News & market updates

President Anura Kumara Dissanayake chaired a meeting with bank and financial institution heads to launch the National QR Payment Promotion Initiative and seek banking sector support for rapid adoption. The Central Bank said the shift will reduce ATM cash transaction costs and offer a more efficient, secure payment method.

Sri Lanka's banks will operate shorter hours on Wednesdays to conserve fuel, with most branches open 9:00–13:00; Commercial Bank and Nations Trust Bank have issued islandwide notices (Commercial Bank: mini/supermarket branches 9:30–15:00, others 9:00–13:00; NTB also suspends Saturday services).

Union Bank of Colombo PLC's Basel III Tier II debenture issue was oversubscribed with applications totalling Rs. 3.23 billion for 32.29 million debentures; the bank allotted debentures across Types A–C per its basis of allotment.

New private sector borrowing from Sri Lanka’s banking sector fell to Rs. 82.6 billion in January 2026, an 11-month low, while domestic commercial bank lending dropped to Rs. 108 billion (nine-month low); total outstanding private sector debt rose 26.3% YoY to Rs. 10.3 trillion.

Senior bankers at the Association of Professional Bankers convention urged caution, prioritising balance-sheet discipline—liquidity, capital buffers, and managing interest-rate and FX exposure—over rapid expansion. Speakers also highlighted selective growth, risk-adjusted returns, and greater use of digital capability and sustainable debt instruments.

Union Bank of Colombo proposes a Basel III-compliant debenture issue to raise up to Rs. 3 billion in 5-year subordinated Tier II debentures (Rs.100/unit), opening 10 March 2026. Three interest options are offered — 13% fixed annual (Type A), 12.5% fixed semi‑annual (Type B, 12.89% AER), and 182-day T-bill + 400bps floating (Type C); rated BB (lka) by Fitch.

Union Bank of Colombo (UBC.N0000) plans to raise up to LKR 3 billion via a Basel III-compliant, listed 5-year Tier II debenture issue (LKR100 par) opening 10 March 2026; coupons include 13% fixed (annual), 12.5% fixed (semi-annual) or 182-day T-bill + 400bp.

Union Bank of Colombo reported group Profit Before Taxes of Rs.2.2 billion for FY2025 and doubled PAT to Rs.660 million. Gross income rose to Rs.18.2bn, NII Rs.5,638mn, net loans up 36% to Rs.110.8bn, deposits up 15% to Rs.118.8bn and total capital ratio 13.2%.

Union Bank of Colombo reported group Profit Before All Taxes of LKR 2.2 Bn and doubled PAT to LKR 660 Mn in FY2025. Net loans rose 36% to LKR 110.8 Bn, deposits grew 15% to LKR 118.8 Bn, total assets increased 19% to LKR 184.8 Bn and capital ratio was 13.2%.

Banks across Sri Lanka are intensifying AML/CFT controls ahead of the country's third mutual evaluation, warning a negative outcome would damage financial credibility and access to funding. Leading banks such as DFCC and HNB report system upgrades, AI-backed transaction monitoring, stronger KYC/UBO processes and mock evaluations.

HNB MD/CEO Damith Pallewatte highlights HNB’s Sarusara agripreneur programme (15,000 participants to date, 30,000 target) and a 2026–2030 strategic plan. He warns of banking-sector challenges (liquidity, asset quality, digital risk) and urges ecosystem-building across exports, agriculture, tourism and digital services.

NDB Bank has launched Visa's Card Present Connect (CPC) in Sri Lanka, a Cybersource-powered in-person payment acceptance solution for SMBs using Android SmartPOS. The offering supports EMV, contactless and mobile wallets and aims to lower costs, speed onboarding and simplify deployment for acquiring banks.

CEOs of Amana Bank, Seylan Bank, Pan Asia and Union Bank said Sri Lanka's banking sector is pursuing continuous, capital-intensive digital transformation, highlighting legacy systems, governance, costs and cyber risk as the main execution challenges.

HNB CEO Damith Pallewatte said exceptional loan growth in 2025 and a shift from government securities to lending are squeezing bank margins, tightening liquidity and raising funding costs. He warned deposit and lending rates are rising and that vehicle imports and lower single-borrower limits are reshaping credit and capital markets.

The inaugural Sri Lanka Fintech Summit 2025 set industry priorities and KPIs, recommending bank–fintech partnership frameworks, a national cloud policy, digital ID expansion, CBDC research and a target to reduce cash-in-circulation from 4.5% to 3.5% of GDP in three years. Sessions included CBSL, the Ministry of Digital Economy, BOI and banking leaders.

Seminar on safeguards under the amended Companies Act No. 12 of 2025 will be held on 27 Jan (2–5pm) at NH Collection, Colombo 3. Organisers say the amendments place new responsibilities and stricter penal sanctions on company secretaries and directors; speakers include HNB and LOLC Insurance chairs.

Opposition MP Faiszer Musthapha warned amendments to the Colombo Port City Economic Commission Act would allow the Port City Commission to issue offshore banking licences outside the Banking Act, creating shadow-banking and systemic risk. He said permitting Port City offshore banks to borrow from domestic banks and lower capital requirements could strain FX reserves and disadvantage local banks.

Central bank lending to banks rose to Rs48 billion on Jan 08 as state banks faced a severe cash crunch, raising liquidity concerns. Analysts warned the government's 'domestic buffer' withdrawals could strain interbank markets, prompt central bank accommodation and pressure interest rates, inflation and the rupee.

The Ceylon Chamber coordinated Cyclone Ditwah relief with member companies including Aitken Spence, Central Finance, Union Assurance, Union Bank, Eastern Merchants and Wealthtrust, mobilising over 190 volunteer hours and handling 40,000+ emergency assistance requests to support the DMC’s emergency operations.

AFC Asia Frontier Fund co-manager Ruchir Desai said Sri Lanka is now one of the fund’s top country picks, having raised allocation since November 2022, citing regained political and economic stability, undervalued equities (market ~11x earnings) and strong bank and consumer earnings.

Nations Trust Bank received Central Bank approval to acquire HSBC Sri Lanka's retail banking business, adding about 200,000 customer accounts; completion is expected in the first half of 2026.

Hatton National Bank MD/CEO Damith Pallewatte set out HNB's 'Road to 2030', prioritising digitalisation and remittance-capture as growth drivers and citing worker remittances up ~20% y/y to nearly $6.5bn. He urged banks to align with Budget 2025 targets including a 12% digital-economy goal and DPI like SL-UDI and asset registries.

IBSL's National Banking and Finance Conference on 1–2 Dec 2025 will host a CEO Forum on "Digital Transformation and Financial Sustainability", featuring CEOs from Seylan Bank (SEYB.N0000), Pan Asia (PABC.N0000) and Union Bank (UBC.N0000), with DFCC Bank (DFCC.N0000) moderating.

The CSE introduced the 'GSS+ Bonds' regulatory framework in March 2025 to list green, social and sustainability bonds, and Bank of Ceylon has aligned its ESG systems and investment banking division to facilitate such issuances.

Union Bank of Colombo received shareholder approval to issue 30 million debentures to raise Rs3 billion, to be Basel III-compliant Tier 2 listed, rated, unsecured subordinated redeemable debentures with a non-viability conversion feature, subject to regulatory approvals.

Nations Trust Bank reported a 48% year-on-year rise in quarterly profit to 6.1 billion rupees for the September quarter. The bank said higher net interest income drove results and expects its agreed acquisition of HSBC’s Sri Lanka retail business (≈200,000 accounts) to fuel further growth.

NCCSL and KPMG held a post-Budget 2026 seminar stressing fiscal discipline and a development focus, noting the VAT threshold has been lowered to Rs. 36 million per annum. Panelists highlighted priorities of digitalisation, export diversification, SME empowerment and sustained public investment.

ADB urged Sri Lanka to make cybersecurity and data protection core to its digital transformation. Government advisers said recent laws and institutions (PDPA, Data Protection Authority, National Cyber Security Centre) and a forthcoming Cyber Security Bill will underpin plans to grow the digital economy to $15bn by 2029 and boost digital exports.