Pan Asia Bank ended 2025 with its largest balance sheet on record, a sharply improved credit book, and profit after tax of Rs4.01 billion for the second consecutive year. Total assets crossed Rs308 billion, up 17%, while the gross loan book grew 55% to Rs217.12 billion, the highest annual credit growth the bank has seen in three decades of operation.
Strip out a one-off sovereign debt exchange gain that distorted the 2024 figures, and the 2025 results are starker still. Underlying profit before tax climbed 52% to Rs5.82 billion. Underlying profit after tax rose 35% to Rs4.01 billion. Earnings per share reached Rs9.05, up from Rs6.70 a year earlier. These are not numbers propped up by a windfall. They reflect a bank that has quietly rebuilt its earnings engine while Sri Lanka’s broader economy has slowly, unevenly, begun to stabilise.
Naleen Edirisinghe, Director & CEO at Pan Asia Bank
The result is significant because it comes in a falling-rate environment, the kind of year that tends to compress margins and squeeze banks that rely too heavily on interest income. Pan Asia managed it differently. While benchmark rates trended downward for much of the year, the bank offset the pressure through active liability repricing, a deliberate shift towards a healthier deposit mix, and the early retirement of high-cost borrowings. Interest expenses fell 4%. Net interest income still grew 5% to Rs12.75 billion, with a net interest margin of 4.55%.
The sharper story is in fee income. Net fee and commission income grew 37% to Rs2.52 billion, driven by higher lending volumes, stronger trade flows, card transaction growth, and a notable upturn in remittances. That diversification matters because it signals a bank that is no longer fully dependent on the spread between what it pays depositors and what it charges borrowers. Total operating income reached Rs16 billion.
Cost discipline kept pace with revenue growth. The cost-to-income ratio fell from 52.68% to 48.94%, even as the bank continued to invest in new branches, digital capability, and staff. The improvement was driven by process optimisation, automation across key operations, and the efficiencies that come with handling larger business volumes without proportionally larger teams. For a mid-sized bank expanding at pace, holding the cost line while growing the top line is harder than it looks.
Credit quality was the most striking improvement. The Stage 3 loan ratio dropped to 1.73% from 3.10% the year before, one of the more meaningful moves in the sector. That shift did not happen by chance. It reflects tighter underwriting standards, better borrower monitoring, and an early-warning framework that caught problems before they became provisions. The bank set aside Rs520.81 million in expected credit loss provisions during the year, accounting for loan growth, updated economic parameters, and, notably, adjustments related to Cyclone Ditwah’s climate-related impact. Stage 3 provision coverage also strengthened, rising to 62.63% from 60.10%.
Deposit growth tells a similar story about customer confidence. Customer deposits rose 21% to Rs231.04 billion. The growth was not concentrated in a single segment; retail, SME, and corporate depositors all contributed. Foreign currency deposits expanded, strengthening the funding mix for a bank that is also growing its trade finance business. The rupee liquidity coverage ratio stood at 204.90% against a regulatory minimum of 100%. The all-currency ratio was 154.97%. This reflects a deliberately constructed liquid asset portfolio and careful planning during a period of shifting interest rates and credit demand.
Capital buffers are equally solid. The Common Equity Tier 1 and Tier 1 ratios both came in at 16.66%, against regulatory minimums of 7.00% and 8.50% respectively. The total capital ratio reached 18.27%, well above the 12.50% floor. The leverage ratio of 8.74% (regulatory minimum: 3%) gives the bank meaningful headroom to grow without straining its capital base. Return on equity rose to 14.09%. Return on assets before tax reached 2.08%.
Chairman Aravinda Perera framed the year in terms of what the bank’s third decade of operation has built and what it now has to protect. The board’s focus, he said, is on governance, resilience, and sustainable value creation, not short-term performance chasing.
Director and CEO Naleen Edirisinghe was more direct about the operational shift the results represent. The loan portfolio’s 55% expansion to Rs217.12 billion was the highest single-year credit growth in the bank’s history, and it was achieved while keeping asset quality intact, a combination that is difficult to sustain when a bank is growing fast. His forward priorities centre on margin optimisation, digital transformation, and building out the bank’s analytics capability, the kind of investment that tends to look expensive in the short run and essential in hindsight.
Pan Asia Bank enters its fourth decade as a different institution from the one that navigated Sri Lanka’s 2022 economic crisis. The balance sheet is stronger, the loan book is cleaner, the cost structure is leaner, and the deposit base is larger. The harder question, the one no results announcement can fully answer, is whether the growth of 2025 was a post-crisis bounce or the beginning of a sustained structural shift. The capital ratios and liquidity buffers suggest the bank is in a position to find out.