Cleaner loans. Thinner margins.
Net Interest Income fell 11.5% from a year ago to LKR 7.97 Bn as interest costs outpaced interest income. An impairment reversal of LKR 418 Mn limited the fall in Profit After Tax to 8.9%, at LKR 2.89 Bn.
Share price
- Close, 21 October 2026
- LKR 103.75
- Results declared
- 21 October 2026
Jul–Sep 2026 results, line by line
| LKR Mn | Jul–Sep 2026 | YoY | QoQ |
|---|---|---|---|
| Net Interest Income | 7,965 | −11.5% | −4.8% |
| Net Fee Income | 2,131 | 0.0% | −5.7% |
| Total Operating Income | 10,514 | −12.3% | −15.0% |
| Impairment (Reversal) | (418) | Reversal | Reversal |
| Operating Expenses | 5,327 | +8.5% | +12.0% |
| Cost to Income | 50.7% | +9.7 pts | +12.2 pts |
| Profit Before Income Tax | 4,292 | −2.0% | −5.4% |
| Profit After Tax | 2,886 | −8.9% | −4.2% |
YoY against the same quarter a year ago. QoQ against the previous quarter.
What drove it
- 01Interest costs outpaced interest income
Interest Expenses rose 22.9% YoY against 8.9% for Interest Income. The Net Interest Margin slipped to 3.57% for the first nine months, from 4.06% in FY2025, and the CASA ratio fell to 20.7% from 23.9% at end-2025.
- 02An impairment reversal
Impairment swung to a reversal of LKR 418 Mn, from a charge of LKR 1,406 Mn a year ago. That added LKR 1,824 Mn to operating profit before taxes on financial services, which was LKR 5,605 Mn against LKR 5,679 Mn.
- 03Loan quality kept improving
Impaired (Stage 3) loans net of provisions fell to 3.00% of total loans from 3.75% at end-2025. Gross Stage 3 was 8.60%, down from 9.18%, and provision cover rose to 65.4% from 59.1%.
- 04Capital is above the minimums
Tier 1 was 9.48% against an 8.5% minimum, down from 11.25% at end-2025, and Total Capital 14.77% against 12.5%. The all-currency LCR was 161.8% against a 100% minimum.
Valuation at LKR 103.75
The shares trade at 54% of book value. Bank figures; the last 12 months include the restated October to December 2025 quarter.
Three things to watch next quarter
- Net Interest Margin. Does it hold near 3.6%, after falling from 4.1% in FY2025?
- Tier 1 capital. Does the 9.48% ratio rebuild its room above the 8.5% minimum?
- The cash dividend. Is the LKR 6.46 a share cash dividend released by the CBSL?
The company
Capital Trust Securities. For information only. Not investment advice. Source: National Development Bank PLC interim financial statements to 30 September 2026 (unaudited). Bank figures; comparatives restated.