HNB reaches Rs 2.5 Tn asset milestone, marking a strong start to 2026
Damith Pallewatte, Managing Director / CEO, HNB
- Bank’s Total Deposits crosses Rs 2.0 Tn and Gross Loans and Advances crosses Rs 1.6 Tn in Q1 2026
- Asset quality remains stable, with the Net Stage 3 ratio at 1.18%
- Strong Liquidity and Capital Positions maintained well above regulatory minimums
Against a backdrop of heightened economic volatility, the Bank recorded a Profit After Tax (PAT) of Rs 9.95 Bn in Q1 2026, reflecting disciplined balance sheet expansion and sustained improvements in asset quality. At Group level, performance remained resilient, with PAT reaching Rs 10.35 Bn for the quarter.
During the first quarter of 2026, interest income recorded a year-over-year (YoY) growth of 10.0%. While interest expense increased during the period, the growth in interest income outpaced the rise in funding costs, resulting in Net Interest Income (NII) reaching Rs 26.9 Bn.
Margin expansion was a key highlight for the quarter, with Net Interest Margin (NIM) increasing from 4.26% to 4.45% and NII rising by 13.5% YoY, driven by disciplined balance‑sheet growth as loan expansion was supported by a growing deposit base and a largely stable funding mix, enabling sustained margin enhancement over the period.
Net fee and commission income rose to Rs 6.8 Bn, up 40.9% YoY from Rs 4.8 Bn in Q1 2025, driven by strong momentum in the leasing segment, building on the expansion achieved in the previous year. Growth was further supported by expansion of the loan book, improved card performance, and higher transaction banking activity, including increased adoption of enhanced digital solutions. Exchange income also increased by 6.0% YoY to Rs. 1.6 Bn, reflecting higher customer activity and improved trade flows.
Overall, Total Operating Income for the first quarter of 2026 increased to Rs 36.1 Bn, compared to Rs 30.8 Bn recorded in the corresponding period of 2025, reflecting a YoY growth of 17.2%. Total operating expenses increased by 19.6% YoY, primarily due to higher customer activity levels, including increased card‑related volumes, higher loan originations and credit assessments, contributing to an increase in routine operational expenses, and mandatory levies associated with priority‑sector and agriculture‑related lending. Effective cost management was maintained, with the cost‑to‑income ratio standing at 37.15% in Q1 2026, broadly stable year‑on‑year compared to 36.41% in Q1 2025.
