LB Finance surpasses Rs. 25 b pre-tax profit on exponential loan portfolio growth, pays Rs. 13.7 b taxes to Govt.

LB Finance Executive Director  Ravindra Yatawara

LB Finance PLC 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, while remitting Rs. 13.72 billion in direct and indirect taxes to the Government during the year.

The company said its tax contribution places it among the largest taxpayers in Sri Lanka’s non-bank financial institution (NBFI) sector, underscoring its role in supporting national revenue generation and economic development. The contribution comes at a time when tax revenue remains a key pillar of Sri Lanka’s economic recovery efforts, with the financial services sector playing an increasingly important role in supporting government finances.

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.

The company 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. Customer deposits also increased by 25 per cent to Rs. 173.33 billion, reflecting continued public confidence in the institution.

To support its growth, LB Finance diversified its funding base through expanded bank borrowing facilities and strategic long-term funding arrangements from Swiss-based Social Investment Funds, reflecting growing international confidence in the company’s financial strength and Sri Lanka’s financial services sector.

The company continued to generate strong returns for shareholders. Return on Average Equity (ROE) improved to 24.28% from 22.77% 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. 

Commenting on the performance, Executive Director Ravindra Yatawara said the company had achieved the milestone through disciplined execution and a customer-focused strategy.

“Surpassing the Rs. 25 billion pre-tax profit mark is a significant achievement for LB Finance. These results reflect the strength of our business model, our commitment to sustainable growth and our contribution to Sri Lanka’s economic progress,” he said.

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 negative 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.

Operational efficiency also improved significantly, with the cost-to-income ratio declining to 30.52% from 32.58%, supported by ongoing cost optimization 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.

LB Finance continued to expand its Alternative Finance operation during the year, while re-launching affordable housing loans which demonstrated with strong demand. In addition, Sanmitha Small Business Loans, introduced to support the MSME sector, grew rapidly during the year and reached a loan book of Rs. 1.7 billion.

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 specialized 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.