News & market updates

IMF and G20 participants urged greater transparency and faster restructuring of non-bonded commercial loans to ease sovereign debt stress, highlighting risks for banks with exposures in vulnerable countries such as Sri Lanka.

The Reserve Bank of India has allowed Indian banks and their Sri Lanka branches to lend to Sri Lankan customers denominated in Indian rupees, widening credit access and reducing exchange-rate risk for Sri Lankan businesses.

Sri Lanka's banks cut foreign borrowings and boosted FX deposits and investments, lifting net foreign‑currency assets 42.5% y/y to USD 1.5bn at end‑Q2 2025. D‑SIBs (84.8% of these investments) and banks including Sampath Bank and HNB financed foreign governments and firms via sovereign securities and syndicated loans.

Commercial Bank of Ceylon CIO Sumudu Gunawardhana urged banks to join the Fintech Forum to strengthen bank–fintech partnerships and grow wallet share. He said fintechs provide agility while banks offer trust, scale and compliance support to expand digital financial services and improve cybersecurity.

Union Bank of Colombo (UBC.N0000) had Fitch assign an expected National Long-Term Rating of 'BB(EXP)(lka)' to its proposed LKR3 billion Basel III-compliant Tier 2 subordinated debentures. The bank says proceeds will strengthen Tier 2 capital and support loan-book expansion; final rating subject to documentation.

Colombo Stock Exchange extended its rally to a 13th session as the ASPI rose 0.46% (100.49 pts) to 21,951.79 with turnover of Rs.6.5bn and foreign net inflows of Rs.46.4m. Banking, capital goods and food/beverage counters led activity, with Melstacorp, Access Engineering, Union Bank, RCL and NDB among top contributors.

Hatton National Bank hosted the inaugural Sri Lanka FinTech Summit 2025 at BMICH, where Visa launched 'Visa Accept' in Sri Lanka to enable merchants to accept card payments via smartphones without extra hardware. The two-day forum gathered regulators, banks, startups and policymakers to discuss digital payments, blockchain, AI and financial inclusion.

Union Bank of Colombo (UBC.N0000) plans to raise 3 billion rupees by issuing 30 million Basel III-compliant tier-2 debentures at Rs100 each; final tenor, coupon and other terms will be set by the board and the issue is subject to regulator and shareholder approval.

Banking system net foreign assets fell from about $3.3bn in April 2025 to $2.90bn in July 2025, reversing after rate cuts and a pickup in private credit. Central bank net foreign assets also eased to around $1.41bn in June (≈$1.46bn in July), buying $142m from the interbank market in August.

Union Bank of Colombo PLC appointed Gyanendra Prasad Dhungana to its Board as a Non-Independent Non-Executive Director. Dhungana is a banker with over 30 years' experience, including CEO roles at Nabil Bank and Nepal Bangladesh Bank and senior posts at Nepal Rastra Bank.

ICCSSL hosted a July 30 Coffee Evening where CSE and SEC officials and practitioners discussed the Colombo Stock Exchange's new governance regulations for listed companies, focusing on compliance complexities and implementation challenges.

People’s Bank reported an all-time-high 1H Profit Before Tax of Rs. 28.0 billion and PAT of Rs. 18.2 billion. The bank also reported Rs. 3.6t in assets, Rs. 3.1t deposits, improved net interest margins and a digital customer base of 3.7m.

Hatton National Bank MD Damith Pallewatte is leading the Sri Lanka FinTech Summit 2025 (Sept 24–25) to coordinate a national fintech ecosystem, targeting measures like 95% financial inclusion by 2030 and $100m in near-term fintech investment; workstreams will focus on SME lending, KYC interoperability, blockchain pilots and cross-border payments.

Sri Lanka's central bank swaps rose to $3,870m while net foreign reserves after swaps fell to $2,210m by June. Analysts warn buy-sell swaps create contingent liabilities and heighten forex risk as recent rate cuts have reduced reserve accumulation, weighing on banks' FX exposure.

CRIB delivered 8.9 million credit reports in 2024 and reported 14.8 million active credit records, covering 81% of Sri Lanka's adult population. It secured clearances to allow MSMEs and the public to use movable assets as collateral and expanded digital data sources, including gold loans.

CSE director Ray Abeywardena said Sri Lanka's exchange rate stability is providing investor confidence and predictability. He credited prudent policy, improved external sector performance and steady foreign investment and tourism receipts for the stability.

Sri Lanka’s central bank sold 231.9 billion rupees (~$770m) of foreign exchange to the government unsterilized in H1 2025, reducing banking-system liquidity. The operations are likely to tighten liquidity and put upward pressure on interbank rates.

Colombo market closed July with ASPI up 9% for the month (ASPI YTD +23%) and S&P SL20 up 7.7% (YTD +18.5%), with average daily turnover in July at Rs.7.16bn. Banking-led activity saw HAYL, DFCC, BIL, NDB and COCR as key contributors while foreigners were net sellers (Rs.134m).

Union Bank of Colombo (UBC.N0000) reported PAT of Rs. 251m for 1H 2025, up 247% y/y, and PBT of Rs. 834m (up 58%); net loans topped Rs.100bn, customer deposits were Rs.108bn and Total CAR was 13.65%.

Union Bank of Colombo PLC reported Profit Before Tax of LKR 834 million and PAT of LKR 251 million for 1H 2025, with PAT up 247% year-on-year. Net loans exceeded LKR 100 billion (24% YTD growth), customer deposits reached LKR 108 billion and Total CAR stood at 13.65%.

HNB CEO Damith Pallewatte outlines HNB's plan to channel private capital into agrimodernisation and exporters, targeting 30,000 Agripreneurs under HNB Sarusara. He cites 4.8% GDP growth in 1Q25 and an 800bp policy‑rate cut since 2023 as supporting conditions.

The Association of Professional Bankers hosted a panel at the Bank of Ceylon where CISOs from Commercial Bank and Hatton National Bank and other experts discussed strengthening cyber risk supervision and digital resilience for the banking sector.

SLID, in partnership with Huawei Sri Lanka, hosted the CXO Forum 2025 in Colombo with over 100 banking and finance leaders to discuss leveraging AI, big data and cloud to de-risk and innovate. Panelists included Union Bank CEO Dilshan Rodrigo and LOLC Finance Chairman Conrad Dias, and the Central Bank governor outlined regulatory priorities for sustainable digital innovation.

Commercial Bank of Ceylon (COMB.N0000) launched Sri Lanka's first AI-powered SME credit underwriting solution to speed and personalise SME loan approvals. The machine-learning platform automates risk assessment and the bank plans to extend AI underwriting to personal, housing and card lending.

Private credit expanded by Rs133bn in May 2025 (up from Rs71bn in April), taking five‑month growth to Rs478.6bn, while commercial bank credit to government fell Rs53bn. The central bank cut its policy rate last month and central bank credit to government rose Rs123bn.

LankaPay CEO Channa de Silva said the Fintech Forum aims to position Sri Lanka as a regional fintech hub, noting Rs.1.3tn in cash circulation and Rs.34tn in digital transactions last year and urging bank–fintech partnerships to boost rural financial inclusion.

CBSL Governor Dr. Nandalal Weerasinghe urged Sri Lankan banks to embed sustainable finance and pledged CBSL support for the Sustainable Finance Roadmap 2.0, stressing ESG risk management, transparent disclosures and potential regulatory incentives.

The CIMA–JXG Pinnacle Awards 2025 resumed in Colombo on 11 June, honoring corporate excellence; Commercial Bank won Bronze for ESG, ACL Cables received a Bronze CFO award, Citizens Development Business Finance won Silver for a digital transformation project, and Union Bank's chairman served on the judges' panel.