Chairman Rienzie Wijetilleke told shareholders the profit would have been higher if at least half the value of assets pledged for a bad loan which was taken over by the government had been given.
Interest income at bank level rose 42 percent to 26.1 billion rupees while interest expense rose 55 percent to 15.1 billion. Net interest income rose 26 percent to 10.9 billion.
Loan loss provisions were 907 million rupees, down from 931 million in 2006. Non performing assets were 6 percent.
"Inflationary trends will undoubtedly affect our customer lending portfolio as we realize the spiraling cost of living factor is proving to be one of the most challenging obstacles facing us in the coming year," Wijetilleke said.
Chief executive Rajendra Theagarajah said inflation and the high level of domestic interest rates were a threat to the country's development.
Wijetilleke said mid-sized customers outside the cap