Sampath Bank’s loan book surpasses Rs. 1trn

• Profits weaken on tighter margins
• Net Interest Income slips 4.0% to Rs. 20.87bn
• Total assets climb to Rs. 1.93 trn

Sampath Bank PLC significantly expanded its loan book in the second quarter of 2025, pushing it past the Rs. 1 trillion milestone. However, profitability came under pressure from narrowing interest margins, rising deposit costs, and higher operating expenses.

Gross loans grew by Rs. 73.19 billion during the June quarter, reversing a Rs. 4.84 billion contraction in the first three months. This resulted in a net loan book growth of Rs. 68.35 billion for the first half of the year, a 7.1 percent increase that took the total to Rs. 1.03 trillion by the end of June. The bank’s total assets rose to Rs. 1.93 trillion from Rs. 1.78 trillion at the start of the year.

The bank’s delayed loan expansion, combined with lower lending rates, impacted its net interest income, which slipped 4.0 percent year-on-year to Rs. 20.87 billion for the quarter. A robust deposit growth of Rs. 138.72 billion in the first half raised interest expenses by 2.0 percent for the quarter. Consequently, the net interest margin narrowed to 4.24 percent from 4.90 percent at the beginning of the year.

On a positive note, the funding profile improved as its low-cost Current and Savings Account (CASA) deposits grew by Rs. 68.3 billion. The CASA ratio strengthened to 35.2 percent by the end of June, up from 34.0 percent at the start of the year.

Compared to the industry, Sampath Bank appeared slower to expand lending in early 2025 but picked up the pace significantly in the June quarter, as reflected in the sharp rise in advances.

The bank reported earnings of Rs. 5.72 per share, or Rs. 6.70 billion, for the April-June quarter, down from Rs. 6.88 per share, or Rs. 8.07 billion, in the same period last year.

Operating expenses climbed 14.0 percent to Rs. 12.06 billion, driven by higher personnel costs following annual salary revisions and a general rise in other operational expenses. This increase pushed the cost-to-income ratio to 39.9 percent from 37.5 percent a year ago, although it showed an improvement from 44.95 percent at the end of the first quarter of 2025.

Fee-based income provided strong support to the bottom line, with net fee and commission income rising 19.0 percent to Rs. 5.22 billion. This growth was led by credit, cards, trade, and electronic banking operations. Net other operating income turned positive at Rs. 1.73 billion, compared to a loss of Rs. 564.0 million a year earlier. In contrast, the bank recorded a net trading loss of Rs. 17.89 million against a Rs. 2.16 billion gain in the prior-year quarter.

Asset quality showed improvement, with impairment charges falling to Rs. 1.50 billion from Rs. 1.74 billion. The Stage 3 (impaired) loans ratio also improved, declining to 4.26 percent from 4.69 percent at the start of the year.

In an earnings release, the bank highlighted its role in supporting Sri Lanka’s economic revival through dedicated business revival units. “This program provides tailored financial solutions to businesses in distress, enabling them to rebuild and grow. Through this initiative, the bank has helped improve customer creditworthiness and contributed to overall financial stability and resilience in the economy,” it stated.

Dhammika Perera’s Vallibel One PLC remains the largest shareholder with a 14.95 percent stake, while the state-run Employees Provident Fund (EPF) is the fourth-largest shareholder, holding 9.97 percent.