Four of Sri Lanka’s largest banks filed September-quarter accounts on Friday afternoon, and they tell a consistent story: lending income is growing strongly, and almost everything below it is working against the bottom line.

All four grew net interest income by double digits. Three of the four reported lower profit anyway, squeezed by trading losses, by impairment charges where a year earlier there had been write-backs, and by operating costs rising faster than income. The Daily Mirror filed the four sets of results between 2.07 and 2.27 p.m.

Commercial Bank: flat quarter, stronger nine months

Commercial Bank of Ceylon reported group net profit of Rs 16.74 billion for the third quarter, down 0.7 percent from Rs 16.86 billion a year earlier, the Daily Mirror reported. Net interest income rose 19.3 percent to Rs 41.36 billion and gross income 20 percent to Rs 109.63 billion, which the bank attributed mainly to loan book growth.

Over nine months group net profit rose 8.6 percent to Rs 52.16 billion. Interest expense rose 23.6 percent, outpacing the 20.5 percent rise in interest income — the bank cited higher rates and deposit growth. Impairment charges rose 17.8 percent to Rs 16.57 billion and operating expenses 19.9 percent to Rs 47.27 billion on staff and technology costs.

Group gross loans grew 16.7 percent from end-2025 to Rs 2.43 trillion, deposits 15.5 percent to Rs 3.12 trillion and total assets 14.7 percent to Rs 3.87 trillion. Standalone deposits crossed Rs 3 trillion during the quarter. The net interest margin eased to 4.45 percent from 4.51 percent on higher deposit costs, and the share of current and savings accounts fell to 37.08 percent of deposits from 39.65 percent.

Asset quality improved: the gross impaired loan ratio fell to 5.31 percent from 5.81 percent at end-2025 and 6.25 percent a year earlier. The Tier 1 ratio slipped to 12.50 percent and total capital to 16.35 percent, both above the 10 and 14 percent minimums; the bank attributed the decline to asset growth and the exclusion of third-quarter profit from the calculation.

HNB: a Rs 8.99 billion trading loss

Hatton National Bank’s group net profit fell 4.9 percent to Rs 11.0 billion, with earnings per share at Rs 18.24 against Rs 19.12, the Daily Mirror reported.

The underlying business grew: net interest income rose 24.8 percent to Rs 36.36 billion, fee income 14.9 percent to Rs 7.51 billion, total operating income 15.8 percent. What offset it was a trading loss that widened to Rs 8.99 billion from Rs 672 million, partly cushioned by other operating income rising to Rs 8.04 billion from Rs 2.93 billion, and a Rs 1.59 billion impairment charge against a Rs 2.09 billion reversal a year earlier. Operating expenses climbed 18.5 percent.

Over nine months group net profit fell 3.4 percent to Rs 33.56 billion while standalone bank profit rose 4.8 percent. Gross loans grew 20.7 percent from end-December to Rs 1.82 trillion and deposits 12.8 percent to Rs 2.21 trillion.

Nations Trust: the HSBC acquisition lands on the quarter

Nations Trust Bank posted the sharpest fall — net profit down 28 percent to Rs 4.42 billion, with earnings per share at Rs 13.26 from Rs 18.35, the Daily Mirror reported.

Again the lending business grew hard — net interest income up 20 percent, fee income up 41 percent, loans up 36 percent year on year — while a net trading loss of Rs 2.11 billion replaced a Rs 791 million gain, operating expenses rose 36 percent and the tax charge rose 38 percent.

The bank attributed the quarter to costs from its acquisition of HSBC Sri Lanka’s retail banking business and initial provisions on the acquired portfolio. The Rs 21.78 billion cash acquisition completed on 1 May, and the purchase price allocation was still being finalised at end-September.

The nine-month picture inverts: group net profit rose 34 percent to Rs 19.98 billion even though pre-tax profit was broadly flat at Rs 21.82 billion. That gap is a tax effect — the income tax charge fell to Rs 1.84 billion from Rs 7.00 billion, the first half having included a one-off credit linked to the HSBC deal. Readers should treat the nine-month growth figure with that in mind.

Bank of Ceylon: the outlier

The state-owned Bank of Ceylon reported nine-month net profit of Rs 58.7 billion and pre-tax profit of Rs 94.1 billion, the Daily Mirror reported, with net interest income up 10 percent to Rs 169.2 billion. Interest income rose 6 percent while interest expenses rose 3 percent — the only one of the four where funding costs grew more slowly than earnings. Impairment also fell, to Rs 16.8 billion from Rs 18.7 billion.

Chairman Kavinda de Zoysa said the results reflected “the strength of BOC’s franchise, the confidence of our customers and the disciplined execution of our strategy,” adding that beyond profitability the priority remained capital, risk management and financial inclusion. The bank said it paid Rs 60.1 billion in direct taxes to the government over the period.

Note that BOC’s filing is reported on a nine-month basis throughout, not as a standalone quarter, so it is not directly comparable with the quarterly figures above.

The market read it immediately

The results landed on a falling market. Hatton National Bank closed down 1.88 percent at Rs 403.75 and was among the day’s top negative contributors to the All Share Price Index, EconomyNext reported after the close. Sampath Bank, which reported its own September quarter on Thursday, fell 1.91 percent to Rs 154.00.

A note on sourcing

All four sets of results in this report come from Daily Mirror filings. At the time of writing no other verified newsroom had carried them — EconomyNext, Daily FT and Lanka Business Online had not filed on any of the four. The EconomyNext citation above is for the share price move only, not for the earnings figures. Results filed to the Colombo Stock Exchange late on a Friday are typically picked up more widely the following working day.

Not reported

None of the filings explains what drove the trading losses at HNB and Nations Trust, which were the single largest swing factor in both. None gives a forward view, and none of the banks is quoted on the 2027 Budget presented on Wednesday or on its implications for bank taxation.

Sources