Finance company sector assets up 35% YoY to Rs. 2.49 t by Q3 2025

Saturday, 3 January 2026 00:44 - - {{hitsCtrl.values.hits}}

The Non-Bank Finance Company (FC) sector expanded sharply in the year to end-September 2025, with total assets growing 35.3% year-on-year (YoY) to Rs. 2.49 trillion, driven primarily by a strong increase in loans and advances, according to the Central Bank of Sri Lanka’s Financial Soundness Indicators (FSI) for the third quarter of 2025.

Net loans and advances rose 48.4% YoY to Rs. 1.99 trillion from Rs. 1.34 trillion at end-September 2024, reflecting an acceleration in credit growth. In contrast, investments declined by 4.5% to Rs. 334.3 billion from Rs. 350.1 billion a year earlier, indicating a balance-sheet shift towards lending activity.

Total liabilities, excluding equity, increased 42.5% YoY to Rs. 1.98 trillion at end-Q3 2025. Deposit liabilities rose 21.6% to Rs. 1.23 trillion, while borrowings more than doubled to Rs. 611.2 billion, up 120.2% from Rs. 277.6 billion a year earlier. Equity funds increased by 13.2% YoY to Rs. 511.1 billion.

Regulatory capital of the FC sector increased 16.7% to Rs. 418.1 billion, while risk-weighted assets expanded at a faster pace of 37.3% to Rs. 2.19 trillion. As a result, the total capital adequacy ratio declined to 19.1% at end-Q3 2025 from 22.5% a year earlier. Tier 1 capital stood at Rs. 389 billion, up 12.1% YoY. The total borrowings-to-equity ratio increased to 1.2 times from 0.6 times over the same period.

Asset quality improved markedly during the period, with the gross Stage 3 loans ratio declining to 6.8% at end-Q3 2025 from 12% a year earlier. Gross Stage 3 loans fell 18.3% YoY to Rs. 140.7 billion, while net Stage 3 loans declined 29.6% to Rs. 73.5 billion. Impairment coverage for Stage 3 loans improved to 47.7% from 39.3%.

The FC sector reported a profit after tax of Rs. 41.9 billion during the first six months of FY2025/26, up 59.3% from Rs. 26.3 billion in the corresponding period a year earlier.

Net interest income increased 26.6% YoY to Rs. 119.7 billion, while profit before tax rose 48.3% to Rs. 55.6 billion. Return on assets and return on equity increased to 6.9% and 17.2%, respectively, from 5.7% and 12.3% a year earlier.

Liquidity indicators moderated during the period, though remaining above regulatory thresholds. The ratio of liquid assets to total assets declined to 8.9% at end-Q3 2025 from 11.9% a year earlier. The credit-to-deposit ratio increased to 169.3% from 141.8%, while liquid assets to deposits and borrowings declined to 12% from 17%.

For banking sector assessment see https://www.ft.lk/business/Banking-assets-up-16-YoY-to-Rs-24-5-t-in-9M/34-785573