LB Finance Outperforms Amid Uneven Recovery in Sri Lanka’s Finance Sector

As Sri Lanka’s finance company sector continues its uneven recovery, LB Finance PLC has emerged as a standout performer, delivering strong growth and stability at a time when many peers remain cautious or constrained.

The broader finance company industry is still grappling with margin pressure, funding costs and cautious credit expansion following recent economic disruptions. In contrast, LB Finance reported a 24% year-on-year increase in Profit After Tax to Rs. 8.93 billion for the nine months ended December 2025, highlighting its ability to convert improving market conditions into tangible results.

While several finance companies have prioritised balance sheet repair, LB Finance continued to expand with discipline. Total assets grew to Rs. 349.4 billion, and the Group’s asset base crossed Rs. 369 billion, reflecting confidence-driven growth rather than defensive consolidation. Income growth of 23% and a 25% rise in PBT demonstrate resilience that outpaces sector averages.

A key differentiator has been funding strength. At a time when some finance companies face deposit volatility, LB Finance’s customer deposits rose to Rs. 158.33 billion, underscoring sustained public trust. The company also accessed foreign funding, unlike many smaller players still reliant on domestic sources.

Asset quality further sets LB Finance apart. While sector-wide NPL concerns persist, LB Finance reduced its gross NPL ratio to 1.46%, supported by provision coverage of nearly 190%. This contrasts with industry peers that continue to report elevated credit risk and restructuring challenges.

Capital and liquidity positions remain another advantage. LB Finance’s Capital Funds to Total Deposit Liabilities Ratio of 36.55% and strong core capital buffers provide growth headroom that many finance companies currently lack. Cost efficiency also improved, with a 30% cost-to-income ratio, aided by digitalisation.

Strategic investments have reinforced performance. The acquisition of Associated Motor Finance Company PLC strengthened LB Finance’s leasing portfolio, while digital platforms such as LB CIM enhanced customer onboarding and credit evaluation. These initiatives contrast with slower digital adoption across parts of the sector.

As Sri Lanka’s finance companies navigate recovery at different speeds, LB Finance’s results illustrate how technology, capital strength scale, and risk discipline can translate into sustained outperformance.

 

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