Lanka Rating Agency Limited (LRA) has reaffirmed the entity rating of Sarvodaya Development Finance PLC (SDF) at ‘BBB-‘ with a Stable Outlook, acknowledging the company’s enhanced financial profile, robust capital status, growing loan portfolio, and improved profitability for the fiscal year ending 2026.
This reaffirmation follows a rating elevation announced in November 2025 and indicates SDF’s ongoing advancement in several crucial financial metrics. LRA reported that SDF’s loan portfolio surged by approximately 55.3%, reaching Rs. 29.8 billion in FY 2025/26, up from around Rs. 19.2 billion in FY 2024/25. This growth aligns closely with the overall performance of the licensed finance company sector and showcases SDF’s strong performance relative to peers, bolstered by its increasing involvement in microfinance, small and medium-sized enterprise (SME) lending, society bulk loans, and agriculture-related financing.
In terms of profitability, SDF saw its earnings rise to approximately Rs. 820.1 million, a notable increase from Rs. 473.8 million the previous year. LRA attributed this growth to reduced funding costs, substantial portfolio expansion, and stable interest spreads.
Asset quality indicators also showed improvement, with gross and net non-performing loan ratios decreasing to approximately 4.9% and 2.9%, respectively. This positive trend was aided by loan recoveries and the overall growth of the company’s lending portfolio.
SDF upheld a strong capital position, reporting a Capital Adequacy Ratio of about 22.1% in FY 2025/26, compared to 20.6% in FY 2024/25. This ratio remains above the industry average, providing the organization with a solid foundation to support its expected portfolio growth in FY 2026/27.
The company’s deposit base experienced a growth of roughly 7.9%, reaching Rs. 10.6 billion during the year, which constituted about 30% of its funding mix. SDF continues to provide a diverse range of services, including deposit mobilization, microfinance, SME lending, leasing, housing finance, gold-backed lending, and digital financial solutions.
Through its long-standing connection with the Sarvodaya Movement and its network of associated societies, SDF holds a unique position in Sri Lanka’s financial services sector, strategically focusing on agricultural financing, rural entrepreneurship, and promoting inclusive access to financial resources.
The rating presentation included notable attendees such as Mr. Mahesh Jayasanka, Head of Strategic Planning at SDF; Ms. Ruwanthi Sylva, Head of Corporate and Capital Market Ratings at LRA; Dr. Kenneth De Zilwa, CEO of LRA; Mr. Channa De Silva, Chairman of SDF; Mr. Nilantha Jayanetti, CEO of SDF; Ms. Manori Wannigama, Head of Finance at SDF; and Ms. Nipuni Mihirangi, Analyst – Corporate and Capital Markets at LRA.
LRA emphasized that the sustainability of SDF’s earnings, along with the continued preservation of asset quality and capital strength, will be crucial for the company’s future rating trajectory. Further enhancements in profitability and SDF’s comparative standing within the sector could positively affect its rating in the medium term.
