Sri Lanka’s banking sector has delivered a landmark performance in the first half of 2025, with both state-owned and private lenders posting record profits amid a more favourable economic environment. A combination of easing interest rates, a stronger rupee and renewed credit demand has driven the sector’s earnings surge, signalling a decisive shift from crisis-era survival to growth-oriented lending.
Lower funding costs, stemming from recent Central Bank policy rate cuts and stable inflation, have improved operating margins. The Finance Ministry’s latest fiscal review highlighted increased system liquidity and a stronger external position, while the country’s current account surplus in the first half has bolstered market confidence and supported credit expansion.
Among state-owned banks, Bank of Ceylon (BOC) set the benchmark with a profit before tax (PBT) of Rs. 59.4 billion for the first six months of the year, representing a 165% jump from Rs. 22.4 billion a year earlier. Profit after tax (PAT) reached Rs. 35.9 billion, supported by a 79% surge in net interest income to Rs. 102.7 billion and greater operational efficiency.
This followed an exceptional first quarter, when BOC posted a PBT of Rs. 30 billion, up 222% year-on-year, and a PAT of Rs. 17.1 billion, reflecting a 95% rise in net interest income. National Savings Bank (NSB) also reported strong results, with a profit after tax of Rs. 7.59 billion for the first quarter, up 124% from last year, aided by higher operating income and tight cost management.
Private sector banks have also capitalised on the improved market conditions. Commercial Bank of Ceylon reported a net profit of Rs. 31.17 billion for the first half, up 64.9% year-on-year, while profit before tax rose 61.5% to Rs. 45.24 billion.
The bank saw operating income increase by nearly 40%, while impaired loans declined and customer deposits crossed Rs. 2.5 trillion. Sampath Bank, however, recorded mixed fortunes, with second-quarter profits slipping 17% year-on-year to Rs. 6.7 billion due to higher operating costs.
Nevertheless, its first-quarter performance had been notably strong, with PBT at Rs. 13.4 billion, up 115%, and PAT at Rs. 8.3 billion, a 149% increase, supported by robust non-interest income and capital strength.
Hatton National Bank (HNB) posted a 49% jump in group profit after tax to Rs. 11.1 billion in the first quarter, driven by improved asset quality and solid capital buffers. Nations Trust Bank was among the first to release full half-year results, reporting a profit after tax of Rs. 9 billion, up 10% year-on-year, alongside a 26% increase in its loan book. DFCC Bank also reported double-digit growth in net interest income during the first half, underpinned by a strong capital position.
Mid-tier lenders mirrored the trend, with Union Bank reporting a 247% surge in profit after tax to Rs. 251 million for the first half, while profit before tax rose to Rs. 834 million. SDB Bank posted a Rs. 156 million profit after tax for the same period, supported by improved margins and expanding lending activity.
Overall, the first half of 2025 has marked a clear turnaround for Sri Lanka’s banking sector. The combination of lower interest rates, currency stability, and renewed credit appetite has created a fertile environment for profitability.
Both state-owned and private banks are now better positioned to support the country’s post-crisis economic recovery. However, the Finance Ministry has cautioned that sustaining this momentum will require continued fiscal transparency and steady progress on debt restructuring to safeguard financial sector stability.
