In January 2025, HNB Group bought out the rest of Acuity Partners from joint-venture partner DFCC and rebranded it HNB Investment Bank (HNBIB), on the belief that full control would let it move faster and commit capital on its own terms.
The restructuring meant HNBIB would now answer to one owner instead of two, and brought advisory, capital markets, securities, venture capital, and primary dealer operations under one entity for the first time. It also gave the new bank direct access to the balance sheet of its parent, whose assets topped Rs2.5 trillion by the end of 2025.
HNBIB moved quickly to put the new structure to work. Its Corporate Finance division structured the country’s first high-yield bond for a non-bank financial institution, Fintrex Finance. Sri Lanka’s corporate debt market has historically been dominated by investment-grade issuers; the Fintrex deal opened a channel for higher-growth companies that don’t clear that bar. The same year, HNBIB entered a partnership with Dhivehi Investment Partners to pursue joint mandates in the Maldives, its first move into a market outside Sri Lanka.
The bank also revised its approach to sector investing. Rather than launch separate funds for SMEs, fintech, agritech, meditech, and exporters as originally planned at launch, HNBIB consolidated around thematic platforms spanning sustainability, technology, and innovation. The revised strategy was reflected in investor appetite. In December 2025, when HNBIB brought a Rs10 billion Sustainable Bond to market, it was oversubscribed on its first day.
Despite margin pressure, HNBIB remained profitable in 2025. Profit after tax exceeded Rs2.0 billion, even as earnings declined 34.4% year on year, reflecting the impact of higher interest rates in the second half of the year that compressed margins. The bank described its response as a cautious approach to prevailing market conditions rather than a shift in strategy.
The bank’s 2026-2030 strategic mandate puts machine learning and AI at the center of how it plans to read customer behaviour and speed up decision-making. HNB Securities, the group’s primary dealer unit, separately began upgrading its IT infrastructure in 2025, working towards a fully integrated core Primary Dealer system meant to handle rising volume and complexity in government securities trading.
Corporate Finance also introduced the Trust Certificate in 2025, a new instrument giving issuers more flexibility outside conventional debt structures.
Market conditions in 2025 helped; the ASPI rose 42% and average monthly turnover on the Colombo Stock Exchange grew 131% to Rs102 billion. HNB Stockbrokers digitalised its account opening process and extended online trading to all accounts, while also opening a second branch in Jaffna, a market in which the bank sees growing interest from entrepreneurs, professionals, and younger investors.
HNB Group has stated a goal of becoming Sri Lanka’s largest private sector bank by 2030. For HNBIB, that includes moving towards wealth management and advisory-led client relationships, rather than a business built primarily around one-off transactions.
This is reflected in the conversation Echelon had with Damith Pallewatte, Chairman, and Ray Abeywardena, Managing Director/Group Chief Executive Officer at HNB Investment Bank.
Pallewatte speaks to the institutional and strategic decisions behind HNBIB’s formation, weighing in from his position overseeing the bank’s long-term direction within the wider HNB Group.
Abeywardena brings the operational and commercial view, speaking to how HNBIB executed on that strategy through the year, from deal execution to market expansion.
HNB acquired full ownership of Acuity Partners in January 2025, rebranding it as HNB Investment Bank. What became possible under whole ownership that was not possible as a joint venture with DFCC?
Damith Pallewatte: While the joint venture served both partners well over many years, our decision to take full ownership of Acuity was driven by a wider set of priorities: those of the HNB Group and our nation as a whole. For Sri Lanka to grow, it needs more pathways for individuals, communities and enterprises to raise and deploy capital. Aggregating capital and directing it to where it is most needed, in a way that widens economic opportunity and deepens the markets Sri Lankans can eventually participate in, is a national priority as much as a commercial one.
Bringing Acuity fully into the Group lets us operate specialised advisory, capital markets, securities, venture capital and primary dealer activities as a single business under one name. That unification is the foundation of the HNB Investment Bank brand. Each of those capabilities previously carried its own identity in the market. Today a client engages one institution, backed by the standing of the wider HNB Group, whether they are raising private capital, structuring a transaction or accessing debt and equity markets. Full ownership also lets us decide quickly and responsibly, and commit capital over a longer horizon, while holding to the governance standards that protect shareholders across the Group. The timing matters.
As the economy recovers, Sri Lankan businesses increasingly need structured capital and market access, not financing alone. A single, fully integrated investment bank is better placed to meet that need, and to help build deeper, more efficient capital markets in the process.
With HNB Investment Bank bringing together corporate finance, stockbroking, primary dealing and venture capital capabilities, what differentiates HNBIB in Sri Lanka’s investment banking landscape, and how does being part of the HNB Group strengthen that proposition?
Ray Abeywardena: What differentiates HNB Investment Bank is the ability to provide integrated capital solutions across the entire investment lifecycle. By bringing together corporate finance, stockbroking, primary dealing, and venture capital capabilities, we are able to support clients at different stages of growth, from raising capital and accessing markets to building long-term value.
Being part of the HNB Group further strengthens this proposition through the stability, trust, and extensive ecosystem of one of Sri Lanka’s most established financial institutions. This foundation enables us to combine deep market expertise with the agility and innovation required in today’s evolving investment landscape.
Our focus is to leverage these strengths to deliver greater value to clients while contributing to the continued development of Sri Lanka’s capital markets.
HNBIB placed Sri Lanka’s first high-yield bond for Fintrex Finance in 2025, introducing a new investment class to the local debt market. What gap in capital markets does this address, and is there any new instrument you have planned?
Ray: The introduction of the high-yield bond for Fintrex Finance addressed an important gap in Sri Lanka’s capital markets: the need for more diverse funding solutions for growing companies that may not always fit within traditional financing structures.
Historically, the corporate debt market has been dominated by highly rated issuers. However, as businesses expand and the economy recovers, there is increasing demand for alternative capital solutions that allow fundamentally strong companies with higher growth potential to access institutional investors while providing investors with opportunities to diversify their portfolios.
Our role as an investment bank is to bridge that gap by structuring solutions that balance issuer requirements with investor expectations. Going forward, we see opportunities to further develop the local debt ecosystem through instruments that cater to different stages of business growth, including sustainable finance solutions, structured products and sector-focused investment opportunities.
HNBIB partnered with Dhivehi Investment Partners in 2025, allowing Maldivian companies to raise capital and list on the CSE. How does the Maldives partnership serve as a model for entering other markets?
Ray: The partnership with Dhivehi Investment Partners represents an important step in expanding the role of Sri Lanka’s capital markets beyond our domestic borders. It demonstrates how collaboration between regional financial institutions can create opportunities for companies to access deeper pools of capital while allowing investors to discover new investment opportunities.
For companies in smaller emerging markets, accessing a more developed capital market can provide greater visibility, stronger governance frameworks and access to a broader investor base. Sri Lanka, with its established capital market infrastructure and professional expertise, is well positioned to support such regional linkages. While every market has its own characteristics, the broader model is one we believe can be replicated through strategic partnerships.
Our focus will remain on identifying opportunities where HNBIB’s expertise in advisory, capital raising, and market access can create meaningful value for businesses and investors across the region.
At the launch of HNB Investment Bank, there were plans for sector-specific investment funds targeting SMEs, fintech, agritech, meditech, and export industries. How far along are those funds?
Damith: The ambition behind those sectors has not changed, but the way we pursue it has. Rather than launching a separate fund for each sector, we concluded that Sri Lanka’s market is better served by investment platforms organised around the themes that cut across all of them: sustainability, technology, and innovation. A thematic platform can support a fintech business and an export manufacturer through the same structure, which is more efficient in a market of our scale than a proliferation of narrow funds.
That thinking is already producing results in sustainable finance, where we advised on landmark transactions including Sri Lanka’s first listed Green Bond and HNB PLC’s own Sustainable Bond. Both reflect real investor appetite for returns that come with measurable impact. Our discipline is unchanged: we move when the business, investor demand, and market conditions align, rather than launching vehicles for their own sake.
The 2025 annual report says AI will be used to improve customer insights and decision-making speeds. Which business line within HNBIB does AI change first? Research, trading, or deals?
Damith: I would resist the idea that AI, Large Language Models (LLMs) and Machine Learning (ML) transform just one aspect of the business at a time. It will eventually become a capability that runs across the whole business, changing how we process information, draw out insight and reach decisions.
The clearest early value that we see is in working through large and complicated datasets, spotting patterns faster and giving our teams a sharper basis for the calls they make, whether in research, capital markets, trading or advisory.
What does not change is the nature of the work itself. Investment banking runs on judgement, relationships and experience, and technology should sharpen those things rather than stand in for them. And as much as we should be forward-thinking on technology, this is still an evolving technology, and as such, comes with its own risks and governance challenges.
That is also why we are deliberate about how we adopt it. A brand that clients value is, above all, a brand they trust, and in this business trust is inseparable from sound governance and disciplined risk management. We would rather adopt a capability well than adopt it first.
The Corporate Finance arm introduced the Trust Certificate as a new product in 2025. Which client segment is the Trust Certificate designed for, and what problem does it solve that existing instruments did not?
Ray: The Trust Certificate was introduced to provide businesses and investors with a more flexible capital market solution by expanding the range of instruments available beyond traditional debt structures. It is particularly relevant for corporates and institutions looking for alternative funding mechanisms that can provide greater flexibility in structuring transactions while meeting investor requirements. For investors, it creates access to a different investment opportunity with defined structures and risk characteristics. As capital markets develop, one of our priorities has been introducing instruments that are better aligned with the evolving needs of both issuers and investors.
The Trust Certificate is an example of how we continue to broaden the market toolkit and create solutions that enable businesses to access capital more efficiently.
HNB Securities took the first steps in 2025 to upgrade its IT infrastructure to a fully integrated core Primary Dealer system. What does that system change about how government securities are traded?
Damith: The value here is not the technology on its own but what it enables. Moving to a fully integrated primary dealer system means transactions in government securities are executed, settled, and monitored on one platform, faster and with fewer points of failure than a group of siloed legacy systems allowed. Especially as trading volumes and complexity rise, that kind of scalable, single-view infrastructure stops being a convenience and becomes a core requirement.
The government securities market sets the benchmark for the entire financial system, so the quality of the plumbing behind it matters well beyond any one firm. As one of the country’s licensed primary dealers, our investment here supports a more resilient and better-instrumented market at a point when Sri Lanka is rebuilding institutional and international investor confidence in its debt.
That is the contribution we set out to make: infrastructure that helps the market carry more weight.
HNB Stockbrokers fully digitalised the account opening process in 2025 and extended online trading access to all accounts, opening a second branch in Jaffna. What is the client profile in Jaffna, and how is digital take-up outside Colombo?
Ray: One of the key objectives behind our expansion strategy has been making investment opportunities more accessible beyond traditional financial centres. The opening of our Jaffna branch reflects our belief that participation in capital markets should not be limited by geography.
Jaffna represents an important emerging market with growing interest among entrepreneurs, professionals and younger investors. Alongside our physical expansion, digital initiatives such as fully digital account opening and online trading access allow us to serve investors across the country with greater convenience and transparency. The future of investing in Sri Lanka will be driven by a combination of digital accessibility and trusted advisory support, ensuring investors have both the tools and guidance needed to participate confidently in capital markets.
HNB Investment Bank has been strengthening its investment ecosystem across advisory, capital markets and securities. Is wealth management an area that HNBIB is looking to expand into, and how does it fit into the organisation’s long-term vision?
Damith: Wealth management represents a natural evolution in our mission to build a complete investment ecosystem. As capital markets continue to develop, there is growing demand from individuals, families, and institutions for professional guidance in managing and growing their wealth. This is an area that we continue to closely monitor as it is still an underdeveloped field, especially when compared with our regional peers.
Our vision is to build capabilities that connect investors with the right opportunities while maintaining the highest standards of trust, governance, and expertise. Any expansion into wealth management will be approached thoughtfully, ensuring that it complements our existing strengths across corporate finance, capital markets, securities, and investment advisory. Any step we take will be measured and built to complement those strengths rather than sit apart from them.
The wider aim is to widen access to serious investment advice and, over time, to help build a stronger investment culture in Sri Lanka, where people and businesses are equipped to make sound long-term decisions.