SDB bank demonstrates resilience and strategic progress in 1Q

Monday, 2 June 2025 03:53 - - {{hitsCtrl.values.hits}}

SDB bank has reported a resilient performance in the first quarter of 2025, underscoring the bank’s commitment to steady progress, stakeholder value, and long-term sustainability.

In a statement it said 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 Rs. 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 optimised 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 Rs. 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.

Executive Director/CEO Kapila Ariyaratne said: “Our Q1 performance reflects a disciplined approach to balance sheet management and long-term value creation. We have prioritised 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.

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