SDB bank delivers Resilient Performance in Q2 2025

As a progressive development bank with a unique mandate, SDB bank continues to position itself at the intersection of financial inclusion, cooperative values, and digital innovation. Rooted in community and cooperative banking principles, the Bank plays a vital role in uplifting underserved segments particularly women entrepreneurs, MSMEs, and rural populations while scaling its reach through digital channels and customer-centric solutions. With its strategic focus on sustainability, social impact, and inclusive finance, SDB bank has steadily grown into one of Sri Lanka’s most purpose-driven financial institutions.

Despite broader macroeconomic headwinds, SDB bank reported a Profit After Tax of Rs. 156 million for the first half of 2025, reflecting a resilient performance. The Bank recorded a 32% year-on-year increase in net fee income, while its Net Interest Margin rose to 5.64% in June 2025, supported by proactive yield and funding cost management. Maintaining a substantial capital and liquidity position, SDB bank recorded a Total Capital Ratio of 15.26% and a Liquidity Coverage Ratio of 281.52% as at the end of the quarter.

The period under review coincided with steady progress in Sri Lanka’s economic recovery, with GDP growth estimated at 5% for Q2 2025, annual headline deflation of –0.6% in June, and foreign reserves rising to USD 6 billion. These macroeconomic developments, alongside ongoing fiscal and monetary reforms, provided a supportive backdrop for the Bank’s operations, contributing to enhanced lending opportunities, digital growth, and investor confidence.

While overhead expenses rose by 6% year-on-year due to higher staff costs, these were offset by a reduction in impairment charges, which declined by 18% compared to Q2 2024, driven by sustained collection and remediation efforts. The impairment coverage ratio for Stage 3 loans improved from 47.78% at year-end 2024 to 49.84% in Q2 2025, reflecting prudent risk management.

On the balance sheet, loans and advances to customers increased by Rs. 3.9 billion since December 2024. Overall assets contracted by 1% during the first half, primarily due to the repayment of short-term borrowings and the impact of the rupee’s appreciation against the U.S. dollar. This aligns with the Bank’s deliberate strategy to optimise its funding structure, reduce reliance on high-cost debt, and grow its low-cost savings base.

Commenting on the results, Kapila Ariyaratne, Executive Director and CEO of SDB bank, said: “We have continued to adapt in a challenging market and our Q2 performance reflects the strength of our fundamentals. By pursuing targeted growth strategies with prudent risk management, we continue to deliver value to our customers and stakeholders, while reinforcing our role in driving inclusive and sustainable economic progress in Sri Lanka.”

SDB bank remains focused on supporting its customers through tailored financial solutions, reinforcing grassroots economic activity, and promoting inclusive growth, while maintaining the resilience and stability needed to navigate evolving market conditions.

About SDB bank:

A future-ready bank, dedicated to offering customer-centric and comprehensive support tailored to each individual's needs, SDB bank is a licensed specialized bank regulated by the Central Bank of Sri Lanka, with a listing on the Main Board of the Colombo Stock Exchange and a Fitch Rating of BB +(lka). Through the network of 94 branches island-wide, the bank provides a comprehensive range of financial services to its Retail, SME, Co-operative, and Business Banking clients across the country. Environmental, Social, and Governance (ESG) principles are deeply ingrained in SDB bank's ethos, with a steadfast focus on uplifting local communities and businesses through sustainable practices. The bank is particularly committed to promoting women's empowerment, sustainable development of SMEs, and digital inclusion, aiming to propel Sri Lanka to new heights.