Total assets of Sri Lanka’s banking industry increased to Rs. 24.5 trillion in the nine months ended September 2025, supported by strong credit growth and higher investments, according to Central Bank data.
The sector recorded a year-on-year asset increase of Rs. 3.3 trillion, driven mainly by an expansion in loans and advances as well as investment portfolios.
Net loans and advances rose from Rs. 10.2 trillion to Rs. 12.1 trillion, while investments increased from Rs. 8.1 trillion to Rs. 9.7 trillion. Cash balances grew to Rs. 1.87 trillion, although other assets declined to Rs. 587 billion.
On the liabilities side, deposits stood at Rs. 19.7 trillion at end-September, up from Rs. 17.4 trillion a year earlier. Borrowings increased from Rs. 1.3 trillion to Rs. 1.6 trillion, while other liabilities rose to Rs. 916 billion. Equity and reserves strengthened to Rs. 2.3 trillion, compared to Rs. 1.9 trillion a year earlier.
Profitability improved significantly during the period. Net interest income rose from Rs. 616.4 billion to Rs. 754.2 billion, while non-interest income increased from Rs. 141.1 billion to Rs. 203.1 billion. Although operating expenses increased to Rs. 356 billion from Rs. 320 billion, impairment charges declined sharply from Rs. 65 billion to Rs. 45 billion.
As a result, profit after tax rose to Rs. 279 billion, compared to Rs. 180 billion a year earlier. Return on equity improved from 13.3% to 17.5%, while return on assets increased from 1.9% to 2.5%.
Asset quality also showed improvement, with the non-performing loans (NPL) ratio declining from 12.4% to 11.2%.
Liquidity indicators remained strong. Liquid assets accounted for 36% of total assets, while the rupee liquidity coverage ratio stood at 298.8%, although lower than 345% recorded a year earlier. The loan-to-deposit ratio increased to 66.9% from 64.9%.
Capital adequacy remained well above regulatory requirements. The overall capital ratio stood at 18.4%, marginally lower than 18.5% a year earlier, while Tier 1 capital improved to 15.1% from 14.8%.
