SDB bank demonstrates resilience and strategic progress in 1Q 2025

SDB bank reported a resilient performance in the first quarter of 2025, underscoring the bank’s commitment to steady progress, stakeholder value and long-term sustainability.

Despite the industry-wide challenges and an ongoing recalibration of funding structures, the bank remained firmly focused on financial stability, operational efficiency and inclusive banking solutions.

The bank recorded a profit after tax of Rs.56 million for the quarter ending March 31, 2025. A key contributor to this result was the 42-basis-point improvement in net interest margin, which rose to 5.60 percent, reflecting strategic adjustments to the lending rates and an optimised funding mix. While net interest income dipped slightly year-on-year (YoY), the bank’s fee-based income streams showed strong momentum as net fee and commission income rose by 53 percent, reflecting the growing impact of digital adoption and enhanced customer offerings.

Impairment charges reduced by 31 percent compared to 1Q 2024, aided by proactive recoveries, risk model refinements and continued traction in customer remediation efforts. Notably, the bank’s coverage ratio for Stage 3 loans improved from 47.78 percent at year-end 2024 to 49.72 percent as of March 31, 2025.

Although the bank’s total asset base saw a marginal 2 percent contraction, primarily due to the settlement of high-cost borrowing and currency appreciation, customer loans and advances rose by Rs.2 billion over the quarter, pointing to gradual credit demand recovery. Simultaneously, SDB bank’s liquidity coverage ratio remained robust at 234.15 percent, well above the regulatory minimums.

The quarter also saw administrative expenses increase by 10 percent YoY, mainly due to inflationary pressures and staff cost adjustments.

SDB bank Executive Director/CEO Kapila Ariyaratne said, “Our 1Q performance reflects a disciplined approach to balance sheet management and long-term value creation. We have prioritised resilient core earnings, selective growth in quality assets and a funding strategy that reduces volatility while promoting sustainability. As we move forward, we remain deeply committed to inclusive finance, SME upliftment and digital enablement while maintaining a strong capital and liquidity position.”

SDB bank concluded the quarter with a total capital adequacy ratio of 16.40 percent and a common equity Tier 1 ratio of 15.01 percent, reinforcing its capacity to support future lending and growth initiatives. The bank’s return on assets stood at 0.82 percent and return on equity at 1.53 percent for the period under review.