Sampath Bank has announced a total operating income of Rs 28.5 billion for the quarter ending March 31, 2026, bolstered by a 5% rise in net interest income and a substantial 28% increase in net fee and commission income compared to the same period last year. Despite this growth, the bank experienced a 26% decline in profit after tax (PAT), which fell to Rs 6.2 billion. This decrease was attributed to a significant rise in impairment provisions amounting to Rs 4.5 billion, necessitated by the ongoing expansion of the loan portfolio and the current geopolitical climate. Additionally, one-off gains from the sale of treasury bills and bonds decreased to Rs 0.7 billion, down by Rs 2 billion from the previous year.
The bank’s total assets exceeded Rs 2 trillion for the first time, a notable milestone driven by robust loan growth of Rs 127 billion in the first quarter of 2026.
For the same quarter, the Sampath Group reported a profit before tax (PBT) of Rs 9.4 billion and a profit after tax of Rs 6.8 billion.
In terms of fund-based income, Sampath Bank recorded total interest income of Rs 46.5 billion, marking a 6% year-on-year increase. This growth was primarily fueled by the expansion of its loan portfolio in the current reporting period and the latter part of the previous year, contrasting with negative loan growth in the same quarter last year. The average weighted prime lending rate (AWPLR) also saw an upward trend.
Interest expenses for the quarter rose by 6% to Rs 26.4 billion, reflecting growth in both deposit and borrowing segments. Consequently, net interest income (NII) increased by 5% to Rs 20.1 billion compared to the same quarter of the previous year.
The net interest margin (NIM) saw a slight contraction of 2 basis points, settling at 4.09%, down from 4.11% in 2025. This dip was mainly due to reduced yields in the bank’s investment portfolio, particularly within government securities.
During the three-month period ending March 31, 2026, the bank’s non-fund-based income decreased by 4% to Rs 8.3 billion, largely due to a decline in capital gains from treasury bills and bonds. Capital gains fell from Rs 2.7 billion in Q1 2025 to Rs 0.7 billion in Q1 2026, a 75% year-on-year drop.
Conversely, net fee and commission income surged by 28%, driven by increased credit activity, higher trade volumes, and greater card usage, reaching Rs 6.1 billion by the end of the quarter.
The bank also reported a total exchange gain of Rs 1.5 billion in the first quarter of 2026, a 24% year-on-year increase, primarily due to the Sri Lankan Rupee’s depreciation against the USD.
In the first quarter of 2026, Sampath Bank recognized an impairment charge of Rs 4.5 billion, a significant increase compared to the reversal of Rs 0.2 billion reported in the prior period.
The impairment charge on loans and advances was recorded at Rs 4.1 billion, a stark contrast to the reversal of Rs 0.1 billion in Q1 2025. This increase was driven by a significant 10.4% growth in the loan portfolio and associated collective impairment needs. While this growth has led to higher provisioning requirements, it is anticipated to yield positive net results in the current financial year.
The bank maintained a conservative provisioning policy, recognizing an additional overlay allowance of Rs 1.5 billion as a precautionary measure in light of increased geopolitical uncertainties. This forward-looking approach underscores the bank’s commitment to prudent credit risk management, ensuring sufficient buffers against potential challenges in the operating environment and the global context.
A comprehensive review of the bank’s ISL customers was conducted, with prudent provisions allocated in the financial statements based on each customer’s unique credit risk profile. This targeted assessment reinforces the bank’s disciplined risk management practices and focus on maintaining financial stability in a challenging global environment.
Furthermore, the bank recognized an impairment charge of Rs 0.4 billion against other financial instruments in Q1 2026, largely due to new investments made during this period.
Operating expenses rose by 19% year-on-year, primarily driven by costs associated with new strategic initiatives. This increase was chiefly due to salary enhancements implemented in 2025, the expansion of staff to support new initiatives and business growth, and higher investments in technology. These strategic long-term investments are expected to enhance income in the coming years.
As the growth in operating expenses surpassed the improvement in operating income, primarily due to a drop in one-off disposal gains from 2025, the bank’s cost-to-income ratio (CIR) worsened by 620 basis points, rising from 38.8% in Q1 2025 to 45.0% in Q1 2026.
The total tax expense for the quarter amounted to Rs 5.0 billion, representing a 43% decline year-on-year, mainly due to reduced profits and the conclusion of tax assessments from prior periods.
The return on average shareholders’ equity (after tax) was recorded at 14.05% as of March 31, 2026, compared to 17.93% at the end of December 2025. Similarly, the return on average assets (before tax) decreased to 1.68% from 2.60% reported at the end of December 2025.
Sampath Bank maintained its capital ratios well above the regulatory minimum requirements. As of March 31, 2026, the CET 1, Tier 1, and total capital ratios were at 13.17%, 13.17%, and 15.79%, respectively, down from 14.75%, 14.75%, and 17.65% at the end of 2025. The decline in capital ratios was primarily due to the increase in risk-weighted assets resulting from substantial loan growth during the quarter.
Liquidity levels remained strong, with the all-currency liquidity coverage ratio (LCR) at 187.87% and the net stable funding ratio (NSFR) at 161.30% as of March 31, 2026, both significantly above the regulatory minimum of 100%.
The recognition of profit for capital purposes under Basel III, following audit certification, along with the proposed Tier II debenture issue, is expected to further enhance the bank’s capital position in the remainder of the year.
During the reporting period, total assets rose by 6%, reflecting an annualized growth of 24%, reaching Rs 2.1 trillion as of March 31, 2026, supported by the growth in the loan portfolio. Gross loans increased by Rs 127.5 billion, from Rs 1,223.6 billion at the end of 2025 to Rs 1,351.1 billion. This growth was mainly driven by a Rs 105 billion rise in LKR-denominated loans, while foreign currency loans saw a modest increase of Rs 22 billion.
Total liabilities increased by 7% since the end of 2025, reflecting an annualized growth rate of 28%, reaching Rs 1.92 trillion as of March 31, 2026. This rise was primarily driven by the growth of the deposit portfolio, which increased by Rs 69 billion from Rs 1.65 trillion at the end of 2025 to Rs 1.72 trillion as of March 31, 2026. The increase was largely due to LKR-denominated deposits, contributing Rs 49 billion, while foreign currency deposits grew by Rs 20 billion.
At the Annual General Meeting held on March 30, 2026, Sampath Bank’s shareholders approved a final cash dividend of Rs 10.30 per share for the financial year 2025. Consequently, the bank recognized a provision of Rs 12.1 billion in its Q1 2026 financial statements to facilitate the payment of this approved dividend.
In alignment with its commitment to stakeholder well-being, Sampath Bank has become the first bank in Sri Lanka to receive ISO 14001:2015 certification for its head office and branch network, reinforcing its environmental leadership. The bank has also deepened its commitment to responsible business by becoming a Patron of the UN Global Compact Sri Lanka for Diversity & Inclusion and Water & Ocean Stewardship, collaborating with NCPC Sri Lanka to promote awareness among corporate and SME clients regarding low-carbon transitions and sustainable business models.
Continuing its sustainability initiatives, Sampath Bank’s infrastructure rejuvenation program, “Wewata Jeewayak,” has completed its 40th tank restoration, significantly benefiting agricultural and community development in Sri Lanka. This initiative, along with the bank’s ongoing efforts in coral restoration, turtle conservation, reforestation, mangrove restoration, and other environmental projects, positions Sampath Bank as a crucial contributor to environmental and social sustainability in the country.
As part of its efforts to reduce ocean plastic, the bank officially handed over a Material Recovery Facility (MRF) in Batheegama, Dickwella, to the community, established in partnership with an organization sharing similar sustainability goals.
Throughout this period, Sampath Bank has advanced its sustainability agenda, enhancing its focus on sustainable finance, climate governance, and operational performance. The bank has expanded its ESG-linked credit screening in accordance with best global practices and successfully implemented SLFRS S1 and S2 under its Climate First Action Plan, thereby improving climate-related governance, risk management, and reporting.
As part of its green finance contributions, Sampath Bank launched a Green Fixed Deposit supported by a comprehensive Green Deposit Framework, which received independent limited assurance at the pre-issuance stage, thereby boosting credibility and stakeholder confidence.
Image 1: Harsha Amarasekera, Chairman, Sampath Bank PLC
Image 2: Sanjaya Gunawardana, Managing Director/Chief Executive Officer, Sampath Bank PLC
