HNB 4Q down on provisions but full year profit up as loans grew Rs.354bn

Nihal Jayawardena – Chairman	Damith Pallewatte – CEO

Hatton National Bank PLC reported lower profits for the December quarter on the back of massive provision reversals on account of International Sovereign Bonds (ISBs) which was there in the corresponding quarter in 2024 but was absent in 2025.

The bank reported earnings of Rs.24.69 a share or Rs.14.12 billion for the October – December period, down 31 percent from the same quarter in 2024. The bank reversed provisions of Rs.82.15 billion in the December quarter in 2024, largely consisting of the provisions that had been made on account of the ISBs. The December 2025 quarter had only Rs.1.46 billion in provision reversals.

When HNB wrote back the ISB related provisions back then, it also recognized Rs.49.46 billion as what is referred to as the day-1 loss for the de-recognition of the old bonds.

Barring these one-off provision reversals and losses, the bank reported some solid operating level performance for the quarter on the back of some robust growth in new loans.

The bank saw its loan book expanding by a massive Rs.354.22 billion in 2025 at a growth of 30.5 percent, of which Rs.99.49 billion came in the final three months of the year.

The bank also raised Rs.246.37 billion in deposits at a growth of 14.4 percent.

Under this backdrop, the HNB reported a net interest income of Rs.31.76 billion in the three months, up 2 percent on the back of narrowing margins.

In fact, the net interest margin – the difference between what the bank charge for its loans and what it pays for its deposits – fell to 4.26 percent from 4.86 percent a year ago.

The bank also saw its asset quality improving as the Stage 3 loans ratio came down to 1.09 percent from 1.88 percent.

The heavier growth in new loans amid improving debt serviceability of the borrowers in a low interest economy too helped the Stage 3 loans ratio to improve.

Meanwhile, the fee incomes also rose sharply by 40 percent to Rs.7.38 billion.

The bank attributed the higher fee incomes to the “ higher card usage and a sharp increase in digital transactions”.

“The significant increase in the demand for trade related services on the back of the reopening of vehicle imports and improving trade activity, saw trade finance emerge as one of the key contributors to non-fund income in the current year”, the bank added in a statement.

For the full year, the bank reported earnings of Rs.83.23 a share or Rs.47.59 billion, up 9 percent.

Ceylon Steel Corporation Limited has 9.99 percent stake in HNB being its largest shareholder while the Employees Provident Fund had 9.75 percent stake being its second largest shareholder.