DFCC Bank achieved remarkable financial performance for the year ending 31 December 2025, showcasing the effectiveness of its strategic approach, disciplined execution, and robust balance sheet. The Profit After Tax from continuing operations rose by 32%, driven by substantial growth in the loan portfolio and deposit base, effective asset-liability management, and stringent cost control.

The Bank’s total assets grew by 22% to LKR 857 billion, with the loan portfolio increasing by 31%, indicating a well-managed credit expansion aligned with national recovery priorities. The performance was bolstered by funding optimization and prudent liquidity management, enhancing long-term value for shareholders and customers.

Throughout the year, market interest rates stabilized at lower levels as the Central Bank of Sri Lanka adopted an accommodative stance to support liquidity and credit flows. Despite disruptions caused by Cyclone Ditwah in late 2025, early signs of recovery were evident, with reconstruction activities expected to boost credit demand.

A significant strategic milestone was the signing of a binding Business Sale Agreement with Standard Chartered Bank PLC, acquiring the Wealth and Retail Banking operations of Standard Chartered Bank, Sri Lanka. This acquisition strengthens DFCC Bank’s retail and wealth franchise, broadens its customer base, and accelerates growth across key segments.

The Bank also issued Sri Lanka’s first listed and rated Blue Bond, an LKR 3 billion transaction that was significantly oversubscribed, reflecting strong investor confidence and reinforcing DFCC Bank’s leadership in sustainable finance.

Celebrating its 70th anniversary, the Bank introduced special Fixed Deposit products to reward long-standing customers and deepen relationships, reaffirming its commitment to service and trust.

Looking forward, DFCC Bank is dedicated to upholding Environmental, Social, and Governance principles. Sustainability is integral to the Bank’s operations, ensuring growth remains inclusive and responsible. The Bank is enhancing climate- and sustainability-related financial disclosures in line with SLFRS S1 and S2, strengthening transparency for investors and capital providers.

DFCC Bank was recognized as a Great Place to Work and ranked 4th in the AICPA & CIMA Top 20 Employers in Sri Lanka. It was declared Best Bank in MSME Acceleration at the ICC Emerging Asia Banking Awards 2025. Additionally, the Bank was ranked 27th among Sri Lanka’s Most Valuable and Strongest Brands by Brand Finance and received accolades at SLIM Digis 2.5 for Best Use of AI Technologies and Best SEO/SEM Campaign.

Income Statement Analysis

Profitability

In 2025, DFCC Bank PLC reported a Profit Before Tax (PBT) of LKR 15,582 million and a Profit After Tax (PAT) of LKR 11,060 million from continuing operations, a 32% increase from the previous year’s PAT of LKR 8,353 million. Including the gain from the disposal of its stake in Acuity Partners (Pvt) Ltd, total Profit After Tax rose to LKR 16,028 million.

Earnings Per Share (EPS) from continuing operations climbed by 30% to LKR 25.30, while EPS including the disposal gain was LKR 36.66, indicating sustained earnings momentum.

At the Group level, for the year ended 31 December 2025, Profit Before Tax was LKR 15,953 million and Profit After Tax was LKR 11,231 million from continuing operations, compared to LKR 13,820 million and LKR 8,554 million respectively in 2024. Group EPS from continuing operations rose by 30%, reaching LKR 25.31 in 2025, from LKR 19.51 in the previous year.

The Bank’s Return on Assets (ROA) before tax from continuing operations remained at 2.00%, while Return on Equity (ROE) after tax from continuing operations stood at 11.55% for 2025, compared to 10.99% in 2024.

The total tax expense, including Value Added Tax (VAT), Social Security Contribution Levy (SSCL) on financial services, and Income Tax, amounted to LKR 10,751 million for the year ended 31 December 2025, with a tax expense percentage of operating profit, including the gain on the disposal of Acuity stake, at 41%.

Net Interest Income

Interest income increased by 6% during the year, while interest expenses were effectively contained, reflecting disciplined margin management in a lower-rate environment. The loan portfolio expansion of 31% supported this performance, with a strategic focus on quality asset growth.

Net Interest Income rose by 10% to LKR 30,953 million, driven by effective loan book growth and funding cost optimization. The CASA portfolio grew by 20%, with the CASA ratio at 24.49% as of 31 December 2025, indicating a stronger funding mix of deposits and improved cost efficiency.

Net Interest Margin moderated from 4.18% in December 2024 to 3.96% by December 2025, mainly due to competitive pressures and prevailing market dynamics.

Fee and Commission Income

Strategic focus on remittances, trade-related commissions, and card-based services supported strong growth in non-funded income. The expansion of the credit card portfolio contributed significantly to performance.

While related fee expenses increased in line with customer acquisition and portfolio growth, the net impact remained positive. Net fee and commission income increased by 48% to LKR 7,313 million, compared to LKR 4,929 million in 2024.

Impairment Charge on Loans and Other Losses

The Stage 3 impaired loan ratio improved to 4.55% as of 31 December 2025, from 5.63% a year earlier, supported by recoveries and portfolio expansion.

Impairment provisions were prudently calibrated to reflect model updates and risk buffers across a higher-risk customer base, including customers affected by Cyclone Ditwah requesting relief under temporary debt relief schemes. Consequently, impairment charges increased by 6% to LKR 4,926 million, compared to LKR 4,648 million in 2024.

Operating Expenses

Technology and digital transformation remained a strategic priority, with ongoing upgrades to IT infrastructure aimed at enhancing multi-channel service delivery and operational efficiency. The Bank also increased investment in marketing and promotional activities to strengthen brand visibility, deepen customer engagement, and support product growth. These initiatives are expected to deliver long-term value by building brand equity, expanding market reach, accelerating customer acquisition, and strengthening DFCC Bank’s competitive position in a dynamic financial landscape.

As a result of these strategic investments, operating expenses increased to LKR 18,808 million for the year ended 31 December 2025, compared to LKR 16,805 million in 2024. The Bank continues to prioritize cost optimization to ensure sustainable growth and operational resilience.

Other Comprehensive Income (OCI)

Changes in the fair value of investments in equity and fixed-income securities (treasury bills and bonds), along with movements in hedging reserves, are recorded through other comprehensive income. The application of hedge accounting minimized the impact of exchange rate fluctuations on the Bank’s profitability.

A fair value gain of LKR 9,721 million was recorded on equity securities outstanding as of 31 December 2025, primarily driven by the increase in the share price of Commercial Bank of Ceylon PLC. Treasury bill and bond valuations contributed a further gain of LKR 1,059 million.

Financial Position Analysis

Assets

DFCC Bank delivered strong balance sheet growth despite ongoing economic challenges and sector-specific pressures. Total assets expanded by LKR 153 billion, a 22% increase since December 2024. The Bank’s net loan portfolio also increased by LKR 120 billion to reach LKR 516 billion, representing a robust 31% growth from LKR 395 billion as of 31 December 2024. This performance reflects the successful execution of DFCC Bank’s strategic growth priorities and renewed confidence amid improving economic conditions, reinforcing the Bank’s vital role in driving credit expansion and supporting national economic recovery.

Liabilities

The Bank’s total liabilities increased by LKR 130 billion, reflecting a 21% growth from December 2024. The deposit base expanded by 21%, rising by LKR 100 billion to LKR 565 billion, up from LKR 465 billion as of 31 December 2024, resulting in an improved loan-to-deposit ratio of 99.80%. Additionally, the CASA ratio stood at 24.49% as of 31 December 2025. The Bank effectively contained funding costs by utilizing medium to long-term concessionary credit lines, which supported the expansion of the lending portfolio and provided much-needed concessionary funding to customers. Factoring in these concessionary term borrowings, the CASA ratio further improved to 29.74%, while the loan-to-deposit ratio improved to 92.85% as of 31 December 2025.

Equity and Compliance with Capital Requirements

As of 31 December 2025, total equity increased by LKR 23 billion, supported by a profit after tax of LKR 16.03 billion 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 31%. Leveraging the strengthened equity base, the Bank effectively absorbed the additional capital requirements associated with portfolio growth. The Tier 1 Capital Ratio was maintained at 13.550%, while the Total Capital Ratio stood at 15.933%, compared to 12.402% and 15.759%, respectively, as of December 2024.

The Bank’s Net Stable Funding Ratio (NSFR) stood at 122.64%, and the Liquidity Coverage Ratio (LCR) – all currency – stood at 184.06%, both comfortably exceeding regulatory minimums.

Dividend Policy

The Bank’s dividend policy seeks to maximize shareholder wealth while ensuring adequate capital for expansion, supported by its island-wide presence and investments in technology. Accordingly, the Board of Directors has approved a final dividend of LKR 7.50 per share, comprising LKR 2.50 per share in cash and LKR 5.00 as a scrip dividend for the year ended 31 December 2025, balancing shareholder returns with long-term business plans. Consequently, the dividend payout ratio for the year is 32% of the distributable profit.

CEO’s Statement

DFCC Bank concluded 2025 with record financial performance, strengthened capital, and decisive strategic progress – achievements made possible by the trust placed in us and the discipline with which our teams executed throughout the year.

For the year ended 31 December 2025, the Bank recorded a Profit After Tax of LKR 11,060 million from continuing operations, reflecting a 32% increase over the previous year’s LKR 8,353 million. Including the gain arising from the strategic divestment of our 50% stake in Acuity Partners (Pvt) Ltd, total reported Profit After Tax increased to LKR 16,028 million. It is important to clearly distinguish between these figures. The underlying performance of LKR 11,060 million reflects the strength of our core banking operations, while the additional gain strengthened our capital base and enhanced strategic flexibility for future growth.

Total assets expanded by 22% to LKR 857 billion, supported by a 31% increase in the loan portfolio. Our Total Capital Adequacy Ratio stood at 15.933%, and both the Net Stable Funding Ratio and Liquidity Coverage Ratio remained comfortably above regulatory thresholds – reaffirming the resilience of our balance sheet and our prudent approach to risk management.

2025 was also marked by significant strategic milestones. The signing of the binding Business Sale Agreement to acquire the Wealth and Retail Banking operations of Standard Chartered Bank in Sri Lanka represents a transformative step in strengthening our retail and wealth franchise. During the year, we also successfully issued Sri Lanka’s first listed and rated Blue Bond – an LKR 3 billion transaction that was significantly oversubscribed – reinforcing our leadership in sustainable finance and responsible capital mobilization.

As we commemorated our 70th year of service, our focus remained firmly on relevance and responsibility. Our MSME, retail, and remittance propositions continued to expand financial access, while disciplined cost management and funding optimization supported stable earnings growth.

Sustainability is not an adjunct to our strategy; it is embedded within our operating model, governance framework, and disclosure practices.

Our commitment extends beyond financial performance. Through our Ride for Life cycling initiative, we continued to raise national awareness on mental health, recognizing that economic resilience must be matched by social well-being. Our Leopard conservation campaign further underscored our responsibility toward environmental stewardship and biodiversity protection – reflecting our belief that responsible banking must consider the long-term health of the ecosystems within which we operate.

During the year, the Bank was honored to receive several recognitions that reflect the strength of our people and our brand. We were certified as a Great Place to Work and ranked 4th in the AICPA & CIMA Top 20 Employers in Sri Lanka. We were also named Best Bank in MSME Acceleration at the ICC Emerging Asia Banking Awards 2025. In addition, DFCC Bank was ranked 27th among Sri Lanka’s Most Valuable and Strongest Brands by Brand Finance and received recognition at SLIM Digis 2.5 for Best Use of AI Technologies and Best SEO/SEM Campaign. We view these acknowledgments not as endpoints, but as encouragement to continue raising standards across every dimension of our work.

These outcomes would not have been possible without the confidence of our customers, the commitment and professionalism of our employees, the guidance of our regulators, and the support of our Board, shareholders, and investors. We remain deeply grateful for the trust placed in DFCC Bank. It is this trust that obliges us to remain transparent, prudent, and forward-looking in every decision we take.

As we move ahead, our capital is strong, our strategy is clear, and our responsibility remains unchanged. DFCC Bank will continue to pursue disciplined growth, responsible innovation, and sustainable value creation – building on over seven decades of service to Sri Lanka with humility and conviction.

Thimal Perera

Director/ Chief Executive Officer

24 February 2026

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