The bank said the forex bet came "from a breach in operating procedure" in its foreign currency banking unit and risk management has since been tightened.

"The aggressive provisioning in the first half, coupled with further tightening of risk management measures, means that we have cleared the decks and placed the bank in a strong position to propel ourselves for greater growth in the next half," chief executive Zulfiqar Zavahir said in a statement.

Sri Lanka's government securities rates plummeted in the first quarter from around 20.0 percent to 13.0 percent, giving holders of government bonds chance for large capital gains.

NTB showed government securities of 12.0 billion in its trading portfolio by end-June (up from 8.0 billion in December). The accounts showed funding of 12.7 billion through repurchase deals.

The bank also had 10.6 billion in government securities in the held-to-maturity stock, up from 7.3 billion in December.

Its performing loan book grew at a slow 3.0 percent to end at 42.7 billion rupees. Most banks had chosen to finance the government, rather than the private sector as the economy weakened.

Group interest income grew 15.0 percent to 3.2 billion; interest expense grew 9.0 percent to 3.2 billion rupees allowing net interest income to grow at a faster 31.0 percent.

Deposits grew by 29.0 percent to 44.2 billion rupees.

Zavahir said the bank was expanding into the north and east with fresh branches to be opened in the next six months.

Group gross assets grew 11.0 percent to 75.2 billion rupees while net assets grew 2.0 percent to 4.4 billion. At bank level net assets were 3.8 billion rupees and it had total capital adequacy of 13.04 percent, (down from 15.2 percent in December) above regulatory requirements.