People’s Bank posts record first-half earnings on shift to private sector lending

Prof. Narada Fernando

Clive Fonseka

State-owned People’s Bank yesterday announced it reported a post-tax profit of Rs.18.2 billion for the quarter ended June 30, 2025, after booking impairment charges on exposures to several state-owned enterprises (SOEs).

The lender, one of the country’s largest financial institutions, said the operating income for the period was Rs.80.8 billion.

The bank’s net interest income rose to Rs.69.3 billion during the period, compared to Rs.27.6 billion in the corresponding period of 2024, reflecting the timely repricing of assets and liabilities, in line with the changing market interest rates. Consequently, the net interest margins improved to 4.0 percent in 2025, from 3.4 percent in end-2024. Net fees and commissions reached Rs.8.0 billion, recording a 16.8 percent growth, the highest ever for the same period. Total operating expenses stood at Rs.33.4 billion (2024: Rs.28.7 billion).

Customer deposits reached Rs.3,125.3 billion (end-2024: Rs.2,854.7 billion), while net loans stood at Rs.1,592.3 billion (end-2024: Rs.1,522.0 billion). Total assets rose to Rs.3,571.8 billion on a solo basis (end-2024: Rs.3,297.8 billion). 

As of June 30, 2025, the bank’s Tier I and total capital adequacy ratios stood at 12.0 percent and 16.9 percent, respectively (end-2024: 10.9 percent and 16.5 percent). On a consolidated basis, the ratios were 13.2 percent and 17.6 percent (end-2024: 12.6 percent and 17.7 percent). These ratios reflect all prudential deductions, including those related to the sovereign-backed SOE restructuring, which were fully accounted for, ensuring a conservative and prudent assessment. 

The consolidated operating income of the group at end-1H 2025 was Rs.91.8 billion. Pre-tax and post-tax profits on a consolidated basis were Rs.31.0 billion and Rs.19.6 billion, respectively. The group’s total deposits reached Rs.3,248.1 billion, while net loan grew to Rs.1,785.6 billion and total assets reached Rs.3,795.0 billion by end-June 2025, on a consolidated basis.

Commenting on the results of the bank and group, People’s Bank Chairman Prof. Narada Fernando noted that the achievement underscores the bank’s strong position as an independent state institution, well-equipped to make meaningful contributions to the government’s broader agenda of strengthening the national economy.

“Our focus extends well beyond profitability. We remain firmly committed to advancing financial inclusion, supporting the SME sector and uplifting the living standards of all Sri Lankans,” he said.

He added that amidst the ongoing challenges of a recovering macroeconomic environment, People’s Bank is steadfast in executing its strategic priorities, which include strengthening the private sector lending, with a special emphasis on the SME base, fostering innovation and empowering entrepreneurs, all with the ultimate goal of reinforcing the broader economy.

Reflecting similar sentiments, People’s Bank CEO Clive Fonseka stressed that the record-breaking performance was achieved despite a significant reduction in the exposure to SOEs. The exposure to SOEs declined to 26.5 percent by end-1H of 2025, from 42.8 percent at end-1H of 2024. 

“Our strategic pivot towards the private sector successfully offset the decline in SOE business volumes, enabling us to mitigate the potential negative impacts. This shift clearly demonstrates our strength and resilience as a true commercial bank,” he said.

Commenting on the overall performance, Acting Head of Finance and DGM Commercial Credit Thushari Hewawasam noted that as of end-June 2025, the group’s asset base reached Rs.3.8 trillion, reflecting a strong 9.3 percent growth in the first half of the year. The increase was primarily attributable to a Rs.120.6 billion rise in net loans and advances, complemented by Rs.300.2 billion growth in the group’s deposit base. She further highlighted that this performance underscores the bank’s strategic emphasis on operational efficiency, digital transformation and customer-centric initiatives, which have strengthened its competitive position and ability to adapt to emerging challenges.