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Shalini
Shalini
May 15 2026
36Financial Performance
Net Interest Income - Rs. 3.41 billion (+12%)
Net Fee and Commission Income - Rs. 0.77 billion (+55%)
Operating Profit before Taxes on Financial Services - Rs. 2.17 billion(+ 14%)
Profit Before Tax - Rs. 1.65 billion (+ 13%)
Profit After Tax - Rs. 1.05 billion (+3%)
Earnings per Share - Rs. 2.37
Profitability Ratios: NIM-4.28%, ROA (Before Tax)-2.07%, ROE-13.86%
Balance Sheet Growth
Total Assets increased by Rs. 26.59 billion (+9%) to Rs. 334.61 billion.
Gross Loans and Advances grew by Rs. 22.36 billion (+10%) to Rs. 239.49 billion.
Customer Deposits expanded by Rs. 23.16 billion (+10%) to Rs. 254.19 billion.
The CASA ratio improved to 22.63% from 20.18%, indicating a strengthening of low-cost funding.
Credit Quality
Credit quality strengthened during the period, with the Stage 3 Loans to Total Loans ratio improving to 1.57% from 1.73%, while provision coverage remained stable at 62.21%
Capital and Liquidity Position
The Bank remains well capitalised and liquid;
CET1 Ratio: 14.86% (Regulatory Minimum - 7%)
Tier 1 Ratio: 14.86% (Regulatory Minimum - 8.50%)
Total Capital Ratio: 16.43% (Regulatory Minimum - 12.50%)
Leverage Ratio: 7.95% (Regulatory Minimum - 3%)
Liquidity Coverage Ratio (All Currency): 151.72% (Regulatory minimum: 100%)
Liquidity Coverage Ratio (Rupee): 192.98% (Regulatory Minimum - 100%)
Net Stable Funding Ratio: 126.92% (Regulatory Minimum - 100%)
Financial Performance Summary
Pan Asia Banking Corporation PLC delivered a robust financial performance in the first quarter of 2026, demonstrating resilience amid a volatile global macroeconomic landscape influenced by ongoing geopolitical tensions in the Middle East. Despite these external pressures, the Bank recorded a Profit Before Tax (PBT) of Rs. 1.65 billion and a Profit After Tax (PAT) of Rs. 1.05 billion, reflecting disciplined financial stewardship, operational consistency, and effective risk management.
Income Performance
During the quarter, the Bank recorded a solid income performance, supported by continued balance sheet expansion and improving business activity across its core banking segments. Interest income increased by 18%, while interest expenses grew by 23%, reflecting expansion in loans and advances across corporate, SME, and retail portfolios, alongside deposit mobilisation to support asset growth amid evolving market conditions.
The Bank’s continued focus on corporate and business banking customers with stronger credit profiles enhanced earnings stability and supported quality-driven growth. As a result, Net Interest Income increased by 12% year-on-year compared to Q1 2025, primarily driven by higher lending volumes within a relatively stable to moderately easing interest rate environment.
Non-interest income recorded strong momentum, with net fee and commission income rising by 55%, supported by increased lending activity, growth in trade-related income, and strong remittance inflows. Growth was broad-based, with trade finance, card-related services, and remittance products contributing meaningfully, reflecting gradually improving economic activity and strengthening revenue diversification.
Net gains from trading increased by over 40%, driven by higher realised income from investments in unit trusts and government securities classified at FVPL. In contrast, gains from derecognition of FVOCI assets declined by 62%, mainly due to market-driven valuation movements in Treasury bills and bonds within a still-adjusting yield environment.
Collectively, these dynamics contributed to a 14% increase in total operating income compared to Q1 2025, reflecting a balanced and resilient income profile despite ongoing macroeconomic adjustments.
Asset Quality and Impairment Expenses
Credit loss expenses declined by 93% year‑on‑year in Q1 2026, primarily driven by net impairment reversals in Stage 3 exposures, reflecting improved credit performance, recoveries, and disciplined risk management. The Bank continued to adopt a prudent and forward‑looking approach to credit risk management, taking into account prevailing macroeconomic conditions, including ongoing geopolitical uncertainties.
Stage-wise impairment movements indicate continued portfolio discipline. Stage 1 loan related impairment charges increased to Rs. 125.94 million, largely attributable to loan book expansion and updated forward‑looking risk indicators, while Stage 2 impairment charges amounted to Rs. 153.54 million, reflecting moderate stress in selected borrower segments.
In contrast, the Bank recorded a net Stage 3 impairment reversal of Rs. 125.30 million, supported by improved borrower performance, effective recoveries, and focused resolution strategies.
The Bank maintained strong asset quality during the quarter, with the Stage 3 loan ratio at 1.57%, remaining among one of the lowest in the industry. This performance is underpinned by robust underwriting standards and proactive portfolio monitoring. Despite general repayment pressures arising from climate‑related disruptions in late 2025 and the indirect impact of ongoing geopolitical tensions, targeted recovery and client engagement strategies were implemented to preserve asset quality while supporting affected borrowers.
The Stage 3 Provision Coverage Ratio remained stable at 62.21%, reflecting continued prudence in provisioning across sectors exhibiting early signs of stress and further reinforcing balance sheet resilience.
Net Operating Income, defined as total operating income less impairment charges, increased by 17% compared to Q1 2025. This stronger growth was primarily driven by the significant reduction in credit loss expenses during the period, which enhanced overall earnings after accounting for credit risk.
Operational Efficiency
The Bank continued to prioritise operational efficiency through disciplined cost management. The Cos- to-Income Ratio increased marginally by 114 basis points year-on-year, primarily due to a higher comparative base resulting from a one-off reversal of bonus provisions recognised in Q1 2025.
Excluding this non-recurring item, cost discipline was effectively maintained while advancing strategic investments in branch network expansion, technology upgrades, and staff development. Continued process optimisation, increased digital adoption, and greater automation enabled the Bank to efficiently manage higher business volumes, supporting improved profitability and operating leverage.
Taxation
Taxes and levies on financial services and income tax expenses increased by 16% and 34%, respectively, during the quarter, broadly in line with improved profitability. The relatively higher increase in income tax expense is primarily attributable to a lower comparative base in Q1 2025, which included a favourable reversal of excess income tax provisions relating to prior years, following the successful resolution of a tax appeal.
The Bank remains focused on effective tax planning, maintaining strong compliance standards, and proactive engagement with regulatory authorities, supporting a stable, transparent, and well-governed tax position.
Profitability and Returns
The Bank recorded a 13% year‑on‑year increase in Profit Before Tax in Q1 2026, reflecting strong underlying earnings momentum. The Net Interest Margin (NIM) was sustained at a healthy level, supported by effective balance sheet management and stable funding dynamics.
Key profitability indicators remained robust, with Return on Equity and Return on Assets Before Tax reflecting resilient core income generation, improved asset quality, and disciplined execution across the Bank’s operations.
The positive earnings performance was further supported by strong growth in both fund-based and non-fund-based income streams, alongside continued cost discipline and operational efficiency improvements.
Overall, the Bank remains well-positioned to sustain its earnings trajectory, supported by a resilient business model, stable funding base, and a continued focus on high-quality growth amid evolving macroeconomic conditions.
Other Comprehensive Income
Fair value losses were recorded on government securities classified under FVOCI, mainly Rupee Treasury Bills and Treasury Bonds, due to increases in market interest rates during the period. These are mark-to-market adjustments arising from yield movements and do not impact the Bank’s underlying earnings performance.
Balance Sheet Growth
The Bank achieved its highest loan growth on record in the first quarter of 2026, with the advances portfolio expanding by 10% to Rs. 239.49 billion. This growth was driven by strong credit demand across the SME, Corporate, and Retail sectors, supported by targeted sectoral strategies and focused business origination.
The Bank’s balance sheet expanded significantly during the period, with total assets increasing by 9% to Rs. 334.61 billion, reflecting sustained business momentum. Customer deposits also recorded their strongest quarterly growth in Q1 2026, rising by 10% to Rs. 254.19 billion. This expansion was underpinned by robust mobilisation of both term deposits and CASA balances, highlighting growing customer confidence in the Bank’s franchise.
This broad-based balance sheet growth was supported by improved liquidity buffers, including higher cash balances and continued growth in foreign currency deposits. These factors contributed to funding stability while enabling continued asset expansion. The sustained momentum across assets, loans and deposits positions the Bank to support future earnings growth and strengthens its financial resilience.
Capital and Liquidity
The Bank maintained a strong capital and liquidity position during the period, with all regulatory ratios remaining comfortably above minimum requirements. Capital adequacy remained robust, with a Common Equity Tier 1 (CET1) Ratio and Tier 1 Ratio of 14.86%, and a Total Capital Ratio of 16.43%, providing a solid buffer to support growth while maintaining prudent risk coverage.
Liquidity indicators continued to demonstrate resilience, reflecting effective balance sheet management and a stable funding profile. The Liquidity Coverage Ratio (LCR) stood well above regulatory thresholds, with the Rupee LCR at 192.98% and the All Currency LCR at 151.72%, while the Net Stable Funding Ratio (NSFR) remained strong at 126.92%.
The Bank’s Leverage Ratio of 7.95% further underscores its balance sheet strength, reinforcing overall financial resilience and providing capacity to sustain future expansion in a disciplined manner.
Chairman’s and CEO’s Statements
Reflecting on the Bank’s performance in the first quarter of 2026, Chairman Aravinda Perera stated: “The Bank has commenced 2026 on a strong footing, delivering steady earnings growth alongside its highest-ever quarterly expansion in loans and deposits. This performance reflects the resilience of our business model, disciplined execution of strategy and the continued trust placed in us by our customers and other stakeholders. While the operating environment remains dynamic, the Bank’s focus on prudent governance, capital strength and liquidity discipline continues to underpin stability. Maintaining a well-balanced approach to growth and risk remains a core priority of the Board, particularly in a context where external uncertainties persist. As we progress through the year, we remain committed to strengthening our franchise, enhancing operational resilience, and ensuring that growth is both sustainable and aligned with long-term value creation. The progress achieved in the first quarter provides a solid platform for the Bank to build on its strategic objectives for 2026.”
Commenting on the Bank’s performance, Director/CEO Naleen Edirisinghe stated: “The Bank has delivered a strong start to 2026, with broad-based growth across income streams and balance sheet segments. The 13% growth in Profit Before Tax, supported by a 12% increase in Net Interest Income and strong momentum in fee-based income, reflects the strength of our core banking operations and customer franchise. Our advances portfolio expanded by 10% during the quarter, driven by healthy demand across corporate, SME, and retail segments, while deposits recorded their highest-ever quarterly growth, reinforcing funding strength and customer confidence. Importantly, this growth has been achieved alongside continued improvement in asset quality indicators and a disciplined risk management approach. Customers and stakeholders continue to place their trust in Pan Asia Bank due to its consistent financial stability, responsible banking practices and unwavering commitment to protecting stakeholder interests. We remain focused on driving high-quality growth by deepening relationships with our core customer segments, optimising margins and enhancing non-interest income streams. At the same time, investments in digital capabilities, process efficiency and data-driven decision-making continue to strengthen our operating platform. Looking ahead, our priorities for 2026 remain clear: sustain balance sheet growth, preserve asset quality leadership and improve operational efficiency while capitalising on emerging opportunities in a gradually stabilising economic environment. The Bank is well-positioned to translate this momentum into sustained financial performance and long-term shareholder value.”
Outlook and Strategic Direction
Pan Asia Bank enters the remainder of 2026 on a strong footing, supported by solid earnings momentum, robust balance sheet growth and strengthened core operations. The Bank remains focused on sustaining high‑quality growth, preserving asset quality and maintaining strong capital and liquidity buffers.
Amid evolving macroeconomic conditions and geopolitical uncertainties, the Bank is well positioned to navigate challenges through its disciplined strategy, resilient business model and continued focus on efficiency and customer engagement, supporting sustainable long‑term value creation.
