Capital Alliance Limited (CAL) said.

A report by CAL said that the banking sector remained the largest contributor to earnings with Rs. 49.1 billion, and the food, beverages and tobacco sector took the second place with Rs. 35.1 billion.

Apart from the lower finance cost and reduced impairments by the banking sector, the growth in earnings before interest and taxes due to lower operational costs also contributed to the growth in corporate earnings in Q2.

In the second quarter ending in June, the banking sector had impairment reversals of about Rs. 14 billion, with HNB having reversals amounting to Rs. 4.6 billion, while Commercial Bank had reversals of about Rs. 4.1 billion.

The highest profitable companies were the Commercial Bank with Rs. 15.9 billion and HNB with Rs. 11.7 billion, and the highest losses were seen in Browns Investment with Rs. 6.4 billion loss and Brown and Company PLC recorded a Rs. 5.2 billion loss.

Moreover, CAL said that the total market revenue increased by 17% y-o-y to Rs. 1,627 billion in Q2,  where revenue growth was primarily driven by the capital goods and food, beverages and tobacco sectors and consumer staples distribution.