LB Finance surpasses Rs. 25 b pre-tax profit mark in FY26

• Achieves exponential loan portfolio growth, pays Rs. 13.7 b in taxes to Govt.
• Plans entry into the Philippines market for which the regulatory approval process is nearing completion 

LB Finance PLC has reported a landmark financial performance for the year ended 31 March 2026, becoming one of the few non-bank financial institutions in Sri Lanka to surpass the Rs. 25 billion Pre-Tax Profit milestone. 

The Company recorded a historic Pre-Tax Profit of Rs. 25.01 billion, reflecting a 22% increase over the previous year, while Profit After Tax (PAT) rose by 27% to Rs. 13.67 billion, driven by strong portfolio expansion, diversified revenue streams, improved operational efficiency, and disciplined risk management.

In a statement LB Finance said it delivered broad-based growth across all key business segments during the year. Total income increased by 28% to Rs. 60.04 billion, supported by a 24% increase in interest income to Rs. 51.81 billion and a remarkable 72% growth in fee and commission income to Rs. 7.91 billion. Total operating income grew by 26% to Rs. 37.74 billion, reflecting the continued strength of LB Finance’s diversified business model.

The lending portfolio expanded by 58% to Rs. 312.66 billion, significantly outperforming industry growth trends. Total assets increased by 64% to Rs. 395.33 billion, underscoring the scale of the Company’s balance sheet expansion.

Public confidence in LB Finance remained strong throughout the year, with customer deposits increasing by 25% to Rs. 173.33 billion, reinforcing deposits as the Company’s primary funding source. To support rapid asset growth and strengthen liquidity management, LB Finance further diversified its funding base by expanding bank borrowing facilities to Rs. 102.97 billion and securing strategic long-term funding arrangements from Swiss based Social Investment Funds.

The Company continued to generate strong returns for shareholders. Return on Average Equity (ROE) improved to 24% from 23% in the previous year, while shareholders’ funds increased by 20% to Rs. 61.38 billion. Net Asset Value (NAV) per share rose to Rs. 110.79 from Rs. 92.53 a year earlier, while Earnings Per Share (EPS) increased to Rs. 24.68 from Rs. 19.50. Reflecting confidence in its earnings sustainability, the Company declared a dividend of Rs. 8.20 per share. 

LB Finance contributed approximately Rs. 13.72 billion in direct and indirect taxes during the year, reinforcing its position among the largest taxpayers within Sri Lanka’s non-bank financial institution sector.

Executive Director Ravindra Yatawara said: “Surpassing the Rs. 25 billion Pre-Tax Profit milestone is a landmark achievement for LB Finance and a testament to the resilience of our business model, disciplined execution, and customer-centric strategy. During the year, we accelerated portfolio growth, strengthened our market position through the acquisition of Associated Motor Finance Company PLC, maintained industry-leading asset quality and enhanced operational efficiency. These results reflect our commitment to creating sustainable value for shareholders, empowering our customers, and contributing meaningfully to Sri Lanka’s economic progress.”

A major strategic highlight during the year was the acquisition of a controlling stake in Associated Motor Finance Company PLC (AMF), which was fully consolidated into the Group’s financial statements. The acquisition significantly strengthened the Group’s presence in the high demand motor bike financing market, contributing approximately Rs. 17.2 billion in loans and receivables while expanding the Group’s overall competitive footprint.

At Group level, loans and receivables increased to Rs. 333 billion, while total assets rose to Rs. 415.57 billion. Total Group profit exceeded Rs. 14.04 billion, supported by strong contributions from subsidiaries and expanding operations.

Despite rapid balance sheet growth, LB Finance maintained capital adequacy and liquidity levels comfortably above regulatory requirements. Asset quality indicators improved further during the year, with the Gross Non-Performing Accommodation Ratio declining to 1.35% from 2.25% in the previous year. The Net NPL ratio remained at -1.24%, supported by strong recovery mechanisms and prudent provisioning practices. The Company maintained a robust Stage 3 impairment coverage ratio of 72.61%, reflecting its disciplined approach to risk management and credit underwriting.

LB Finance has established the Alternative Finance unit that has begun to steadily grow, offering a full stack of Alternative Financial services products. During the Financial Year, the Company relaunched affordable housing loans, which has demonstrated with strong demand. Furthermore, Sanmitha Small Business Loans, targeting the MSME sector, was launched during the year and has reached a loan book of Rs. 1.7 billion.

Operational efficiency also improved significantly, with the cost-to-income ratio declining to 30.52% from 32.58%, supported by ongoing cost optimisation initiatives and digital integration across the business. LB Finance continued to advance its digital transformation agenda through its flagship ‘LB CIM’ platform, which incorporates AI-driven credit assessment capabilities and biometric authentication to improve access to financial services. During the financial year, the LB CIM achieved a total transaction volume exceeding Rs. 316 billion across more than 6 million transactions, reflecting strong customer engagement and sustained growth in digital channel adoption.

Looking ahead, LB Finance remains focused on sustainable portfolio expansion, funding diversification, digital transformation, and maintaining strong capital and liquidity positions. The Company also plans to expand its specialised lending businesses and pursue regional growth opportunities, including its microfinance operations in Myanmar and its planned entry into the Philippines market, for which the regulatory approval process is nearing completion.