Business
DFCC Bank delivers strong financial performance despite adverse market conditions
The following commentary relates to the unaudited Financial Statements for the period ended 31 March 2023, presented in accordance with Sri Lanka Accounting Standard 34 (LKAS 34) on “Interim Financial Statements”.
Financial Performance
Profitability
DFCC Bank PLC, the largest entity within the Group, reported a Profit Before Tax (PBT) of LKR 2,684 Mn and a Profit After Tax (PAT) of LKR 1,749 Mn for the quarter ended 31 March 2023. This compares with a PBT of LKR 143 Mn and a PAT of LKR 366 Mn in the previous period.
The Group recorded a PBT of LKR 3,001 Mn and PAT of LKR 2,062 Mn for the quarter ended 31 March 2023 as compared to LKR 326 Mn and LKR 527 Mn respectively in 2022. All the member entities of the Group made positive contributions to this performance.
The Bank’s Return on Equity (ROE) increased to 10.88% during the quarter ended 31 March 2023 from 5.04% recorded for the year ended 31 December 2022. The Bank’s Return on Assets (ROA) before tax for the quarter ended 31 March 2023 is 1.63% compared to 0.46% for the year ended 31 December 2022.
Net Interest Income
The Bank’s Net Interest Income (NII), increased by 75% over Q1 of 2022 to reach LKR 8.34 Bn by the quarter end of March 2023. The tight liquidity conditions in the domestic money market have resulted in rising market interest rates. As a result, the Bank’s deposit and lending products experienced a significant increase in interest rates during the period under review. While the higher interest rates may have continued to depress the lending portfolio, it led to an overall improvement in Net Interest income (NII). Strategically, the Bank increased the fixed income investment portfolio, which contributed significantly to an increase in investment interest income. In line with the increase in the AWPLR over the past 12 months, the interest margin increased from 3.80% in March 2022 to 5.93% by March 2023.
Fee and Commission Income
The untiring efforts of the Bank’s staff led to increased remittances, trade-related commissions and other fee income lines which contributed to the increase of non-funded business during the period. Fee income generated by credit cards also increased significantly in line with the volume of the transactions. Accordingly, net fee and commission income have increased to LKR 1,064 Mn for the quarter ended 31 March 2023, compared to LKR 639 Mn in the comparative period in the year 2022.
Impairment Charge on Loans and Other Losses
The impaired loan (stage 3) ratio has increased from 4.36% in December 2022 to 4.80% as of 31 March 2023, a continuation of the trend in the prevailing economic condition. To address the current and potential future impacts of the current economic conditions on the lending portfolio, the Bank made adequate impairment provisions during the period by introducing changes to internal models to account for unseen risk factors in the current highly uncertain and volatile environment. With these provisions made to cover the additional risks in the economic environment, the impairment charge recorded an increase of 67% against the comparative period and stood at LKR 4.69 Bn for the quarter ended 31 March 2023 compared to LKR 2.81 Bn in the comparable period.
Operating Expenses
The operating expenses for the quarter ended on 31 March 2023 increased due to an increase in IT-related expenses as a result of infrastructure upgrades, as well as cost increases due to inflation and the Sri Lanka Rupee devaluation. However, the numerous process automation and workflow management systems introduced over the period helped curtail and manage operating expenses at reduced levels.
Other Comprehensive Income
Changes in the fair value of investments in equity securities and fixed income securities (treasury bills and bonds) and movement in hedging reserves are recorded through other comprehensive income.
Due to the application of hedge accounting, the impact on the bank equity due to the exchange fluctuation was minimized. A fair value gain of LKR 2,034 Mn was recorded on account of equity securities outstanding as at 31 March 2023. The increase in the share price of Commercial Bank of Ceylon PLC during the period was the main contributor to the reported fair value gain in equity securities. The favourable movement in the treasury bills and bonds yields resulted in a fair value gain of LKR 908 Mn during the period.
Business Growth
Assets
Despite the challenges faced by the economy and the banking sector, DFCC Bank’s total assets increased by LKR 9.8 Bn, recording a growth of 1.75% from December 2022. In line with the bank’s growth strategy and the current economic situation, an increase in investment in fixed income securities, combined with positive fair value movement in both fixed income securities and equity securities, has contributed to a 49% increase in investment in financial assets at fair value through other comprehensive income as of 31 March 2023 compared to the balance as of 31 December 2022. With increased provision for expected credit losses and appreciation of the Sri Lanka Rupee, the net loan portfolio has recorded LKR 357 Bn as at 31 March 2023.
Liabilities
The Bank’s deposit base experienced a growth of 2.29%, recording an increase of LKR 8,490 Mn to LKR 378,805 Mn from LKR 370,314 Mn as at 31 December 2022. This resulted in recording a loan to deposit ratio of 104.33%. Further the CASA ratio is 18.05% as at 31 March 2023. The Bank’s funding costs were also contained by using medium to long-term concessionary credit lines. When these concessionary term borrowings are considered, the CASA ratio further improved to 29.86% and the loans to deposit ratio improved to 89.02% as at 31 March 2023.
Equity and Compliance with Capital Requirements
DFCC Bank’s total equity increased to LKR 57 Bn as at 31 March 2023 with the recorded profit after tax of LKR 1.75 Bn. The favourable movements in the equity portfolio and fixed income security portfolio classified as fair value through other comprehensive income and positive movement in hedging reserve also resulted in an increase of the Bank’s total equity.
As at 31 March 2023, the Bank Recorded Tier 1 and Total Capital ratios of 10.171% and 12.848%, respectively. The Bank’s Net Stable Funding Ratio (NSFR) was 128.24%, and Liquidity Coverage Ratio (LCR) – all currency was 226.43% as at 31 March 2023. All these ratios were maintained above the minimum regulatory requirement.
CEO’s Statement
“As we reflect on the last quarter’s performance, we are pleased to report strong financials across all business areas. Sri Lanka’s resilient and adaptable economy and our commitment to innovation, operational excellence, and customer-centricity continue to pay off, as evidenced by our steady revenue growth and increased profitability. We are confident that our robust growth strategy and prudent risk management practices will enable us to continue delivering sustainable value to our stakeholders in the long term, which bodes well for the overall economic situation of Sri Lanka.”
By Ifham Nizam
Australian High Commissioner to Sri Lanka Matthew Duckworth described Omega Traders’ latest investment in a modern dhal-processing facility as a strong example of how cross-border supply chains can translate into productive investment, local value addition and new business opportunities in Sri Lanka.
The investment, which adds a 150-metric-tonne-per-eight-hour-day processing capacity to Omega Traders’ operations, marks a significant expansion of the company’s manufacturing footprint as it celebrates 45 years in Sri Lanka’s food commodity industry.
Speaking at the inauguration of the new Lentil and Orid Dhal Processing Factory in Wattala, last Friday, H.C. Duckworth said the facility represented more than an increase in production capacity, pointing to the wider economic value created when Australian agricultural production is connected with Sri Lankan processing and distribution.
‘This facility is not operating on its own. It is part of a long supply chain and a trade partnership between Sri Lanka and Australia, Duckworth said.
His comments placed the Omega Traders’ investment within a broader commercial context: Australia brings agricultural production and established export capabilities, while Sri Lanka provides processing capacity, labour, market access and opportunities for further value addition.
The investment comes as Sri Lanka continues to look towards greater domestic processing and value-added manufacturing rather than relying solely on the import and distribution of finished commodities.
Dr. (Mrs.) Siddhika G. Senaratne, Director General/CEO of the Sri Lanka Standards Institution (SLSI), who attended the inauguration as Guest of Honour, highlighted the importance of quality assurance in food processing and the role of standards in maintaining confidence across the supply chain.
The facility is equipped with new-generation cleaning, processing, sorting and quality-control machinery, including advanced colour-sorting technology, automated systems and an in-house quality-control laboratory.
The additional capacity will support Omega Traders’ three principal Mysoor Dhal brands — Rainbow Jumbo Dhal, Komas Dhal and Rozanna Dhal — which serve different segments of the Sri Lankan market.
But the investment also has a distinctly local agricultural dimension.
Through its Orid Dhal operation, Omega Traders plans to source locally grown black matpe from Sri Lankan farmers and process it at the new facility.
That creates a domestic value chain linking farmers to industrial processing and consumers, while potentially increasing demand for locally produced agricultural commodities.
Duckworth said this type of business partnership could generate benefits for both countries.
‘Australia produces some of the world’s best agricultural products and we are very efficient and very capable at trading them. But that alone is not going to bring success to Australia. Just as building a factory like this is not going to bring success to Sri Lanka, he said.
‘It’s when we bring these entities together that our products produced in Australia can be processed in excellence here in Sri Lanka that enables this to be a success, the H.C. explained.
The investment therefore combines two complementary supply streams: imported agricultural commodities, including Australian-origin products, and locally produced black matpe for the Orid Dhal operation.
For Sri Lanka, the business significance extends beyond Omega Traders itself. Increased processing capacity creates demand for logistics, packaging, distribution, services and agricultural inputs, while supporting employment within the food-processing ecosystem.
HR-led transformation places people, culture and business performance at the heart of the organisation
Ideal Motors (Pvt) Ltd,has achieved a significant milestone by securing multiple prestigious workplace and organisational culture accolades in 2026, reinforcing its position as an employer of choice in Sri Lanka’s automotive sector.
Among its latest achievements, Ideal Motors has been recognised as one of the 20 Great Workplaces for Young Talent in Sri Lanka 2026, ranked No. 1 and awarded the Gold Medal in the Small and Medium category of Best Workplaces™ in Sri Lanka 2026, and ranked No. 18 among Best Workplaces™ in Asia in the Medium Scale category—the highest-ranked Sri Lankan organisation in the category. The company also received Industry Excellence for Workplace Culture – Trading Industry.
The Young Talent recognition was presented at the Great Place To Work® CXO Forum 2026 held on 10 September 2026 at Cinnamon Life, Colombo. The recognition followed an evaluation of more than 100 certified organisations and highlights workplaces that create meaningful opportunities for employees under 35 to develop, contribute and grow.
At the Best Workplaces™ in Sri Lanka Awards Gala 2026, held on 11 September 2026 at Cinnamon Life, Colombo, Ideal Motors achieved another historic milestone by entering the Best Workplaces Sri Lanka list for the first time and securing the No. 1 Gold Medal in the Small and Medium category. The company also achieved No. 18 in Best Workplaces™ in Asia, reflecting the strength of its workplace culture beyond Sri Lanka.
These achievements represent more than a collection of awards. They reflect the transformation taking place within Ideal Motors, where people, culture and business performance are increasingly viewed as interconnected drivers of sustainable growth.
Over the past few years, the organisation’s HR function has evolved from a predominantly administrative role into a strategic business partner, with greater emphasis on employee experience, capability development, engagement, performance, communication, wellbeing, diversity and inclusion, and data-driven HR practices.
The Automobile Association of Ceylon (AAC) conducted a seat belt safety awareness programme in front of its headquarters and along Galle Face Centre Road, encouraging motorists and passengers to make seat belt use a habit on every journey.
AAC staff, working alongside officers of the Sri Lanka Police Traffic Division, distributed specially designed hanging tags and stickers to drivers. The material carries a clear reminder that seat belts protect drivers as well as passengers in both the front and rear seats.
The public awareness drive was held ahead of the requirement taking effect on 20 September 2026, under which seat belt use becomes mandatory for every occupant of a vehicle travelling on an expressway.
AAC emphasized that the regulation should be understood as a life-saving measure rather than only a legal obligation. Wearing a seat belt can help prevent occupants from being thrown inside or from a vehicle during a collision and can lessen the severity of injuries.
The Association said road safety legislation must be supported by sustained public education, visible enforcement and responsible behaviour by all road users. The participation of the Traffic Police helped the campaign reach motorists directly in a busy part of central Colombo.
Showers about 100mm will occur in the Western, Sabaragamuwa, Central and North-western provinces and in Galle and Matara Districts
Govt. confident of 2/3 majority despite NPP split speculation
Justice Corea appointed Acting President of the Court of Appeal
Protest against setting up of cement factory in highly populated area near BIA
India funding 13 new bridges, Moragahakanda structure receiving priority
Cross-border supply chains seen as key to new business opportunities
‘Dates have the highest sugar content to fight Coronavirus’
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