DFCC Bank profit jumps in June quarter on accelerated loan growth

DFCC Bank PLC announced strong financial results for the quarter ended June 30, 2025, driven by accelerated loan growth as lower interest rates spurred borrowing across the banking sector. 

The bank reported Net Interest Income (NII) of Rs. 7.78 billion for the quarter, a 16 percent increase from the same period last year, as growth in interest income outpaced the rise in interest expenses.

The performance was supported by robust growth in new lending, with the loan book expanding by 16.5 percent, or Rs. 72.87 billion, in the first six months of 2025 to reach a total of Rs. 513.78 billion.

On the funding side, total deposits grew by 13.9 percent (Rs. 64.80 billion) during the same period. The bank also successfully improved its low-cost funding base, with its Current and Savings Account (CASA) ratio rising to 26.54 percent by the end of June from 24.77 percent at the start of the year. However, the bank’s Net Interest Margin (NIM) saw a slight dip, closing the period at 4.10 percent.

The bank’s non-interest income streams also showed significant strength. Net fee and commission income grew by a robust 62 percent to Rs. 1.81 billion for the quarter, boosted by higher remittance volumes, trade finance, and card-related fees. Trading incomes surged to Rs. 953.71 million from Rs. 363.94 million in the prior year, primarily due to gains on forward exchange contracts and equities. Additionally, net gains from reclassified debt instruments contributed Rs. 564.37 million to the bottom line.

Reflecting the significant expansion of its loan book, the bank increased its provisions for potential bad loans to Rs. 2.21 billion for the quarter, up from Rs. 1.11 billion in the same period last year. Despite the higher provisioning, the bank’s asset quality showed marked improvement. The Stage 3 loans ratio—a key measure of non-performing loans—declined to 4.62 percent from 5.65 percent at the beginning of the year.

These strong operating results led to a net profit of Rs. 2.79 billion for the June quarter, translating to earnings of Rs. 6.40 per share. This is a significant increase from the Rs. 1.85 billion, or Rs. 4.31 per share, reported in the corresponding quarter of 2024. For the first six months of 2025, the bank reported earnings of Rs. 5.78 billion.

DFCC Bank’s share closed last week at Rs. 151.25, down Rs. 2.00 or 1.31 percent. Major government-related entities, including the Bank of Ceylon, Sri Lanka Insurance Corporation, and the EPF, collectively hold a 26.42 percent stake in the bank.