Sri Lanka’s listed companies reported a robust 57.4% year-on-year increase in earnings for the March 2025 quarter, marking the sixth consecutive quarter of profit growth, according to an analysis by First Capital Research.
The strong performance was mainly fueled by the banking and consumer sectors, benefiting from reduced finance costs and improving economic conditions.
The banking sector emerged as a key driver, with earnings rising 43.5% year-on-year. Industry giants such as Commercial Bank, HNB, Sampath Bank, Nations Trust, NDB, Seylan Bank, and Pan Asia Banking Corporation posted a collective 52.9% earnings growth.
The improvement stemmed from a surge in net interest income, supported by falling interest rates, which helped lower funding costs. Growth in fee-based income—especially from digital banking and card transactions—combined with reduced loan impairment charges due to better credit quality, added to the bottom-line gains.
However, the banking sector’s performance was tempered by rising operating expenses, and a few institutions—such as DFCC, Sanasa Development Bank, and HDFC—recorded profit declines.
Meanwhile, the Food, Beverage, and Tobacco sector delivered the strongest results across all segments, with profits soaring by 174.8%.
This spike was driven by higher revenues, improved margins, and lower finance costs. Major contributors including Ceylon Tobacco Company, Melstacorp, Cargills, Distilleries, Bukit Darah, Cold Storage, and Lion Brewery accounted for more than 60% of sector earnings.
The sector benefited from growing consumer demand, lower input costs, and a strengthening rupee, which further enhanced margins.
In contrast, the Consumer Durables and Apparel sector suffered a steep 206.6% drop in earnings. The plunge was largely due to HELA and Dipped Products, which posted a combined earnings contraction of 251.5%.
HELA swung from a Rs. 6 billion profit last year to an Rs. 8.8 billion loss this quarter, impacted by shrinking margins, rising operational costs, and impairment losses. DPL also faced pressure from a significant fall in revenue and a sharp rise in distribution costs.
The Real Estate sector also underperformed, with earnings dropping 26% year-on-year. This was primarily due to major declines at Overseas Realty and CT Land Development. Overseas Realty saw a 44.7% profit decline due to forex losses, while CT Land posted a 73.3% drop stemming from weaker investment property revaluations.
Despite isolated sectoral weaknesses, Sri Lanka’s corporate earnings momentum remains strong, signaling cautious optimism for sustained recovery in 2025.
