LB finance maintains growth momentum with Rs. 7bn pre-tax profit in 1Q

LB Finance PLC commenced the 2026/27 financial year on a strong note, recording a 31 percent increase in profit after tax to Rs. 3.54 billion for the quarter ended June 30, 2026, compared to Rs. 2.70 billion in the corresponding period of the previous year. 

Total income increased by 47 percent to Rs. 18.76 billion, while net interest income grew by 31 percent to Rs. 8.94 billion, reflecting continued business expansion and healthy growth in the lending portfolio. Earnings per share improved to Rs. 6.38, compared to Rs. 4.88 in the corresponding quarter of the previous year.

Operating profit before tax on financial services increased by 30 percent to Rs. 7.17 billion, while profit before taxation rose by 30 percent to Rs. 5.70 billion. The Return on Equity (ROE) improved to 22.96 percent from 21.01 percent in the corresponding period of the previous year. 

The company’s loan portfolio expanded to Rs. 341.96 billion, an increase of over Rs. 29 billion during the quarter, while total assets grew to Rs. 433.95 billion. Customer deposits increased to Rs. 181.12 billion, reinforcing LB Finance’s strong market position and customer confidence.

Despite continued uncertainty driven by geopolitical tensions, inflationary pressures, liquidity constraints, and heightened volatility in global markets, LB Finance delivered strong performance through prudent risk management, disciplined lending practices, and a strong focus on asset quality. The company continued to maintain strong asset quality, with the Gross NPL ratio improving to 1.41 percent, compared to 1.91 percent a year earlier, showcasing the effectiveness of its credit evaluation and recovery processes. 

The Core Capital Ratio stood at 18.89 percent and the Total Capital Ratio at 18.59 percent, remaining well above regulatory minimum requirements. Liquidity levels also remained comfortably above the required regulatory thresholds.

LB Finance diversified its funding sources during the quarter by securing funding from two leading international development finance institutions (DFIs): Norfund, the Norwegian investment fund for developing countries, and Swedfund, the Swedish state-owned development finance institution. These facilities is expected to strengthen the company’s ESG compliance and reporting framework while supporting increased financing for the Micro, Small and Medium Enterprises (MSME) sector. 

Reinforcing its strong financial performance, LB Finance was recently ranked the best-performing finance company in Category 1 by K Seeds Investments in its Finance Sector Ranking for the fourth quarter of FY2025/26. The independent assessment evaluated 29 listed finance companies across ten key financial performance indicators, recognizing LB Finance’s strong profitability, operational efficiency, asset quality, and growth.

At the group level, LB Finance recorded a 41 percent increase in profit after tax to Rs. 3.83 billion, with total operating income rising by 43 percent to Rs. 12.09 billion. Group assets increased to Rs. 452.98 billion by Rs. 37 billion from the previous financial year end, supported by the group’s diversified financial operations, comprising Associated Motor Finance Company PLC and LB Microfinance Myanmar Company Limited.

The company’s digital finance and lifestyle platform, CIM, continued its strong growth momentum during the quarter, driven by accelerated customer acquisition and the introduction of new features, including the UnionPay Virtual Debit Card, Tap to Pay, Cross-Border Payments, and e-Gifting. Increased customer engagement, particularly among Gen Z, together with growth in transaction volumes, transaction counts, and digital investments, further strengthened its position in Sri Lanka’s digital financial services landscape.