Union Bank of Colombo PLC has had a remarkable two years. Since the Nepali Chaudhary Group (CG Corp Global) acquired a controlling stake in November 2023, the bank has grown its loan book by 80% and doubled its profits as at end 2025. Dilshan Rodrigo, Director/Chief Executive Officer at Union Bank, who joined at the same time as the new owners, sat down with Echelon to discuss how Union Bank turned itself around and where the growth story goes from here.
It’s been two years since the CG Corp Global Group acquired Union Bank. How would you summarise what the bank has achieved in that time?
Since they acquired the bank in November 2023, it’s been a breath of fresh air. It has really awakened the bank. In the last two years, we grew our loan book by 80%, halved our NPAs and doubled our profit in the last year. I’m proud of what we’ve achieved, proud of the team that made it happen.
“In the last two years, we grew our loan book by 80%, halved our NPAs and doubled our profit in the last year.” — Dilshan Rodrigo, CEO, Union Bank
This is a bank with a significant branch presence, technology and over a thousand staff — a huge overhead. So we have to grow; that is inevitable. I’m fortunate to have a young team. Our top management, down to the branch managers, is probably a decade younger than the industry. They are much more driven, there is energy, and they are very receptive to change. We’ve made a lot of changes to the operating model, and that has really paid dividends.
With 80% loan growth, doubled profits, and halved NPAs over two years, what were your biggest inherited challenges, and which strategies drove the turnaround?
The first problem was staff attrition, the second was a legacy NPA portfolio, and the third was high operating leverage, as our cost-income ratio at the time was 82%. So we focused on a few areas. First, capacity building. We ran programmes covering soft skills, leadership training, negotiation, selling, technical credit, operations, IT and AI training. training. Out of that came a mindset where everybody has to be an all-rounder— there are no specialists. Even the pawning officer, who is generally a specialist in any other bank, does mainstream banking.
We backed that with performance-based pay with over 20 incentive schemes in the bank. If you deliver, you get a better return. Then we restructured the branch model. The branch manager focuses entirely on sales and customer service. The deputy branch manager handles operations and compliance. We minimise the number of people managing back-office work and maximise the number of people facing customers. Credit and operations were centralised; just like a car showroom, where you only see the people encouraging you to buy and never the back office.
Pawning and leasing were both new to Union Bank, yet both grew at a pace that put you on par with the top six banks in the country within a single year. What made that possible so quickly?
We focused on enhancing Pawning by adding gold loans and launched leasing during 2024 — conventional products, but new to Union Bank and launched with greater intensity. In their very first full year, we delivered Rs4 billion in growth in pawning and Rs10 billion in leasing, which is on par with the top six banks in the country in terms of growth levels.
On pawning, gold prices have more than doubled in the last year and a half, which has been a strong tailwind. There is always the market risk of a sudden gold price drop, but that’s a risk we are taking and managing.
managing. On leasing, the momentum on new vehicle imports may be slowing — there is a lot of unsold stock in the market. So we’ve already developed tailored products to focus on the second-hand leasing market, and we see that continuing to grow this year.
Union Bank’s loan book has grown80% in two years. What strategies did it employ to achieve that while simultaneously bringing down its cost-income ratio and cleaning up its NPA portfolio?
To fix the cost-income ratio, we focused on two things. We grew our balance sheet by 80% over the last two years. That helps because now revenue has improved, the denominator is higher, and the ratio starts coming down. On the cost side, we improved efficiencies and productivity: more deposits per branch, more transactions per branch. This year, we are targeting below 70%, from the 82% we were at two years ago. I’m very confident we will get there.
On the NPA recovery, we created three verticals. First, the big tickets, a small number of loans accounted for 40% of the non-performing book, where we struck deals, negotiated and restructured to get repayments moving. Second, the SME portfolio, which suffered badly when the economy went into a tailspin, we negotiated reschedulings and asset sales. Third, the retail legacy portfolio, which we outsourced to specialist recovery parties. There is still more to be done, but by the end of this year, I’m quietly confident we’ll be on par with the industry.
What has the Chaudhary Group brought to Union Bank beyond capital?
They are very aggressive — they’re not going to get into something just to be part of it, they want to be a top player. When I took over, Nirvana Chaudhary stated publicly that he wanted Union Bank to be one of the top five banks in Sri Lanka by 2029. It went into a newspaper, which put a lot of pressure on us. How can you be a top-five bank when you’re probably the smallest bank at that time? But that translated into very aggressive organic growth. Where organic growth alone is not adequate, inorganic growth is already built into the thinking. Beyond the ambition, there are concrete synergies. They brought in BYD through their association with John Keells, and we became the preferred bank in the BYD segment. Around 30-40% of all vehicle sales in Sri Lanka in 2025 were BYD. They were first out of the block, and that gave us a real advantage in our leasing growth. We also have the Union Bank School of Social Entrepreneurship (UBSSE), that has partnered with the University of Moratuwa to upskill and empower SMEs, which was also influenced by a similar programme at CG Group owned Nabil Bank in Nepal.
How are you thinking about capital as you sustain this level of growth?
When we started, we were the most well-capitalised bank. We recently closed a Rs3 billion tier two debenture issue, which was oversubscribed. Our capital adequacy is now around 14%, which is above the regulatory minimum of 12.5%. This is going to be a recurring need — every year, or twice a year, we will need to supplement capital to sustain this level of growth.
Our shareholders are very comfortable with that, whether through rights issues or tier two debentures. For now, shareholder returns come primarily from share price appreciation rather than cash dividends. From the time CG Corp Global Group invested, we have delivered an 80–120% return on the share price, which is 50% above the market return.
Where are you focusing credit growth now that capital is tighter and you need risk-adjusted returns?
The first year was about balance sheet growth, getting our foot in the door, and showing the market we are here. Now it is about getting the right risk-adjusted return from the right segments. We pick our segments very carefully — higher yielding, faster churning, less variable areas. That means supply chain financing for small and mid-sized enterprises, leasing, secured retail loans, and top local corporations on the corporate banking side. Trade finance and cash management are also key areas, as they generate fee income through guarantees and bonds, which adds another layer of return alongside the funded income.
As a smaller licensed commercial bank, how do you plan to create opportunities?
If I take an analogy, it’s like an aircraft carrier and a fast-attacking craft. The aircraft carrier is the big banks — they can absorb a lot of firepower. A fast-attacking craft is basically focused on precision manoeuvrability and focus. That’s like Union Bank, so going forward it’s all about agility, and that agility comes from digital. We are passionately focused on driving digital both in the frontlines and also for the back office.
You’ve mentioned digital as central to the bank’s future. How do you measure progress there?
For me, the primary measure is simple: what percentage of your transactions are done digitally? We moved from 64% to 75% in the last year. Some of the more progressive banks are close to 90%, so there is still a long way to go, but the direction is right. Beyond that, we track turnaround times, such as ‘how long does it take to approve a loan?’ Digitisation can get that from weeks to minutes.
We also look at customer perception scores on the app stores, the back-office rework ratio, because the biggest waste in a bank is not getting things right the first time, and even paper consumption. If you don’t drive this transformation, digital banks will come and take your market share. Google Pay and Apple Pay are already knocking on the door. Once they enter, the entire payments space will be transformed, and the banks that are not ready will find someone else has taken their place.
As Union Bank enters a new phase of growth, how does the consolidation directive from the regulator factor into your growth plans going forward?
The regulator has been clear: any bank with assets below Rs400 billion by the end of 2027 needs to consolidate. For a bank of our size to reach Rs400 billion organically in two years is near impossible. So it is inevitable that we need to find a partner who can support the journey we are on. Sri Lanka has over 100 banks and non-bank financial institutions; that is simply too many. Consolidation is the right direction, and what we can bring to any partnership is the dynamism, the agility and a proven track record of performance.