Bank Continues to Build Scale and Strengthen Its Core Franchise in 1H 2026

Group Core Business Profit After Tax of LKR 4.1 Bn 

Group Total Capital Adequacy Ratio of 15.746% 

Group Net Fee and Commission Income up by 29% to LKR 4.2 Bn 

Group Total Assets up by 7% to LKR 921 Bn

DFCC Bank entered the second half of 2026 with a larger and increasingly diversified franchise, following sustained growth across lending, deposits, fee income, and total assets during the first six months of the year. Loan and deposit portfolios grew by 9% and 12%, respectively, compared to 31 December 2025, while total assets increased by 7% to LKR 919 Bn and total liabilities grew by 8% to LKR 811 Bn. Net fee and commission income rose by 29%, while Net Interest Income increased by 6% to LKR 16 Bn, demonstrating continued momentum across the Bank's core income streams

 The first half unfolded against a more demanding external environment. Heightened geopolitical tensions in the Middle East kept commodity prices, particularly energy prices, elevated and increased uncertainty across global markets. In response to inflationary risks, the Central Bank of Sri Lanka increased the Overnight Policy Rate (OPR) by 100 basis points to 8.75% in May 2026. Together with other policy measures, the tightening and its gradual transmission to the real economy are expected to moderate credit growth and demand pressures in the period ahead

 Against this backdrop, the Bank continued to manage its funding profile and margins with discipline. Deposit and lending rates were revised in line with prevailing market conditions, while prudent liquidity management, funding optimisation initiatives, and effective control of funding costs supported a 6% increase in Net Interest Income to LKR 16 Bn. These measures helped preserve balance sheet resilience while supporting sustainable value creation for customers and shareholders.

The Bank recorded a Profit After Tax of LKR 3.9 Bn from core operations. While profitability was lower than in the corresponding period, underlying business momentum remained resilient as management deliberately strengthened prudential buffers in response to evolving geopolitical and macroeconomic risks. Impairment provisioning was reinforced through refinements to credit risk models and specific management overlays, resulting in an LKR 1.1 Bn increase in impairment charges compared to the same period last year. At the same time, the Bank maintained a selective lending approach and strict cost discipline. Notably, the net stage 3 impaired loan ratio improved to 3.61% from 4.55% as at 31 December 2025, reinforcing the Bank's focus on asset quality and sustainable growth.

A defining strategic development following the reporting period was the completion of DFCC Bank's acquisition of Standard Chartered Bank PLC's Wealth and Retail Banking Business in Sri Lanka. First announced to the Colombo Stock Exchange in November 2025, the transaction was completed with the acquired portfolio integrated into DFCC Bank effective 1 August 2026. The acquisition encompasses approximately 50,000 customer accounts and around 260 employees, while expanding DFCC Bank's network to 139 locations across the country. Together, these additions materially strengthen the Bank's retail and wealth management capabilities, reach, and accessibility

 The transaction represents a significant step in DFCC Bank's growth journey, providing a broader platform for sustainable expansion, deeper customer relationships, and enhanced service delivery while creating long-term value for customers, employees, and shareholders

Beyond financial performance, 1H 2026 also brought further validation of DFCC Bank's customer, sustainability, and community agenda. The Bank's pioneering Blue Bond secured supplementary listings on the Luxembourg Stock Exchange's Luxembourg Green Exchange and India INX at GIFT City, and was recognised at the Environmental Finance Sustainable Debt Awards 2026. DFCC Bank also received a Gold Award for Financial Inclusivity and a Merit Award for Customer Convenience at the LankaPay Technovation Awards 2026. Through Ride for Life and Ride for Her, the Bank continued to extend its community engagement across mental wellbeing and women's empowerment

 This commentary relates to the unaudited financial statements for the period ended 30 June 2026, presented in accordance with Sri Lanka Accounting Standard 34 (LKAS 34) on Interim Financial Statements.