SDB bank Demonstrates Resilience and Strategic Progress in Q1 2025

30-May-2025

SDB bank reported a resilient performance in the first quarter of 2025, underscoring the Bank’s commitment to steady progress, stakeholder value, and long-term sustainability. Despite industry-wide challenges and an ongoing recalibration of funding structures, the Bank remained firmly focused on financial stability, operational efficiency, and inclusive banking solutions.

The Bank recorded a Profit After Tax of LKR 56 million for the quarter ending 31 March 2025. A key contributor to this result was the 42-basis-point improvement in Net Interest Margin (NIM), which rose to 5.60%, reflecting strategic adjustments to lending rates and an optimized funding mix. While net interest income dipped slightly year-on-year, the Bank’s fee-based income streams showed strong momentum as Net Fee and Commission Income rose by 53%, reflecting the growing impact of digital adoption and enhanced customer offerings.

In a positive development, impairment charges reduced by 31% compared to Q1 2024, aided by proactive recoveries, risk model refinements, and continued traction in customer remediation efforts. Notably, the Bank’s coverage ratio for Stage 3 loans improved from 47.78% at year-end 2024 to 49.72% as of 31 March 2025, a testament to strengthened credit risk management.

Although the Bank’s total asset base saw a marginal 2% contraction, primarily due to the settlement of high-cost borrowing and currency appreciation, customer loans and advances rose by LKR 2 billion over the quarter, pointing to gradual credit demand recovery. Simultaneously, SDB bank’s Liquidity Coverage Ratio remained robust at 234.15%, well above regulatory minimums, ensuring confidence across market cycles.

The quarter also saw administrative expenses increase by 10% year-on-year, mainly due to inflationary pressures and staff cost adjustments. However, the Bank continues to exercise prudent cost controls to maintain overall efficiency.

Commenting on the results, Kapila Ariyaratne, Executive Director / CEO of SDB bank, said: “Our Q1 performance reflects a disciplined approach to balance sheet management and long-term value creation. We have prioritized resilient core earnings, selective growth in quality assets, and a funding strategy that reduces volatility while promoting sustainability. As we move forward, we remain deeply committed to inclusive finance, SME upliftment, and digital enablement while maintaining a strong capital and liquidity position.”

SDB bank concluded the quarter with a Total Capital Adequacy Ratio of 16.40% and a Common Equity Tier 1 Ratio of 15.01%, reinforcing its capacity to support future lending and growth initiatives. The Bank’s Return on Assets (ROA) stood at 0.82% and Return on Equity (ROE) at 1.53% for the period under review.

As Sri Lanka’s reform-driven economic trajectory takes shape, supported by renewed investor confidence, digital infrastructure rollouts, and sustained IMF engagement, SDB Bank remains well-positioned to contribute meaningfully to national development. With a strong presence across 94 branches and a focus on environmental, social, and governance (ESG) integration, the Bank continues to champion community-based banking and future-ready solutions.

About SDB bank:

A future-ready bank, dedicated to offering customer-centric and comprehensive support tailored to each individual's needs, SDB bank is a licensed specialized bank regulated by the Central Bank of Sri Lanka, with a listing on the Main Board of the Colombo Stock Exchange and a Fitch Rating of BB +(lka). Through the network of 94 branches island-wide, the bank provides a comprehensive range of financial services to its Retail, SME, Co-operative, and Business Banking clients across the country. Environmental, Social, and Governance (ESG) principles are deeply ingrained in SDB bank's ethos, with a steadfast focus on uplifting local communities and businesses through sustainable practices. The bank is particularly committed to promoting women's empowerment, sustainable development of SMEs, and digital inclusion, aiming to propel Sri Lanka to new heights.