Sampath Bank PLC reported a 64 percent increase in second-quarter profit, as higher interest, fee and foreign-exchange income combined with a sharp reduction in impairment charges.
The bank’s standalone profit after tax rose to Rs. 10.45 billion in the three months ended June 30, 2026, from Rs. 6.35 billion a year earlier, according to interim financial statements filed with the Colombo Stock Exchange. Earnings per share increased to Rs. 8.91 from Rs. 5.42.
Profit was also 69 percent higher than the Rs. 6.18 billion recorded in the preceding quarter.
Total operating income climbed 32 percent year-on-year to Rs. 34.78 billion, while impairment charges fell 64 percent to Rs. 483 million. Compared with the first quarter, impairment charges dropped 89 percent from about Rs. 4.48 billion.
The bank attributed the quarter-on-quarter decline to recoveries on previously troubled exposures.
“The lower impairment charge was primarily attributable to an impairment reversal exceeding Rs. 3 billion, driven by the successful recovery of long-outstanding loans during the quarter,” Sampath Bank said in its commentary accompanying the results.
The reversal indicates that a significant part of the sequential earnings improvement came from credit recoveries rather than revenue growth alone. Still, core income also expanded during the quarter.
Net interest income rose 16 percent year-on-year to Rs. 22.66 billion, as interest income increased 13 percent and outpaced an 11 percent rise in interest expenses. Net fee and commission income grew 23 percent to Rs. 6.13 billion.
Other income nearly tripled to Rs. 5.99 billion from Rs. 2.01 billion. Net trading gains amounted to Rs. 3.74 billion, compared with a loss of Rs. 18 million a year earlier, while net other operating income increased 64 percent to Rs. 1.98 billion.
The bank said the increase in foreign-exchange-related earnings during the first half reflected higher transaction volumes and the rupee’s depreciation against the US dollar.
The stronger revenue and lower credit costs outweighed a 24 percent increase in operating expenses to Rs. 13.56 billion. Personnel expenses rose 29 percent, while other operating expenses increased 24 percent.
Sampath said the cost increase reflected workforce expansion, annual salary revisions, higher business volumes and continued investment in technology and digital capabilities.
Profit before income tax rose 48 percent to Rs. 16.20 billion. Income tax expenses increased at a slower 25 percent to Rs. 5.75 billion, supporting the faster growth in after-tax profit.
For the first half, profit after tax increased 13 percent to Rs. 16.63 billion, while profit before tax edged up 1 percent to Rs. 24.56 billion. The divergence reflected a lower income tax charge, which the bank attributed to the finalisation of tax assessments relating to previous years.
First-half operating income rose 17 percent to Rs. 63.25 billion. However, impairment charges more than quadrupled to Rs. 4.96 billion from Rs. 1.17 billion, reflecting the heavier provisioning recorded in the first quarter.
The bank said the first-half impairment increase was driven by collective provisions arising from loan growth, additional management overlays for geopolitical risks and a review of customers exposed to higher-risk sectors.
Net loans and advances expanded 20 percent from the end of 2025 to Rs. 1.35 trillion, substantially faster than the 7 percent growth in deposits to Rs. 1.74 trillion. Total assets increased 8 percent to Rs. 2.13 trillion.
Asset-quality indicators nevertheless improved. The gross Stage 3 loan ratio declined to 6.54 percent from 8.37 percent at the end of 2025, while the net Stage 3 ratio fell to 2.25 percent from 3.31 percent. Stage 3 impairment coverage increased to 65.60 percent from 60.44 percent.
Rapid loan growth weighed on capital buffers. Sampath Bank’s common equity Tier 1 ratio declined to 13.21 percent from 14.75 percent at end-2025, while its total capital ratio fell to 15.62 percent from 17.65 percent. The regulatory minimums are 8 percent and 13.5 percent, respectively.
The bank subsequently raised Rs. 10 billion through a Basel III-compliant green bond in July.
