Sri Lanka’s DFCC Bank posts LKR 10.5 billion profit amid strategic expansion and improving economic conditions

DFCC Bank PLC delivered robust financial performance in the first half of 2025, recording a Profit After Tax of LKR 10.5 billion at the bank level, including gains from the strategic divestment of its stake in Acuity Partners (Pvt) Ltd. The Group’s core business Profit After Tax reached LKR 5.7 billion, reflecting strong operational momentum amid Sri Lanka’s gradually stabilizing economic environment.

Key Financial Highlights

The bank’s total assets expanded by 11% to LKR 788 billion, driven primarily by a significant 19% growth in the loan portfolio during the six-month period. Net Interest Income, the bank’s core earnings driver, increased by 11% to LKR 15.2 billion, demonstrating effective loan book expansion and funding cost optimization strategies.

“This performance reflects not only operational resilience, but also clarity of purpose,” said Thimal Perera, Director and Chief Executive Officer. “The bank remains deeply committed to supporting national economic recovery through targeted lending.”

Strategic Growth Initiatives

DFCC Bank’s loan portfolio expansion occurred despite a softening interest rate environment, with the Central Bank of Sri Lanka maintaining an accommodative monetary policy stance. The bank’s Current Account and Savings Account (CASA) ratio improved from 24.77% in December 2024 to 26.54% by June 2025, reflecting stronger deposit mix and enhanced funding cost efficiency.

Net fee and commission income surged by 43% to LKR 3.2 billion, compared to LKR 2.3 billion in the same period of 2024, driven by higher volumes across remittances, credit-related charges, and trade-related commissions.

Asset Quality and Risk Management

The bank demonstrated improved asset quality with its Stage 3 impaired loan ratio decreasing to 4.62% in June 2025 from 5.65% in December 2024, primarily due to successful recoveries and portfolio growth. However, impairment charges for loans and advances increased to LKR 3.1 billion from LKR 2.0 billion in the previous period, reflecting prudent provisioning practices.

Capital Strength and Compliance

DFCC Bank maintained strong capital ratios with Tier 1 Capital at 12.479% and Total Capital Ratio at 15.004%, comfortably exceeding regulatory requirements. The bank’s Net Stable Funding Ratio stood at 112.81%, while the Liquidity Coverage Ratio reached 187.47%, both significantly above regulatory minimums.

Innovation and Inclusion Focus

The bank marked a significant milestone with the launch of its Islamic Banking proposition, aligning with its vision for greater financial inclusion and diversity. The women’s banking proposition, DFCC Aloka, surpassed 100,000 customers, underscoring the bank’s commitment to gender-focused financial access.

In a historic achievement, DFCC Bank became the first foreign corporate to list a green bond on India’s NSE IX at GIFT City, completing a triple listing across Colombo, Luxembourg, and India.

Market Outlook

With private sector credit flows remaining robust and key industries benefiting from improved liquidity, DFCC Bank expects positive momentum to continue through the remainder of 2025. The bank continues to invest in technology and digital transformation to support enhanced multi-channel service delivery.

As DFCC Bank commemorates its 70th anniversary in 2025, the institution remains focused on sustainability, innovation, and customer-centric growth strategies while supporting Sri Lanka’s economic recovery.