Business
Central Bank releases Financial Stability Review for Year 2023
The Financial Stability Review (FSR) of 2023 which encapsulates the developments in the financial system, the risks and vulnerabilities identified thereof, and the policy measures taken by the Central Bank and other regulatory institutions in addressing such risks during the review period, was released on Friday.
Excerpts from the FSR 2023 and the financial stability outlook are given below.
The financial sector, which experienced an unprecedented array of challenges in the aftermath of the economic crisis, continued to operate under challenging conditions. The overall economic contraction during the nine months ending September 2023 coupled with tax hikes aimed at supporting fiscal consolidation; and elevated price levels and interest rates resulted in strained balance sheets of economic agents. Accordingly, financial intermediation1 witnessed a considerable decline reflecting the subdued demand and supply conditions for credit amidst a considerable deterioration in credit quality.
Financial sector exposure to the Government continued to increase amidst the fall in overall credit growth, highlighting imbalances that pose challenges to the financial sector. While the approval of International Monetary Fund’s Extended Fund Facility (IMF-EFF) in March 2023 brought in confidence, ensuing developments such as uncertainties about the sovereign debt restructuring process and the results of the bank diagnostics exercise raised some concerns on the sector.
With these developments, financial markets which witnessed extreme turbulence in 2022 demonstrated signs of stabilisation. Financial market’s stress as indicated by the Financial Stress Index remained broadly at low levels in the first ten months of 2023 as overall market conditions significantly eased compared to 2022. Volatility of share market indices gradually subsided though investors continued to be attracted to high yield investments in the form of Government securities.
Meanwhile, banking sector stocks also depicted high sensitivity to the Government debt restructuring process reflecting their high exposure to the sovereign. Comparatively subdued domestic macroeconomic conditions together with tight global financial conditions resulted in a low level of foreign investments in the domestic equity market.
The anomalous interest rate structure in terms of elevated yields in the Government securities market gradually declined, although not completely, mainly supported by the dissipation of uncertainties following the Domestic Debt Optimisation (DDO) announcement, downward adjustments in the policy rates, reduced inflation, and anchored inflation expectations. The foreign exchange market which recorded an acute shortage of liquidity resulting in a significant depreciation of the Sri Lankan Rupee during 2022 witnessed an appreciation of the domestic currency with a gradual easing of liquidity conditions.
Dr. R. A. D. Jeewantha was honoured as the Most Innovative Dentist of the Year at the Business World International Awards, 2025. Organised by the Business World International Organisation, the award ceremony was held recently at the Mount Lavinia Hotel. A graduate of the Faculty of Dental Sciences, University of Peradeniya, Dr. Jeewantha has built a reputation as one of Sri Lanka’s most respected and forward-thinking dental surgeons. After gaining vital experience in Government hospitals, including the Teaching Hospital in Karapitiya, he also served at a leading private hospital before launching his own practice—Doctor J Premium Dental Care in Delkanda, Nugegoda.
His dental clinic is known for offering advanced, patient-focused treatments in restorative dentistry, cosmetic procedures, and implantology, using state-of-the-art technology. Dr. Jeewantha is especially skilled in dental implants, having completed the American Residency Course in Dental Implantology at Roseman University, accredited by the American Academy of Implant Dentistry. Dr. Jeewantha holds fellowships from the International College of Continuing Dental Education (FICCDE) and the Pierre Fauchard Academy (USA). His advanced skills include modern root canal treatments using Mineral Trioxide Aggregate (MTA) for both surgical and non-surgical procedures.
He has completed international trainings in digital dentistry, full-arch implantology techniques like All-on-Four and Zygomatic Systems, and smile design using digital 3D scans. He has participated in global dental events such as the Asia-Pacific Dental Congress and completed training at institutions including the University of Manchester and North Western State Medical University in Russia. His courses have covered everything from intraoral scanning to managing tooth wear. He has previously received many local and international awards. Dr. Jeewantha also serves the community as a Justice of the Peace for All Island.
The Foundation in Biological Studies at IIHS provides a unique alternative for students looking to fast-track their health careers after their Ordinary Level (O/L) exams. This programme offers a direct route to global health careers, bypassing traditional A/Ls. With over 1,000 students already advancing to universities in Australia, the UK, and Finland, IIHS has positioned the course as a reliable launchpad for careers in fields like medicine, nursing, biomedical sciences, and digital health. “This programme is a game-changer, offering a transformative journey into global healthcare education,” said IIHS CEO Dr. Kithsiri Edirisinghe.
Seylan Bank has recorded a Profit before Tax (PBT) of LKR 4,199 million in Q1 2025, marking a 13.36% growth compared to LKR 3,704 million in Q1 2024. Profit after Tax (PAT) rose by 20.29%, reaching LKR 2,761 million, up from LKR 2,295 million in the corresponding period of 2024.
Despite a decrease in net interest income by 8.37% due to market interest rate reductions, the bank’s net fee-based income grew by 13.83%, driven by fees from loans, cards, remittances, and other services. Total operating income for the quarter was LKR 11,258 million, a 3.83% decrease from the previous year, while operating expenses rose by 4.62%, largely due to increased personnel and other operating costs.
Impairment charges were significantly reduced by 83.17%, totaling LKR 262 million, reflecting the bank’s solid credit quality and proactive provisions. The bank’s impaired loan ratio improved to 1.98% from 2.10% in Q1 2024, with a provision cover ratio of 80.74%.
Seylan Bank’s total assets grew to LKR 785 billion, with loans and advances reaching LKR 469 billion and deposits totaling LKR 647 billion. The bank’s capital adequacy ratios remained strong, with the Common Equity Tier 1 Capital Ratio at 13.67% and Total Capital Ratio at 17.64%.
In addition to its financial performance, Seylan Bank continued its commitment to education, opening 16 more “Seylan Pahasara Libraries,” bringing the total to 281 libraries across the island.Fitch Ratings upgraded Seylan Bank’s National Long-Term Rating to ‘A+(lka)’ with a Stable Outlook in January 2025, further underscoring the bank’s financial stability and growth trajectory.
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