RDB delivers exceptional 1Q performance, setting the pace for transformational year

Regional Development Bank (RDB) has commenced FY2026 on a strong footing, delivering an exceptional first-quarter performance that reflects the successful execution of its transformation agenda, disciplined financial management, and unwavering commitment to empowering communities and driving inclusive economic growth.

For the three months ended 31 March 2026, the bank recorded robust growth across all key financial indicators, demonstrating the resilience of its business model, the effectiveness of its strategic initiatives, and its ability to generate sustainable value in an increasingly dynamic banking environment.

The quarter’s performance underscores the progress achieved through RDB’s ongoing transformation program, which has focused on strengthening governance, enhancing operational efficiency, improving customer experience, accelerating digitalisation, and building a future-ready institution capable of delivering long-term growth.

Most significantly, Profit After Tax (PAT) surged to Rs. 1.08 billion from Rs. 377 million recorded in 1Q 2025, representing a remarkable growth of 187.3%. This exceptional improvement reflects the bank’s strengthened earnings capacity, enhanced productivity, prudent cost discipline, and successful execution of strategic priorities across the organisation. The bank recorded Profit Before Income Tax (PBT) of Rs. 1.87 billion in 1Q 2026 against Rs. 922 million a year ago, reflecting growth of 103%, while taxes on financial services increased by 27.8% compared to 1Q 2025.

Interest income increased by 11% to Rs. 10.64 billion, compared to Rs. 9.58 billion in the corresponding period of the previous year, while maintaining the Net Interest Margin (NIM) of 6.9% in 1Q 2026. 

The growth was driven by continued expansion of the bank’s lending portfolio, improved asset deployment strategies, and disciplined balance sheet management. Net Operating Income rose by an impressive 27.5% to Rs. 6.65 billion, reflecting stronger net interest earnings, growth in fee-based income streams, and benefits arising from ongoing operational improvements. The bank’s net fee-based income recorded significant growth of 223%, increasing from Rs. 187.18 million to Rs. 604.67 million, mainly driven by fee income from financial services provided by the bank.

The results further demonstrate RDB’s ability to convert strategic intent into measurable outcomes while maintaining a strong focus on risk management, governance, and customer value creation.

Chairman Lasantha Fernando said: “Our 1Q performance reflects the successful execution of a carefully designed transformation agenda that has strengthened the bank’s operating model, enhanced organisational agility, and improved our ability to respond to evolving customer needs. These results validate the strategic investments made in governance, operational excellence, technology, and people development. More importantly, they demonstrate our ability to deliver sustainable growth while remaining true to our development mandate and commitment to creating meaningful impact across Sri Lanka.”

The bank’s strong earnings performance was complemented by a resilient balance sheet and sound financial fundamentals. 

RDB maintained capital levels comfortably above regulatory thresholds, reinforcing its financial strength and capacity to support future business growth. 

As at 31 March 2026, the bank reported a Common Equity Tier 1 Capital ratio of 9.59%, significantly exceeding the minimum regulatory requirement of 7%, while the Total Capital Ratio stood at 14.07%, exceeding the minimum regulatory requirement of 12.5%.

Liquidity also remained a key strength, with the bank recording a Liquidity Coverage Ratio (LCR) of 135%, substantially above the regulatory minimum requirement of 100%. This robust liquidity position reflects prudent treasury management and provides the bank with significant capacity to support customer financing requirements while maintaining resilience against market uncertainties.

Asset quality indicators continued to improve, highlighting the effectiveness of the bank’s risk management framework and credit governance practices. Impaired Loans (Stage 3) to Total Loans Ratio remained well contained at 3.77%, reflecting disciplined underwriting standards, strengthened recovery mechanisms, and proactive portfolio monitoring. These indicators demonstrate the bank’s ability to balance growth ambitions with prudent risk management.

The bank’s total assets improved from Rs. 362 billion to Rs. 366 billion during 1Q 2026, while maintaining a gross loan portfolio of Rs. 323 billion and a deposit portfolio of Rs. 286 billion, reflecting the continual growth of operating performance. Return on Equity (ROE) stood at 19.27% (2025: 11.77%) and Return on Assets (before tax) stood at 2.05% (2025: 1.70%), showing the bank’s steady performance for the period ending 31 March 2026.

Further reinforcing confidence in its financial position and long-term prospects, RDB Bank retained its ‘BBB+ Stable’ Lanka Rating Agency credit rating with a Stable Outlook, affirming the bank’s strong capitalisation, sound liquidity profile, governance standards, and strategic direction.

A key contributor to the bank’s performance has been its comprehensive operational transformation program. During the quarter, RDB continued to streamline critical processes across customer onboarding, credit evaluation, loan processing, customer service, and back-office operations. These initiatives have significantly enhanced productivity, reduced turnaround times, improved service quality, and strengthened customer engagement across the bank’s extensive network.

General Manager/CEO Asanga Tennakoon said: “The strong performance achieved during 1Q reflects the collective impact of the transformation initiatives implemented across the organisation. Through process re-engineering, technology enablement, stronger performance management, and a relentless focus on customer experience, we are building a more agile, efficient, and future-ready bank. These efforts are enhancing productivity, unlocking new growth opportunities, and positioning RDB to deliver sustainable value to all stakeholders.”

RDB also continued to strengthen its market presence during the quarter, leveraging its extensive network of 272 branches and deep-rooted relationships across Sri Lanka’s regional economies. The bank further expanded support for entrepreneurs, small and medium enterprises, agricultural communities, women-led businesses, and emerging enterprises, reaffirming its role as a catalyst for financial inclusion and regional development.

As Sri Lanka’s premier development-focused financial institution, RDB remains uniquely positioned to bridge financial accessibility gaps while supporting economic empowerment at the grassroots level. This development-centric approach continues to differentiate the bank and strengthen customer trust across both urban and rural communities.

The bank’s performance during the quarter is particularly noteworthy given the rapidly evolving operating environment characterised by changing customer expectations, technological disruption, and intensifying competition. Through disciplined execution, strategic agility, and a clear focus on long-term value creation, RDB has successfully navigated these challenges while maintaining strong growth momentum.

Looking ahead, the bank remains confident in sustaining this positive trajectory. Building on the strong foundation established during 1Q, RDB will continue to accelerate digital transformation initiatives, deepen customer relationships, strengthen operational excellence, enhance organisational capabilities, and pursue responsible growth opportunities aligned with its development mandate.

With a strong capital base, healthy liquidity profile, improving asset quality, stable credit rating, and a clear strategic roadmap, RDB is well-positioned to deliver another year of sustainable growth while continuing to create lasting value for customers, communities, shareholders, and the nation at large. The exceptional 1Q performance not only marks a strong start to FY2026 but also reinforces RDB’s emergence as a more agile, resilient, and future-focused institution poised to play an increasingly significant role in Sri Lanka’s economic transformation.