Sampath Bank sustains growth momentum in 1Q

• Designation of Sampath Bank as a Domestic Systemically Important Bank

Chairman Harsha Amarasekera

Managing Director Ayodhya Iddawela Perera

Effective from 17 April, Sampath Bank has been officially designated as a Domestic Systemically Important Bank (D-SIB) by the Central Bank of Sri Lanka, in accordance with Directive No. 01 of 2025. The bank has been classified under Bucket 1, reflecting its significant role in maintaining the stability and resilience of the national financial system and underscores Sampath Bank’s critical importance to the country’s financial sector.

The bank reported a Profit Before Tax (PBT) of Rs. 13.4 billion and a Profit After Tax (PAT) of Rs. 8.3 billion for the three months ended 31 March, reflecting growth rates of 115% and 149% respectively, compared to the same period in 2024. Similarly, the Sampath Group posted a PBT of Rs. 14.3 billion and a PAT of Rs. 8.9 billion, demonstrating growth rates of 107% and 135% respectively.

Key financial highlights for the period ended 31 March

• The total deposit portfolio expanded by Rs. 76.6 billion
• Net fee and commission income recorded a growth of 6%
• Impairment charges saw a significant reduction of 102%
• Exchange gain of Rs. 1.2 billion, driven by the depreciation of the LKR against the USD by Rs. 3.02.
• A gain of Rs. 2.7 billion from the disposal of T-Bills and T-Bonds
• Net Interest Income (NII) declined by 6%, primarily due to a reduction in market interest rates
• Strong Tier 1 and Total Capital Adequacy Ratios of 16.51% and 20.30%, respectively

Fund based income

The bank reported a total interest income of Rs. 44 billion for the quarter ended 31 March, representing a decline of 10% compared to the corresponding period in the previous year. This decrease was primarily driven by a lower AWPLR and reduced yields on Government securities seen during the period. Interest expenses of the bank amounted to Rs. 24.9 billion, reflecting a 12% decrease, in line with the overall decline in market interest rates.

The bank’s Net Interest Income (NII) stood at Rs. 19.1 billion, down 6% compared to the corresponding quarter of the previous year. Similarly, the bank’s Net Interest Margin (NIM) declined by 58 basis points—from 4.90% in 2024 to 4.32% in 1Q 2025.

Non-fund based income

In the first quarter of 2025, the bank recorded a substantial improvement in total non-fund based income, which rose sharply to Rs. 8.8 billion from Rs. 0.7 billion reported during the corresponding period of the previous year. Net fee and commission income increased by 6% compared to 1Q 2024, primarily due to an increase in income from card, credit and trade related activities. 

The bank reported a total exchange gain of Rs. 1.2 billion in 1Q 2025, in contrast to a loss of Rs. 4.3 billion recorded in the corresponding period of the previous year, primarily due to the depreciation of the LKR against the USD by Rs. 3.02. Additionally, the bank recorded capital gains of Rs. 2.7 billion from the sale of Treasury Bills and Treasury Bonds, marking a substantial increase of 582% compared to the same period last year.

Impairment charge 

In the first quarter of 2025, the bank reported a total impairment reversal of Rs. 81.8 million, reflecting a significant decrease of Rs. 4.5 billion compared to the previous period. This comprised a reversal of Rs. 53.4 million for loans and advances (1Q 2024: charge of Rs. 2.4 billion), a charge of Rs. 0.4 billion for other financial instruments (1Q 2024: Rs. 0.9 billion), and a reversal of Rs. 0.5 billion for credit-related commitments and contingencies (1Q 2024: charge of Rs. 1.1 billion).

Impairment charge on loans and advances 

The bank recorded a 102% decline in the impairment charge against loans and advances during the reporting period. This notable reduction was primarily due to improved customer credit quality, the bank’s proactive provisioning strategy adopted in previous years, and the stabilisation of key high-risk sectors supported by the broader recovery of the country’s economy. 

Impairment charge on other financial instruments

An impairment charge of Rs. 0.4 billion was recognised against other financial instruments during 1Q 2025, primarily due to the new investments made during the quarter.

Operating expenses

During the reporting period, operating expenses increased by Rs. 2.3 billion compared to the same period in 2024. This rise was primarily driven by a Rs. 1.2 billion increase in personnel costs due to annual salary increments granted in 2Q 2024. Despite this, the cost-to-income ratio (CIR) improved by 130 basis points, decreasing to 38.7% in 1Q 2025 from 40.0% in 1Q 2024. This improvement in CIR was driven by a higher increase in operating income outpacing the rise in operating expenses.

Taxation

The total tax charge for the period saw a significant increase of 78%, rising from Rs. 5 billion in 1Q 2024 to Rs. 8.8 billion in 1Q 2025. This increase was driven by the growth in taxable income.

Key ratios 

As of 31 March 2025, the Return on Average Shareholders’ Equity (after tax) increased to 20.34%, compared to 17.74% at the end of 2024. Similarly, the Return on Average Assets (before tax) stood at 3.02% as of 31 March 2025, compared to 2.84% reported at the end of 2024.

Capital and liquidity

Throughout the review period, Sampath Bank continued to maintain its capital ratios well above the regulatory minimum requirements. As of 31 March, the bank’s CET 1, Tier 1, and total capital ratios were at 16.51%, 16.51%, and 20.30%, respectively, compared to 16.75%, 16.75%, and 19.38% recorded at the end of 2024. Furthermore, the bank comfortably met the enhanced capital ratio requirements of 1% at each level applicable to Domestic Systemically Important Banks (D-SIBs) as of 31 March.

Liquidity levels too remained robust and well above the minimum regulatory requirements. As of 31 March, the All-currency Liquidity Coverage Ratio stood at 305.2%, and the Net Stable Funding Ratio was at 198.0%, compared to 307.4% and 198.7% at the end of 2024.

Assets

During the first quarter of 2025, the bank’s total assets grew by 5% driven by increased investments in short-term financial instruments to reach Rs. 1.86 trillion compared to Rs. 1.78 trillion as of 31 December 2024. During the period, the bank’s holdings in LKR-denominated Treasury Bills increased by Rs. 28 billion, while placements with other banks rose by Rs. 31 billion. Additionally, the bank expanded its investment in US Treasury Bills by Rs. 19 billion. Cash and cash equivalents also increased by Rs 16 Bn, supported by higher nostro balances.

Meanwhile, the gross loan portfolio experienced a slight decline of Rs. 4.8 billion, decreasing from Rs. 964.6 billion at the end of 2024 to Rs. 959.8 billion. This reduction was mainly due to a decrease in foreign currency loans by Rs. 10 billion. However, this decline was partially mitigated by an increase of Rs. 5.2 billion in LKR-denominated loans.

Liabilities

As of 31 March 2025, the bank’s total liabilities increased by 6%, reaching Rs. 1.70 trillion, up from Rs. 1.61 trillion at the end of 2024. This growth was predominantly fuelled by a significant expansion in the deposit base, which rose by Rs. 76.6 billion, from Rs. 1,469.2 billion at the end of 2024 to Rs. 1,545.8 billion as of the reporting date. LKR deposits were the main contributor to this growth, increasing by Rs. 67.8 billion, followed by foreign currency deposits which increased by Rs. 8.8 billion.

The bank’s CASA ratio showed a slight improvement rising to 34.4% as of 31 March 2025, compared to 34.0% at the end of 2024.

Dividend 

At the Annual General Meeting held on 28 March, the shareholders of Sampath Bank approved a first and final Cash Dividend of Rs. 9.35 per share for the financial year 2024. In the 1Q 2025 Financial Statements, the Bank made a provision of Rs. 11 billion to facilitate the payment of the approved final dividend to its shareholders.

Commitment to stakeholder well-being

Sampath Bank continues to play a pivotal role in Sri Lanka’s economic revival. Through its Business Revival Unit, the bank provides targeted financial solutions to customers facing financial distress, empowering them to rebuild and sustain their businesses. This initiative has significantly strengthened customer creditworthiness while supporting broader goals of financial stability and economic resilience.

Sustainability continues to guide Sampath Bank’s community engagement efforts. As a trusted national institution, the bank takes a proactive role in tackling economic, environmental and social challenges with the close collaboration of the local communities. Wewata Jeewayak, the bank’s flagship CSR program continues to revitalise the irrigation systems of the nation, uplifting rural communities through agriculture. A “Breath to the Ocean” focusing on marine conservation, “Sampath Saviya” an MSME empowering program, “Hope for Life”, providing critical healthcare support, and “Gasai Mamai Pubudu Pothai”, a tree-planting initiative that promotes environmental education among children. These efforts reflect the bank’s commitment to creating lasting value by uplifting lives, safeguarding the environment and building a more resilient Sri Lanka.