HNB reports strong first-half growth with Rs 224 Bn increase in advances

• Balance Sheet crosses key milestones amid strong business growth

• Loan book grew by 15% in 1H 2026

• Asset Quality holds firm with Net Stage 3 at 1.17%

• Liquidity and Capital Strength continue to support Growth

• Named Best Bank for Large Corporates by Euromoney for a second consecutive year

Navigating a period of economic volatility and inflationary pressures, HNB Group reported a Profit After Tax (PAT) of Rs 22.5 Bn for the six months ended June 2026, while the Bank recorded a PAT of Rs 23.1 Bn for the same period. The performance reflected strong balance sheet growth, with advances increasing by Rs 224 Bn and deposits by Rs 138 Bn during the first half of the year, while maintaining strong asset quality with a Net Stage 3 ratio of 1.17%.

The Bank's Net Interest Income increased by 21% YoY to Rs. 55.2 Bn and the Net Interest Margin (NIM) increased to 4.40% from 4.26% in 2025 supported by strong lending momentum, with the significant increase in interest income from loans and advances offsetting funding cost pressures stemming from the evolving interest rate environment.

Further strengthening the Bank's non-interest income streams, net fee and commission income increased by 30% YoY, driven by rising digital banking activity, increased card-related transactions, and strong contributions from the transaction banking and leasing businesses. The combined impact of strong growth in net interest income and non-interest income resulted in a 27% YoY increase in Total Operating Income to Rs. 76.7 Bn. While operating expenses increased moderately during the period, largely due to higher foreign currency-denominated technology and payment processing costs, the Bank maintained prudent expense management, supporting overall profitability and a lower annualised cost‑to‑income ratio of 34.48% compared to 38.56 % in 2025.

Reflecting the significant expansion of the Bank's lending portfolio during the period, impairment provisions amounted to Rs. 4.1 Bn in 1H 2026, compared to an impairment reversal in the corresponding period of the previous year.

Commenting on the performance, Mr. Damith Pallewatte, Managing Director / Chief Executive Officer of HNB PLC, stated, “Our performance during the first half of the year reflects the consistency of our execution and the enduring confidence our customers place in HNB. Despite a challenging operating environment, we continued to grow our lending and deposit portfolios while maintaining sound asset quality and a healthy capital and liquidity position. This has enabled us to support our customers' ambitions while preserving the financial strength of the Bank.

We remain committed to helping individuals and businesses navigate changing market conditions by providing responsible financial solutions, strengthening our digital capabilities and continuously improving the customer experience. At the same time, we continue to invest in our people and technology to enhance efficiency, strengthen governance and position the Bank for long-term growth. I extend my sincere appreciation to our valued customers for their continued trust and confidence, and to our employees, who have been instrumental in achieving these results with their outstanding dedication”.

As we move into the second half of the year, we remain focused on executing our strategic priorities while supporting Sri Lanka's economic recovery and growth. With a strong balance sheet and a clear long-term direction, we will continue to build a stronger, more resilient HNB that creates enduring value for our customers, shareholders and the communities we serve.”

The Bank's balance sheet continued to strengthen during the first half of 2026, with the Bank's asset base exceeding Rs. 2.55 Tn and gross loans and advances expanding by Rs. 224 Bn to reach Rs. 1.7 Tn. Customer deposits grew by Rs 138 Bn and surpassed the Rs. 2.1 Tn mark, underpinned by a CASA base of approximately 34%, reflecting the strength of the Bank's low-cost deposit franchise and stable funding base. This reflects sustained business momentum, continued customer confidence and the Bank's disciplined approach to balance sheet management.

The Bank continues to maintain a strong capital and liquidity position, with a Tier I Capital Ratio of 15.44%, a Total Capital Ratio of 18.18% and an all-currency Liquidity Coverage Ratio (LCR) of 186.69%, providing ample capacity to support future business growth while remaining well above regulatory requirements.

HNB, rated AA-(lka) by Fitch Ratings Lanka Ltd., added another international accolade to its portfolio during the period, being named “Best Bank for Large Corporates in Sri Lanka 2026” by Euromoney. The Bank has also been recognised as “Best Bank in Sri Lanka” by The Banker (UK) and “Sri Lanka's Strongest Bank” by The Asian Banker, reflecting the breadth and strength of its franchise. Across its business segments, HNB was named “Best Retail Bank in Sri Lanka” for the 16th time by The Asian Banker, while Global Business Magazine recognised the Bank as “Best Retail Bank and Best SME Bank” for 2026. The Bank was also honoured as “Sri Lanka's Best Corporate Citizen 2025” by the Ceylon Chamber of Commerce.