The Bank delivered solid results during this period, with consistent growth across key performance indicators.
Loan and deposit volumes expanded meaningfully, while Net Interest Income rose by 11%, reflecting disciplined asset-liability management and robust strategic initiatives.
This performance highlights the Bank’s ongoing emphasis on credit expansion and funding optimisation, reaffirming its commitment to creating long-term value for both shareholders and customers.
DFCC Bank sustained its focus on balance sheet growth, recording a 26% increase in loans and a 22% increase in deposits - driven by a strategy designed to capitalise on the easing interest rate environment.
This growth aligns with DFCC Bank’s continued support for national economic recovery through targeted lending.
Reflecting broader market dynamics, private sector credit also showed a strong upward trend, fuelled by lower interest rates and a rebound in economic activity.
The modest increase in interest income for the period marked a turnaround from earlier periods affected by rate compression, enabled by growth in lending volumes and a stronger CASA base.
In Q3 2025, DFCC Bank also marked a major milestone with the launch of Sri Lanka’s first Blue Bond - an LKR 3 Bn initiative to support ocean-positive SMEs and climate adaptation, further reinforcing its leadership in sustainable finance.
The Bank also commemorated its 70th anniversary during the quarter by introducing a suite of special Fixed Deposit products to reward loyal customers and deepen relationships.
In recognition of its continued impact, DFCC Bank was officially certified as a Great Place to Work, and was ranked 4th in the AICPA & CIMA Top 20 Employers in Sri Lanka. It was also declared as the Best Bank in MSME Acceleration at the ICC Emerging Asia Banking Awards 2025.
Other accolades included recognition among Sri Lanka’s Top 30 Most Valuable and Strongest Brands by Brand Finance (ranked 27th), and wins at SLIM Digis 2.5 for Best Use of AI Technologies (Merit) and Best SEO/SEM Campaign (Silver).
This commentary relates to the unaudited financial statements for the period ended 30 September 2025, presented in accordance with Sri Lanka Accounting Standard 34 (LKAS 34) on Interim Financial Statements.
Income Statement Analysis
Profitability
DFCC Bank PLC, the largest entity within the Group, recorded a Profit Before Tax (PBT) of LKR 12,151 Mn and a Profit After Tax (PAT) of LKR 8,328 Mn from continuing operations, compared to a PBT of LKR 9,559 Mn and a PAT of LKR 6,013 Mn in the same period last year.
The Bank’s Earnings Per Share (EPS) from core operations was LKR 19.07, while the EPS including the gain from the disposal of its stake in Acuity Partners (Pvt) Ltd stood at LKR 30.44.
At Group level, PBT was LKR 12,480 Mn and PAT was LKR 8,530 Mn, from continuing operations, compared to LKR 9,909 Mn and LKR 6,308 Mn, respectively, in 2024.
The Bank’s Return on Equity (ROE) stood at 15.85%, while Return on Assets (ROA) before tax was 2.71% for the period ended 30 September 2025, inclusive of the disposal gain recorded under profit from discontinued operations.
Net Interest Income
During the period, DFCC Bank recorded a 4% increase in interest income while containing interest expenses, highlighting the Bank’s operational resilience and disciplined margin management amid a challenging rate environment.
This growth was primarily fuelled by a 26% expansion in the loan portfolio, underscoring DFCC’s strategic focus on quality asset growth.
Achieved within a subdued interest rate landscape, this performance reflects the Bank’s prudent lending practices and effective portfolio management, reinforcing its commitment to sustainable financial performance.
Net Interest Income, the Bank’s core earnings driver, increased by 11% to LKR 22,969 Mn, driven by effective loan book expansion and funding cost optimization while maintaining a robust CASA ratio.
Driven by a 25% growth in the CASA portfolio compared to the previous period, the CASA ratio increased from 24.77% as of 31 December 2024 to 25.34% as at 30 September 2025, reflecting a stronger deposit mix and improved funding cost efficiency.
However, the Net Interest Margin declined from 4.18% in December 2024 to 3.95% by September 2025, largely due to the Bank’s competitive positioning and prevailing market dynamics.
Fee and Commission Income
DFCC Bank’s proactive strategies continued to yield strong results, driving higher volumes across remittances, credit-related charges, trade commissions, and other fee-generating activities.
Growth in the credit card portfolio further contributed to this momentum.
While fee-related expenses rose in line with customer acquisition and portfolio expansion efforts, the net impact remained firmly positive.
Consequently, net fee and commission income surged by 48% year-on-year, reaching LKR 5,281 Mn compared to LKR 3,561 Mn in the corresponding period of 2024.
This growth reflects the Bank’s focus on scaling non-interest income streams effectively.
Impairment Charge on Loans and Other Losses
The Stage 3 impaired loan ratio improved to 4.82% as at 30 September 2025, from 5.65% as at 31 December 2024, driven by successful recoveries and portfolio growth.
Impairment provisions were prudently made to support this expansion, incorporating model calibrations and additional buffers for high-risk sectors, while taking into account global and local economic trends.
Consequently, impairment charges for loans and advances increased by 10%, from LKR 3,577 Mn to LKR 3,938 Mn, compared to the previous period.
Operating Expenses
Technology and digital transformation remained a strategic priority for DFCC Bank, with ongoing upgrades to its IT infrastructure aimed at enhancing multi-channel service delivery and operational efficiency.
In parallel, the Bank increased its investment in marketing and promotional activities to strengthen brand visibility, deepen customer engagement, and support product growth.
These forward-looking initiatives are expected to deliver long-term value by expanding market reach, accelerating customer acquisition, and reinforcing DFCC Bank’s competitive position in a dynamic financial landscape.
As a result of these strategic investments, operating expenses rose to LKR 13,348 Mn in the period ended 30 September 2025, compared to LKR 11,341 Mn in the corresponding period last year.
Despite this increase, the Bank remains firmly committed to strategic cost optimisation across all functions, to ensure sustainable growth and operational resilience.
Other Comprehensive Income (OCI)
OCI included fair value gains from equity and fixed-income securities, alongside movements in hedging reserves.
Exchange rate volatility was minimised through hedge accounting practices.
Equity securities posted a fair value gain of LKR 8,346 Mn, primarily due to an increase in the share price of Commercial Bank of Ceylon PLC.
Treasury bill and bond yield gains amounted to LKR 1,670 Mn during the same period.
Financial Position Analysis
Assets
DFCC Bank demonstrated strong balance sheet expansion despite prevailing economic and sector-specific headwinds.
Total assets grew by LKR 148 Bn, marking a 21% increase since December 2024.
The Bank’s net loan portfolio rose by LKR 101 Bn to reach LKR 495 Bn, reflecting a robust 26% growth from LKR 394 Bn as at 31 December 2024.
This performance aligns with DFCC Bank’s strategic growth agenda and signals renewed confidence in the improving economic environment, underscoring the Bank’s pivotal role in driving credit expansion and supporting national recovery.
Liabilities
DFCC Bank’s total liabilities rose by LKR 128 Bn, marking a 21% increase from December 2024.
The Bank’s deposit base increased by 22%, reaching LKR 568 Bn compared to LKR 465 Bn as at 31 December 2024.
The resulting loan-to-deposit ratio stood at 96.09% as at 30 September 2025, while the CASA ratio stood at 25.34%.
The Bank continued to leverage medium- to long-term concessionary credit lines for targeted lending expansion and affordable financing.
Including these term borrowings, the adjusted CASA ratio improved to 30.72%, and the adjusted loan-to-deposit ratio stood at 89.82% as at 30 September 2025.
Equity and Capital Compliance
As at 30 September 2025, total equity increased by LKR 20 Bn, supported by a profit after tax of LKR 13.3 Bn and fair value gains across the Bank’s securities portfolios.
In alignment with the Bank’s growth strategy and the improving economic environment, the net loan portfolio grew by 26%.
Leveraging the strengthened equity base, the Bank effectively absorbed the additional capital requirements associated with portfolio growth.
As a result, the Tier 1 Capital Ratio was maintained at 11.806%, while the Total Capital Ratio stood at 14.276%, compared to 12.402% and 15.759%, respectively, as at December 2024.
The Bank’s Net Stable Funding Ratio (NSFR) stood at 121.93%, and the Liquidity Coverage Ratio (LCR) – all currency - reached 188.69%, both comfortably exceeding regulatory minimums.
CEO’s Statement
As Sri Lanka continues its macroeconomic recovery - with interest rates easing, credit demand strengthening, and investor confidence returning, DFCC Bank’s performance in the third quarter reflects both resilience and readiness.
The Bank recorded a Profit After Tax of LKR 13.3 Bn at Bank level, which included a one-off gain from the strategic divestment of its 50% stake in Acuity Partners (Pvt) Ltd, underpinned by a 26% growth in the loan portfolio and a 22% increase in deposits.
Core profitability remained strong, supported by disciplined credit expansion and funding optimisation.
These results are a reflection of deliberate choices and shared purpose.
From accelerating home ownership and mobility propositions, to deepening our engagement with Micro and SME sector entrepreneurs and remittance-receiving families, we remained focused on relevance and real impact.
Our inclusive finance agenda continued to gain momentum, with DFCC Aloka surpassing 100,000 customers and the rollout of our Islamic Banking proposition further broadening access to ethical and faith-aligned financial services.
This quarter also marked a defining step in our sustainability journey, with the announcement of Sri Lanka’s first Blue Bond - an LKR 3 Bn initiative designed to finance ocean-positive SMEs and strengthen climate adaptation.
This builds on our earlier leadership in green finance, including the triple green bond listings across Colombo, Luxembourg, and GIFT City in India, further cementing DFCC Bank’s role as a catalyst for sustainable capital.
At ground level, our teams continued to bring the Bank’s purpose to life through nationwide activations such as the Mega Town Storming campaign and participation in regional fairs, creating direct engagement and tangible value for communities.
These collective efforts reinforce not just our market position, but our character as a purpose-driven institution built on connection and service.
As DFCC Bank celebrates its 70th year, the Bank remains deeply grateful to its customers and stakeholders for their continuing trust, understanding, and confidence.
This performance of the period further reflects a powerful balance between financial strength and strategic foresight.
Our fundamentals are strong, our purpose is clear, and our direction is focused - to deliver meaningful growth, responsible innovation, and sustained value for Sri Lankans everywhere.