Monday Nov 03, 2025
Monday Nov 03, 2025
Monday, 3 November 2025 05:52 - - {{hitsCtrl.values.hits}}
Sri Lanka’s State-Owned Enterprises (SOEs) posted a mixed financial performance during the first half of 2025, with overall profits declining to Rs. 227.8 billion from Rs. 280.7 billion a year earlier.
The fall was largely due to a sharp reversal in the Ceylon Electricity Board’s (CEB) performance, which swung from a substantial profit to a loss following tariff reductions.
These losses outweighed gains recorded by State banks and other profitable enterprises, the Finance Ministry said in its Mid-Year Fiscal Position Report 2025 released on 31 October by Finance Minister and President Anura Kumara Disanayake.
Despite the drop in aggregate profitability, several large SOEs recorded improved results. The three main State banks—Bank of Ceylon, People’s Bank, and National Savings Bank—collectively boosted profits by Rs. 65.5 billion in the first six months, reflecting improved interest margins, balance sheet growth, and lower impairment charges.
Bank of Ceylon’s Profit Before Tax (PBT) rose sharply to Rs. 61.1 billion, from Rs. 22.4 billion in the same period of 2024, supported by a 78.6% increase in net interest income to Rs. 102.7 billion.
Total assets increased to Rs. 5,290 billion, while the deposit base grew by 5.2% to Rs. 4,429 billion. Impaired loans improved slightly to 7.13% from 7.20% at end-2024.
People’s Bank reported its highest-ever half-year PBT of Rs. 28 billion, compared to Rs. 2.6 billion a year earlier, reflecting a 151% increase in net interest income to Rs. 69.3 billion.
The bank’s assets grew by 8.3% to Rs. 3,572 billion, while its deposit base rose to Rs. 3,125 billion. The non-performing loan ratio declined to 9.39% from 10.26%, indicating modest improvements in asset quality.
National Savings Bank also recorded a strong performance with PBT rising 55% to Rs. 31 billion. Its impaired loan ratio dropped to 2.83%, from 5.18% in December 2024. The asset base reached Rs. 1,811 billion, and the deposit base increased to Rs. 1,576 billion.
The CEB’s results, however, erased much of these gains.
Revenue from electricity sales dropped 38.8% to Rs. 192.6 billion, despite a 4.3% increase in demand. The average revenue per kilowatt-hour fell to Rs. 24.64 from Rs. 41.97 due to the tariff reduction in January 2025, followed by a partial adjustment in June.
Although favourable weather conditions reduced thermal generation costs by 8.7%, the utility’s gross profit turned into a Rs. 11.2 billion loss. The CEB ultimately posted a net loss of Rs. 13.2 billion in 1H, compared to a profit of Rs. 119.2 billion in 2024.
The generation mix shifted towards renewable and hydro sources, accounting for 34% and 23% of total output respectively, reducing dependence on coal and fuel-based generation.
The Government meanwhile implemented structural reforms under the Sri Lanka Electricity (Amendment) Act, No. 14 of 2025, establishing four new SOEs for generation, transmission, distribution, and system operation to improve efficiency and transparency.
The Ceylon Petroleum Corporation’s profits declined 17.9% to Rs. 17 billion as turnover fell by 19.3% to Rs. 439.5 billion, reflecting lower global prices and a stronger rupee. Import costs fell to $ 1,040 million from $ 1,235 million in 2024.
The corporation also reduced its longstanding dues to the National Iranian Oil Company from $ 191 million to $ 131 million through partial settlements under the Tea-for-Oil barter arrangement.
SriLankan Airlines remained in financial distress despite a rise in passenger volumes.
The airline carried over 1 million passengers during Q1 of the 2025/26 financial year, with a load factor of 82%, but reported a net loss of Rs. 10.7 billion, down from Rs. 12.9 billion a year earlier.
Operating losses widened to Rs. 5.2 billion, but catering operations provided modest relief, resulting in a group operating profit of Rs. 1.1 billion before finance costs.
The airline’s accumulated losses stood at Rs. 628.3 billion, with negative equity of Rs. 415.2 billion and total liabilities of Rs. 606.7 billion. The Board has approved a five-year restructuring plan focused on cost rationalisation and fleet optimisation.
The National Water Supply and Drainage Board reported a net profit of Rs. 17.7 billion, up 28.3% from Rs. 13.8 billion, supported by lower pumping costs after the electricity tariff reduction.
Revenue reached Rs. 41.5 billion, while cost of sales dropped 20% to Rs. 15 billion. Safe drinking water coverage improved to 99.1%, and the Board added nearly 100,000 new connections.
The Sri Lanka Ports Authority recorded a PBT of Rs. 29.2 billion, up from Rs. 19.8 billion, as total revenue rose to Rs. 52 billion. Container throughput continued to expand, with the Port of Colombo expected to handle over 8 million Twenty-foot Equivalent Units (TEUs) in 2025.
Ongoing development projects at the East and West Container Terminals and Colombo North Port are expected to enhance capacity further.
Airport and Aviation Services (Sri Lanka) Ltd., increased revenue by 31% to Rs. 27.3 billion, supported by strong non-aeronautical income.
Operating profit rose to Rs. 16.1 billion, but a Rs. 4.3 billion exchange loss reversed the previous year’s foreign exchange gain, cutting net PBT to Rs. 14.6 billion and after-tax profit to Rs. 9.8 billion.
The Finance Ministry report noted that while the overall SOE sector remains profitable, its fiscal contribution through levies and dividends fell to Rs. 11.7 billion in 1H from Rs. 14.9 billion in 2024. The Government has moved ahead with broad-based reforms aimed at improving governance and reducing fiscal risks.
In June 2025, the Cabinet approved the drafting of the Public Commercial Enterprises Management Bill, intended to professionalise the management of State-owned commercial entities, introduce stricter governance standards, and ensure accountability.
A separate committee is reviewing non-commercial SOEs for potential mergers or closures.
State bank reforms also advanced under the Cabinet-approved policy framework, with independent directors recommended by a committee of professionals in July.
The Government’s broader restructuring program aims to align State enterprises with commercial principles, reduce financial losses, and improve transparency across strategic sectors.
