The Merchant Bank of Sri Lanka has budgeted to earn a turnover of Rs 1.7 billion and a net profit of Rs 350 million for the financial year ending 2009, Chairman, Merchant Bank of Sri Lanka, Janaka Ratnayake said.

He said: The financial year 2008/09 will be very challenging for the industry. Perhaps, we will obtain the licence for specialised banking and expand the investment portfolio this year. "We will also expand our corporate finance activities by connecting some of the corporate clients to public during second and third quarters of the next financial year."

The total value of this expansion will be Rs 3.5 billion. Merchant Credit will expand the branch network and increase the deposits to Rs 3 billion during 2008. Merchant Credit will provide attractive interest rates to its depositors, who hold short, medium and long-term deposits in 2008, Ratnayake said.

The last financial year we earned a gross turnover of Rs 873 million, and an after tax profit of Rs 238 million. Our groups' gross income growth was 24 per cent, which was Rs 1.44 billion at the end of 2007. The Group net profit which recorded a 18.3 per cent growth over the previous year, reached Rs 289 million.

This is the cumulative performance of the Merchant Bank and Merchant Bank Sri Lanka and the Merchant Credit of Sri Lanka Limited, Ratnayake said.

The Merchant Bank has also obtained a reward of second place in the service sector of the National Productivity Award of 2006.

"We will receive the AA- rating at credit rating, which is the highest credit rating in the industry," he said.

Ratnayake said the income ratio is the assessing ratio of a service sector organisation. MBSL has achieved high interest ratios. The non-performing loans ratio is 14 per cent to 18 per cent this year.

Though the second half of 2007 was very competitive due to the high interest rate set-up, where the interest rates increased continuously on a weekly basis.

However, MBSL improved from this position in terms of profitability, asset growth and turnover to increase in the top line and the bottom line of Merchant Bank of Sri Lanka PLC and Merchant Credit of Sri Lanka Ltd in 2008.