DFCC Bank has reported a Profit After Tax of LKR 4.1 billion for the first half of 2026, along with a Total Capital Adequacy Ratio of 15.746%. The bank’s Net Fee and Commission Income saw a significant increase of 29%, reaching LKR 4.2 billion, while its Total Assets grew by 7% to LKR 921 billion.
As the bank moves into the latter half of 2026, it has expanded its diversified operations, achieving notable increases in lending, deposits, fee income, and total assets throughout the first six months of the year. The loan portfolio rose by 9% and deposits by 12% compared to December 31, 2025. Total assets increased by 7% to LKR 919 billion, while total liabilities experienced an 8% rise to LKR 811 billion. The bank’s Net Interest Income also increased by 6% to LKR 16 billion, reflecting ongoing strength in its core income sources.
The first half of the year was marked by challenging external conditions, including heightened geopolitical tensions in the Middle East, which led to increased commodity prices and market uncertainty. In response to rising inflation, the Central Bank of Sri Lanka raised the Overnight Policy Rate (OPR) by 100 basis points to 8.75% in May 2026. These measures, along with other policy adjustments, are anticipated to moderate credit growth and alleviate demand pressures in the future.
Despite these external challenges, DFCC Bank maintained a disciplined approach to managing its funding profile and margins. The bank adjusted both deposit and lending rates in accordance with market conditions, while effective liquidity management and funding optimization strategies contributed to a 6% rise in Net Interest Income to LKR 16 billion. These efforts helped to strengthen the bank’s balance sheet and foster sustainable value for its customers and shareholders.
From core operations, the bank reported a Profit After Tax of LKR 3.9 billion. Although this figure was lower than the previous year’s performance, the management’s strategies to bolster prudential buffers in light of geopolitical and macroeconomic uncertainties remained effective. Impairment provisioning was enhanced through improvements in credit risk models, resulting in an increase of LKR 1.1 billion in impairment charges compared to the same period last year. The bank maintained a selective lending strategy and stringent cost control, with the net stage 3 impaired loan ratio improving to 3.61% from 4.55% as of December 31, 2025, underscoring a commitment to asset quality and sustainable growth.
A key milestone following the reporting period was the successful acquisition of Standard Chartered Bank PLC’s Wealth and Retail Banking business in Sri Lanka, which was finalized on August 1, 2026. This acquisition, first announced in November 2025, adds approximately 50,000 customer accounts and 260 employees to DFCC Bank’s operations, expanding its network to 139 locations nationwide. This strategic move is expected to significantly enhance the bank’s retail and wealth management capabilities.
In addition to financial achievements, the first half of 2026 saw DFCC Bank reaffirm its commitment to sustainability and community engagement. The bank’s innovative Blue Bond received supplementary listings on the Luxembourg Stock Exchange’s Luxembourg Green Exchange and India INX at GIFT City, and was honored at the Environmental Finance Sustainable Debt Awards 2026. Additionally, DFCC Bank earned a Gold Award for Financial Inclusivity and a Merit Award for Customer Convenience at the LankaPay Technovation Awards 2026. The bank also actively supported community initiatives promoting mental wellbeing and women’s empowerment through programs such as Ride for Life and Ride for Her.
This report pertains to the unaudited financial results for the six-month period ending June 30, 2026, in compliance with Sri Lanka Accounting Standard 34 (LKAS 34) on Interim Financial Statements.
In terms of profitability, DFCC Bank PLC, the primary entity within the group, reported a Profit Before Tax (PBT) of LKR 5,480 million and a Profit After Tax (PAT) of LKR 3,904 million for the six months ended June 30, 2026. This compares to a PBT of LKR 7,910 million and a PAT of LKR 5,555 million in the same period the previous year. At the group level, PBT was LKR 5,801 million and PAT was LKR 4,139 million, down from LKR 8,172 million and LKR 5,747 million, respectively, in 2025. The Earnings Per Share (EPS) from core banking operations stood at LKR 8.76 for the period.
The bank’s Return on Assets (ROA) before tax was recorded at 0.99%, while Return on Equity (ROE) after tax was 6.19% for the same period. The total tax expense, which includes VAT on financial services, Social Security Contribution Levy (SSCL), and Income Tax, amounted to LKR 3,696 million for the six months ending June 30, 2026, resulting in a tax expense that constituted 49% of operating profit.
As a result of the tightening of monetary policy, the bank raised both deposit and lending rates to align with current market conditions, which led to a 6% increase in net interest income, reaching LKR 16,132 million. This growth was supported by effective asset management and a disciplined approach to funding. Over the past year, the bank’s assets have increased by 17%, and the loan portfolio has experienced a robust 20% growth.
The bank’s funding profile was also strengthened, with the CASA portfolio growing by 14% since December 31, 2025, and the CASA ratio improving to 24.99% as of June 30, 2026. Despite a competitive interest rate landscape, the bank has managed to maintain a healthy Net Interest Margin of 3.66%, reflecting its prudent funding and pricing strategies.
Strategic initiatives focusing on trade-related commissions and card services have resulted in a significant rise in fee-based income, with net fee and commission income increasing by 29% to LKR 4,187 million, compared to LKR 3,249 million in the same period last year.
In terms of impaired loans, the net stage 3 impaired loan ratio improved to 3.61% as of June 30, 2026, down from 4.55% as of December 31, 2025, aided by recoveries and portfolio growth. Management has taken steps to enhance impairment provisioning in response to current and expected global and domestic economic conditions, using advanced credit loss models and specific management overlays. Consequently, impairment charges rose to LKR 4,630 million for the six months ending June 30, 2026, up from LKR 3,482 million in the previous year, reflecting a conservative assessment of potential credit risks.
The bank continued to prioritize technology and digital transformation, investing in IT infrastructure to enhance digital capabilities, security, and operational efficiency, thereby improving customer experiences across multiple channels. Investment in marketing and development initiatives has also increased to bolster brand visibility and customer engagement. Operating expenses for the period rose to LKR 10,969 million from LKR 8,325 million, though the bank remains committed to cost discipline and efficiency improvements.
Changes in the fair value of equity and fixed-income securities, along with adjustments in hedging reserves, are reflected in the other comprehensive income. A fair value gain of LKR 1,144 million was noted on equity investments as of June 30, 2026, primarily due to the appreciation of Commercial Bank of Ceylon PLC’s shares.
Total assets increased by LKR 62 billion, reflecting a 7% growth since December 2025, driven largely by a loan portfolio expansion that increased by LKR 48 billion to LKR 564 billion. This demonstrates the effective execution of DFCC Bank’s growth strategies, which focus on disciplined lending while ensuring asset quality. The bank’s role in facilitating credit expansion and supporting economic initiatives is reinforced by improving economic conditions.
Total liabilities rose by LKR 61 billion, representing an 8% increase since December 2025, with deposits growing by 12% to LKR 632 billion. The loan-to-deposit ratio stood at 97.44%, and the CASA ratio was reported at 24.99% as of June 30, 2026. The bank managed to keep funding costs in check by utilizing medium- to long-term concessionary credit lines to support lending growth and provide favorable funding to customers.
Equity remained stable at LKR 109 billion as of June 30, 2026, bolstered by a Profit After Tax of LKR 3.9 billion and fluctuations in the bank’s securities portfolios. The net loan portfolio increased by 9%, allowing the bank to meet additional capital requirements associated with this growth. The Tier 1 Capital Ratio was maintained at 11.947%, and the Total Capital Ratio stood at 15.707%, compared to 13.550% and 15.933%, respectively, as of December 31, 2025.
Following shareholder approval, DFCC Bank is in the process of completing the regulatory steps necessary for the issuance of Basel III-compliant, Tier II, listed, rated, subordinated, unsecured, redeemable debentures, aimed at raising up to LKR 15 billion. The bank’s Net Stable Funding Ratio (NSFR) was reported at 124.43%, and the Liquidity Coverage Ratio (LCR) was at 162.26%, both exceeding regulatory requirements.
In his statement, the CEO emphasized that DFCC Bank is entering the second half of 2026 with a stronger position and a more robust core franchise. The group achieved a Profit After Tax of LKR 4.1 billion, with loans and deposits increasing by 9% and 12%, respectively, since December 2025. The gains in Net Fee and Commission Income and Net Interest Income reflect ongoing momentum within the core business.
While profitability has decreased compared to the previous year, this reflects the bank’s strategic decisions to safeguard the quality of its operations. The management strengthened its impairment provisioning and retained a selective lending strategy while maintaining cost and liquidity discipline. The improvement in the net stage 3 impaired loan ratio to 3.61% is a positive indicator of asset quality management.
Strategically, the acquisition of Standard Chartered Bank’s Wealth and Retail Banking business marks a significant new phase for DFCC Bank, expanding its customer base and network. This acquisition is seen as a gateway to enhance the bank’s retail and wealth management services while deepening community connections.
The bank’s commitment to sustainability and customer-centricity was affirmed through the issuance of Basel III-compliant bonds and recognition at various award ceremonies for financial inclusivity and customer convenience. The community initiatives surrounding mental wellbeing and biodiversity conservation continue to foster connections with customers and communities alike.
On behalf of DFCC Bank, the CEO expressed gratitude to all stakeholders for their trust, emphasizing the responsibility to grow responsibly, act transparently, and prioritize customer needs as the bank continues to expand and contribute to Sri Lanka’s progress.
