Cargills Bank to raise Rs. 2.5bn via Rights to fuel lending growth

Cargills Bank PLC has announced plans to raise approximately Rs. 2.5 billion through a Rights Issue to expand its lending activities and strengthen the capital base. The Board of Directors resolved on December 9, 2025, to recommend the issue of up to 294,200,000 new ordinary voting shares at a price of Rs. 8.50 per share.

The new shares will be offered to registered ordinary voting shareholders in the proportion of fourteen (14) new shares for every forty-five (45) shares held as of the record date. 

The subscription price of Rs. 8.50 represents a discount to the market price, with the bank’s shares last trading at Rs. 9.50 as of September 30, 2025. 

If fully subscribed, the move will increase the bank’s current stated capital of approximately Rs. 11.89 billion by a further Rs. 2.5 billion.

According to the bank’s corporate filing, the net proceeds from the issue are intended specifically to support lending activities. This capital infusion aligns with the aggressive growth strategy evident in the bank’s recent performance; in its interim financial statements for the nine months ended September 30, 2025. Cargills Bank reported a 31 percent expansion in its loan book, which grew by Rs. 14.3 billion to reach Rs. 60.4 billion.

The bank’s decision to raise capital follows a period of improved financial results. For the first nine months of 2025, Cargills Bank posted a Profit After Tax (PAT) of Rs. 313 million, marking a 97 percent increase compared to the Rs. 158 million reported in the corresponding period of the previous year. This profitability was supported by a 10 percent growth in net fee and commission income, which reached Rs. 682 million, and a significant 80 percent reduction in impairment charges, which fell to Rs. 162 million due to improved recovery actions and macro-economic conditions. Total assets also grew by 10 percent during the period to reach Rs. 88.5 billion.

From a regulatory perspective, the capital raising also supports the bank’s trajectory toward meeting higher capital requirements. While the bank currently maintains a Total Capital Ratio of 17.08 percent - well above the minimum requirement - it has been granted a timeline until the end of 2029 to comply with a regulatory minimum capital requirement of Rs. 20 billion.

The proposed Rights Issue is subject to approval in principle from the Colombo Stock Exchange (CSE) and the Securities and Exchange Commission (SEC). It also requires shareholder approval via a special resolution at an upcoming General Meeting.