Sampath Bank Delivers 15% Growth in Profit After Tax to Rs 24.6 Bn, Backed by Rs 273 Bn Loan Expansion and Improved Asset Quality

Profit After Tax increases by 15% YoY to Rs 24.6 Bn

Gross loans and advances grow by 22% (Rs 273 Bn) to Rs 1.5 Tn

Deposit base expands by 13% (Rs 209 Bn) to Rs 1.9 Tn

Total Operating Income rises by 14%, supported by 15% growth in Net Interest Income and 21% growth in Net Fee and Commission Income

Net Interest Margin improves by 11 basis points to 4.22%, from 4.11% as at 31st December 2025

Stage 3 loan portfolio declines by Rs 14.4 Bn, reflecting sound asset quality

Recoveries from previously written-off exposures rise by Rs 500 Mn to Rs 841 Mn, reflecting effective recovery efforts

Fund Based Income

Supported by the strength of its core banking operations and prudent balance sheet management, Sampath Bank recorded a 14% increase in interest income to Rs 152.8 Bn for the nine months ended 30th September 2026. This growth was primarily driven by the expansion of the loan portfolio and favourable movements in market lending rates, particularly the AWPLR.

Interest expenses increased by 13% to Rs 86.9 Bn, reflecting growth in the deposit base and the repricing of interest-bearing liabilities amid a dynamic interest rate environment. Notwithstanding this increase, the Bank's Net Interest Income (NII) grew by 15% to Rs 65.9 Bn.

As a result, the Bank's Net Interest Margin (NIM) improved by 11 basis points to 4.22% as at 30th September 2026, from 4.11% as at 31st December 2025. This improvement was driven by higher asset yields, particularly on the loans and advances portfolio, supported by healthy credit growth and favourable interest rate movements.

Non-Fund Based Income

Net fee and commission income grew by 21% to Rs 18.9 Bn, sustained by higher business volumes across lending, cards, trade, electronic banking channels and other transaction banking services. Total exchange income rose by 67% to Rs 5.9 Bn from Rs 3.5 Bn in the corresponding period of 2025, largely reflecting the Rs 20.63 depreciation of the LKR against the USD during the period.

Despite strong growth in core non-fund-based income, capital gains from the sale of Treasury bills and bonds declined to Rs 1.1 Bn from Rs 3.8 Bn in the corresponding period of 2025.

Impairment Charge

The Bank recorded a total impairment charge of Rs 6.0 Bn for the nine months ended 30th September 2026, an increase of 258% from Rs 1.7 Bn in the corresponding period of 2025.

Impairment charge on loans and advances

The impairment charge on loans and advances increased to Rs 8.1 Bn for the nine months ended 30th September 2026, from Rs 2.3 Bn in the corresponding period of 2025. This was primarily due to higher collective impairment provisions arising from loan growth of Rs 273 Bn, together with prudent provisioning buffers maintained in view of prevailing macroeconomic and geopolitical uncertainties.

In line with its prudent risk management practices, the Bank continued to maintain robust impairment buffers against potential credit losses. During the period, the Bank also undertook a comprehensive review of its ISL customer portfolio and recognised provisions based on detailed customer-level risk assessments, particularly in sectors with elevated risk profiles. This proactive approach reflects the Bank's robust risk governance framework and continued commitment to maintaining asset quality and balance sheet resilience.

Recoveries from previously written-off exposures rose to Rs 841 Mn from Rs 341 Mn in the corresponding period of 2025, reflecting the effectiveness of the Bank's recovery and collection efforts.

Impairment reversal on other financial instruments

Notwithstanding new investments made during the period, the Bank recognised a net impairment reversal of Rs 1.3 Bn on other financial instruments. This was primarily due to a lower impairment provision required on investments in FCY bonds following Fitch Ratings' upgrade of Sri Lanka's sovereign rating.

Operating Expenses

The Bank's operating expenses rose by 22% YoY to Rs 40.8 Bn for the nine months ended 30th September 2026. This increase was primarily attributable to higher personnel costs arising from annual remuneration revisions and investments in human capital to support the Bank's strategic growth initiatives. It also reflects higher volume-related costs associated with expanded business activity, together with continued investments in technology and digital transformation aimed at strengthening operational capabilities and customer experience.

As operating expenses grew faster than Total Operating Income, which increased by 14%, the Cost-to-Income Ratio rose to 44.3% from 41.5% in the corresponding period of 2025. The Bank remains focused on enhancing productivity, driving operational efficiencies and maintaining cost discipline, while continuing to invest in capabilities that support sustainable long-term growth.

Taxation

The Bank's total tax charge decreased to Rs 20.6 Bn for the nine months ended 30th September 2026, from Rs 24.1 Bn in the corresponding period of 2025. This reduction was primarily due to the favourable impact arising from the finalisation of tax assessments relating to prior years.

Key Ratios

The Bank's Return on Average Shareholders' Equity (after tax) improved to 18.38% for the nine months ended 30th September 2026, from 17.93% for the year ended 31st December 2025. Return on Average Assets (before tax) stood at 2.21%, compared to 2.60% for 2025.

Capital and Liquidity

The Bank maintained all capital ratios comfortably above regulatory requirements throughout the period. As at 30th September 2026, the Common Equity Tier 1 (CET 1), Tier 1 and Total Capital Ratios stood at 12.27%, 12.27% and 15.32%, respectively, compared to 14.75%, 14.75% and 17.65% as at 31st December 2025. The moderation in capital ratios was primarily due to the increase in risk-weighted assets arising from strong loan growth during the period.

To further strengthen its capital base in support of future growth, the Bank raised Rs 10 Bn through a Basel III-compliant debenture issue in October 2026. The issue was oversubscribed, reflecting strong investor confidence in the Bank's financial strength, growth prospects and prudent capital management.

The Bank also maintained a strong liquidity position, underpinned by a stable funding base and prudent liquidity management. As at 30th September 2026, the All-Currency Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) stood at 174.86% and 157.87%, respectively, well above the regulatory minimum of 100%. This further demonstrates the Bank's financial resilience and its capacity to support sustainable growth while maintaining its funding and liquidity obligations.

Assets

Sampath Bank's total assets increased by 13% to Rs 2.23 Tn as at 30th September 2026, from Rs 1.98 Tn as at 31st December 2025. This growth was primarily driven by the expansion of the loan book, across both LKR and FCY portfolios, by Rs 273 Bn to Rs 1,497 Bn.

Asset quality remained sound, with the Stage 3 portfolio declining by Rs 14.4 Bn during the period.

Liabilities

The Bank's total liabilities increased by 14% to Rs 2.05 Tn as at 30th September 2026, from Rs 1.80 Tn as at 31st December 2025. This was primarily driven by continued growth in the deposit base, which expanded by Rs 209 Bn to Rs 1.86 Tn from Rs 1.65 Tn.

Deposit growth was supported by both currency segments, with LKR deposits increasing by Rs 148 Bn and foreign currency deposits by Rs 61 Bn during the period.