Sampath Bank Records Half Year Results with Profit After Tax of Rs 16.6 Bn, Reflecting 13% Year-on-Year Growth
Financial Performance
Sampath Bank delivered a strong financial performance for the six months ended 30th June 2026, reporting Total Operating Income of Rs 63.3 Bn, an increase of 17% compared to the corresponding period last year. The Bank’s performance was driven by sustained growth across its core revenue streams, with Net Interest Income increasing by 11% and Net Fee and Commission Income rising by as much as 26%.
The Bank’s earnings performance was, however, moderated by a higher impairment charge of Rs 5.0 Bn – a year-on-year increase of a very significant 324% – driven primarily by collective impairment attributable to the continued expansion of the loan portfolio as well as the Bank’s prudent provisioning strategy adopted in light of ongoing geopolitical uncertainties and the evolving macroeconomic environment. Consequently, the Net Operating Income recorded a more modest growth of 10% over the corresponding period of the previous year.
Despite higher operating expenses arising from business expansion initiative and continued strategic investments in technology, distribution and human capital, the Bank reported a Profit After Tax of Rs 16.6 Bn for the period, reflecting a robust year-on-year increase of 13%. The result underscores the Bank’s resilient business model, disciplined risk management practices and continued ability to deliver sustainable earnings while supporting long-term growth in a dynamic operating environment.
In line with its strategic growth priorities, the Bank’s loan portfolio expanded by Rs 226 Bn from its position at the end of 2025, representing a robust increase of 18%. This growth was supported by enhancements to the Bank’s credit origination framework, including streamlined processing, improved operational efficiencies and strengthened governance through a clearer segregation of responsibilities between business units and central processing functions. These initiatives have further strengthened the Bank’s credit delivery capabilities while reinforcing its risk management framework.
The Bank recorded a strong quarter-on-quarter improvement in profitability, with Profit After Tax increasing by 69% compared to the preceding quarter. This performance was driven by a 22% increase in Total Operating Income, reflecting continued business momentum across the Bank’s core operations, together with a 89% reduction in impairment charges. The lower impairment charge was primarily attributable to an impairment reversal exceeding Rs 3 Bn, driven by the successful recovery of long-outstanding loans during the quarter. These factors collectively contributed to the Bank’s stronger earnings performance, underscoring the resilience of its operating model and the effectiveness of its disciplined credit risk management practices.
The Sampath Group reported a Profit Before Tax of Rs 26.6 Bn and a Profit After Tax of Rs 17.9 Bn for the six months ended 30th June 2026.
Fund Based Income
In the first half of 2026, Sampath Bank reported Total Interest Income of Rs 97.8 Bn, representing a 9% increase compared to the corresponding period last year. The growth was mainly attributable to the expansion of the Bank’s lending portfolio and improved assets yields, supported by movements in the Average Weighted Prime Lending Rate (AWPLR).
Interest expenses increased by 8% to Rs 55.1 Bn, primarily reflecting the continued expansion of the deposit base and additional borrowings undertaken to support the Bank’s accelerated credit growth. As the growth in interest income outpaced the increase in funding costs, Net Interest Income (NII) increased by 11% over the corresponding period of the previous year to Rs 42.8 Bn. This performance highlights the Bank’s ability to effectively manage interest margins while sustaining growth in a dynamic interest rate environment.
Consequently, the Bank’s Net Interest Margin (NIM) improved to 4.21%, compared with 4.11% reported in 2025. This improvement was primarily driven by improved yields on the advances portfolio, supported by strong loan growth and favourable movements in market interest rates. The improvement in margin performance reflects the Bank’s disciplined balance sheet management and its continued ability to generate sustainable core earnings.
Non-Fund Based Income
The Bank’s non-fund-based income increased by 30% over the corresponding period of the previous year to Rs 20.5 Bn, driven by sustained growth in fee and commission income and an appreciable increase in foreign exchange-related earnings.
Net Fee and Commission Income increased by 26% to Rs 12.2 Bn, supported by the continued expansion of the Bank’s lending portfolio and higher transaction volumes across its key business segments. Meanwhile, Total Exchange Income rose significantly to Rs 7.2 Bn, representing an increase of 198% over the corresponding period of the previous year. The increase was primarily attributable to the depreciation of the LKR against the USD by Rs 26.12 during the period, together with higher foreign exchange transaction volumes.
Capital gains from the sale of Treasury bills and bonds moderated to Rs 1.0 Bn, during the period, from Rs 3.5 Bn recorded in the corresponding period of 2025, reflecting lower opportunities for gains in the prevailing market environment.
Impairment Charge
The Bank recognised a total impairment charge of Rs 5.0 Bn during the first half of 2026, compared with Rs 1.2 Bn recorded in the corresponding period of 2025, representing an increase of Rs 3.8 Bn. The higher impairment charge primarily reflects the continued expansion of the Bank’s lending portfolio and its prudent provisioning approach in response to prevailing macroeconomic and geopolitical uncertainties.
Impairment charge on loans and advances
The impairment charge on loans and advances increased to Rs 5.3 Bn in the first half of 2026, compared with Rs 1.4 Bn in the corresponding period of 2025. This increase was primarily attributable to higher collective impairment provisions arising from the Bank’s strong loan portfolio growth of 18% during the period, compared with 7% growth recorded in the first half of 2025.
Consistent with its prudent risk management framework, the Bank recognised additional allowance for management overlay during the period to respond to continued geopolitical uncertainties. This proactive measure reinforces the Bank’s resilience by maintaining adequate provisioning buffers to mitigate potential risks arising from both the domestic operating environment and the evolving global landscape.
The Bank also undertook a comprehensive review of its ISL customer portfolio during the period and recognised prudent provisions in the Financial Statements based on the individual risk profile of each customer, with particular focus on higher-risk sectors. This reflects the Bank’s disciplined approach to credit risk management and its continued focus on preserving asset quality while maintaining resilience amid evolving global uncertainties.
During the first half of 2026, the Bank recovered Rs 572 Mn from written-off customers, compared with Rs 216 Mn recognised during the corresponding period of 2025.
Impairment charge on other financial instruments
An impairment charge of Rs 0.2 Bn was recognised on other financial instruments during the first half of 2026, primarily in relation to new investments made during the period.
Operating Expenses
During the first half of 2026, the Bank’s operating expenses increased by 21% year-on-year, reflecting continued investment in strategic growth initiatives, capacity enhancement, and future business expansion. The increase was mainly driven by the expansion of the workforce to support business growth and operational requirements, annual salary revisions, higher operating costs associated with increased business volumes, and sustained investment in technology and digital capabilities. In addition, the depreciation of the LKR against major foreign currencies contributed to higher foreign currency-denominated operating expenses.
As operating expenses grew at a faster pace than Total Operating Income, which increased by 17% during the period, the Bank’s Cost-to-Income Ratio increased to 41.7%, compared with 40.0% in the corresponding period of 2025. Despite these investments, the Bank remains committed to prudent cost management and continuous improvements in operational efficiency, while investing strategically to support sustainable profitability and create long-term value for shareholders.
Taxation
The Bank recorded a total tax expense of Rs 15.3 Bn for the first half of 2026, representing a 8% decrease compared with the corresponding period of 2025. The reduction was primarily attributable to the finalization of tax assessments relating to prior years, which resulted in a lower tax charge during the current reporting period.
Assets
Sampath Bank continued its growth momentum during the first half of 2026, expanding its asset base by 8% from the year-end 2025 position to reach Rs 2.13 Tn as at 30th June 2026. This increase was largely attributable to strong growth in the lending portfolio, with Gross Loans increasing by Rs 226 Bn to Rs 1,449 Bn. The expansion was driven by a Rs 197 Bn growth in LKR-denominated loans, complemented by a Rs 29 Bn increase in foreign currency lending.
Notwithstanding the accelerated loan growth achieved since the third quarter of the previous year, the Bank maintained a resilient asset quality profile, with the Stage 3 portfolio declining by Rs 10.8 Bn. The increase in the Stage 2 portfolio by Rs 36.8 Bn was primarily attributable to the Bank’s proactive and forward-looking credit risk assessment practices. Although migration to Stage 2 based on days past due demonstrated an improvement, the Bank undertook a comprehensive review of its portfolio in response to prevailing geopolitical uncertainties and prudently reclassified selected exposures to Stage 2 to maintain appropriate risk buffers.
Liabilities
The Bank’s funding base continued to demonstrate strong momentum during the first half of 2026, with total liabilities increasing by 8% from the year-end 2025 position to Rs 1.95 Tn as at 30th June 2026, reflecting an annualised growth rate of 16%. This expansion was primarily driven by the continued growth of the customer deposit portfolio.
The Bank’s deposit base increased by Rs 118 Bn during the period to reach Rs 1.76 Tn as at 30th June 2026, compared with Rs 1.65 Tn as at 31st December 2025. The growth was largely supported by a Rs 99 Bn increase in LKR-denominated deposits, complemented by a Rs 19 Bn rise in foreign currency deposits.
Key Ratios
As at 30th June 2026, the Bank recorded a Return on Average Shareholders’ Equity (after tax) of 18.91%, compared with 17.93% as at 31st December 2025. Meanwhile, the Return on Average Assets (before tax) stood at 2.40%, compared with 2.60% recorded at the end of 2025.
Capital and Liquidity
Sampath Bank maintained a strong capital position throughout the period, with all regulatory capital ratios remaining above the minimum requirements prescribed by the regulator. As at 30th June 2026, the Common Equity Tier 1 (CET 1), Tier 1 and Total Capital ratios stood at 13.21%, 13.21% and 15.62%, respectively, compared with 14.75%, 14.75% and 17.65% as at 31st December 2025. The movement in capital ratios primarily reflected the increase in risk-weighted assets arising from the Bank’s strategic loan portfolio expansion during the first half of 2026.
As part of its ongoing efforts to strengthen its capital position, the Bank successfully issued a Rs 10 Bn Basel III-compliant Green Bond in July 2026. The issuance received strong investor interest and was oversubscribed, underscoring confidence in the Bank’s financial resilience, strategic growth direction and commitment to advancing sustainable finance.
The Bank continued to maintain a strong liquidity position, with both the All-Currency Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR) remaining above regulatory thresholds. As at 30th June 2026, the LCR (All Currency) and NSFR stood at 185.04% and 157.38%, respectively, compared with the minimum regulatory requirement of 100%.
Commitment to Stakeholder Well-being
Sampath Bank continued to advance its sustainability and community development agenda through a range of impactful environmental and social initiatives implemented across Sri Lanka. As part of its commitment to supporting rural communities, the Bank completed the restoration and handover of Hurigaswewa Wewa in Eppawala, Anuradhapura, benefiting 307 farming families and providing irrigation support for 122 acres of paddy cultivation. The initiative is expected to contribute towards enhanced agricultural productivity and improved water security for the surrounding communities.
The Bank also launched a Household Waste Management Programme in Boralesgamuwa in partnership with Neptune Recyclers, engaging 100 households through awareness programmes and practical waste segregation solutions aimed at promoting responsible waste management and circular economy practices.
Further strengthening rural livelihoods, the Bank conducted Agri Entrepreneurship Development Programmes in Nikaweratiya, Madagalla, and Mahakumbukkadawala in collaboration with the Department of Agrarian Development. In Rekawa, the Bank partnered with the Department of Wildlife Conservation to conduct awareness sessions for hoteliers covering turtle conservation, sustainable tourism practices, digital banking and financial literacy.