The global economy over the past four years has faced unprecedented challenges, testing its resilience like never before. A once-in-a-century pandemic, geopolitical conflicts, and extreme climate events have not only disrupted supply chains but also deepened poverty, food, and energy crises, compelling governments worldwide to implement aggressive measures to contain inflation, safeguard livelihoods, and stabilise economies. The year under review was also remarkable for the sheer scale of elections globally, as voters in over 60 nations sought change and reform. Despite regional disparities, Asia remained a key driver of global growth, fuelled by increased demand for electronic components vital for the rapid expansion of investments in information and communication technology.

Sri Lanka’s Economy – A Fragile but Positive Recovery

Sri Lanka’s economy demonstrated four consecutive quarters of growth, signalling gradual stabilisation aided by structural and policy reforms. The successful debt restructuring programme bolstered investor confidence, paving the way for medium-term growth prospects. Inflation remained subdued, though poverty alleviation remains a pressing challenge. Encouragingly, private sector credit rebounded, and the construction sector showed signs of revival, reinforcing a cautiously optimistic outlook.

That said, economic recovery remains vulnerable to external shocks, particularly fluctuations in commodity prices and global trade policies. However, higher tourism inflows and remittances strengthened Sri Lanka’s Current Account, while improving fiscal revenues and controlled government spending helped manage public finances.

A Vision Rooted in Values

At DFCC Bank, our core values define who we are and shape our business approach. We aspire to be the bank that is the most customer-centric and easiest to bank with, and this ethos is deeply embedded in our culture, operations, and service delivery. We firmly believe that customer-centricity, strategic partnerships, and a future-ready workforce are the pillars of our success.

The Bank’s transformation from a traditional development finance institution into a dynamic, full-service commercial bank has been pivotal in reshaping our strategic direction. Today, we stand as an innovative financial solutions provider catering to a diverse client base—from large corporates to SMEs and individual customers. Recognising that customer experience is our key differentiator, we have invested significantly in technology and talent development, ensuring that DFCC Bank remains at the forefront of Sri Lanka’s financial landscape.

Our unwavering commitment is to foster a more inclusive and sustainable economy—one where businesses thrive, communities prosper, and financial solutions empower lives.

Sustainability – A Defining Milestone

A landmark achievement in our sustainability journey was the issuance of Sri Lanka’s first Green Bond, initially listed on the Colombo Stock Exchange and subsequently dual-listed on the Luxembourg Stock Exchange under the Luxembourg Green Exchange. This historic milestone underscores DFCC Bank’s unwavering commitment to ESG leadership and solidifies our reputation as a responsible financial institution.

The Board plays a critical role in driving ESG integration, ensuring that sustainability principles are embedded within the Bank’s strategy through the Executive Sustainability Management Committee. This Committee provides strategic oversight, ensuring that ESG factors are seamlessly incorporated into risk management, regulatory compliance, stakeholder engagement, sustainable finance innovation, and social impact initiatives.

Our sustainability agenda is not merely an initiative—it is a business imperative that aligns with global standards while delivering long-term value for our stakeholders.

Collaborating for a Stronger Future

Collaboration is the bedrock of success in today’s interconnected world. At DFCC Bank, we foster an inclusive and innovative work culture, where employees are encouraged to ideate, contribute, and challenge the status quo. Through open communication platforms and strategic engagement, we empower our people to collaborate seamlessly, drive innovation, and achieve our collective goals. By equipping our workforce with future-ready skills, we ensure that DFCC Bank remains agile and adaptive in an evolving financial landscape.

Governance and Compliance – A Commitment to Integrity

Adherence to the highest standards of governance and compliance is non-negotiable for DFCC Bank. The Bank operates within a robust policy framework that ensures full compliance with all regulatory mandates. Our Regulatory Compliance and Legal teams have proactively implemented all regulatory requirements, with zero compliance breaches recorded in 2024.

In addition, DFCC Bank remains committed to global best practices, adhering to internationally recognised UN standards and aligning with revised regulatory and industry standards. We continue to strengthen our governance framework, upholding transparency, accountability, and ethical banking practices at all levels.

Financial Performance – A Year of Record Achievements

DFCC Bank achieved outstanding financial results in 2024, reinforcing our resilience and growth momentum.

As of 31 December 2024, total assets expanded by 9.6% YoY to LKR 703 Bn, driven by a robust increase in lending. The deposit base surged to LKR 465 Bn, with a notable improvement in the CASA ratio to 24.7%. This solid performance propelled DFCC Bank to record its highest-ever profit after tax of LKR 8.3 Bn.

The Bank’s net assets value per share climbed to LKR 194.22, up from LKR 160.54 in 2023, reflecting strong shareholder returns. Our Tier I and Total Capital Adequacy Ratios comfortably exceeded regulatory requirements, standing at 12.4% and 15.76%, respectively. Meanwhile, the Stage 3 impaired loan ratio improved to 5.65%, supported by enhanced credit quality, while the Stage 3 provision cover strengthened to 54.06%.

A landmark achievement in our sustainability journey was the issuance of Sri Lanka’s first Green Bond, initially listed on the Colombo Stock Exchange and subsequently dual-listed on the Luxembourg Stock Exchange under the Luxembourg Green Exchange.

Challenges and Strategic Responses

Despite an improving landscape, non-performing loans (NPLs) remain a challenge. While we have seen marginal improvements compared to 2023, we continue to focus on reviving distressed businesses in line with our sustainability principles. Through meaningful dialogue and tailored restructuring programmes, we have provided supportive repayment measures while strengthening our collection network to ensure financial stability.

Artificial Intelligence (AI) and its transformative potential remain a key discussion point at the Board and senior management level. As AI reshapes the global banking industry, we are actively deliberating its strategic applications, ensuring that DFCC Bank harnesses emerging technologies to drive efficiency, enhance customer experience, and secure a competitive advantage.

A Vision for the Future

DFCC Bank is a formidable force in Sri Lanka’s banking industry, driven by a clear strategic vision and a deeply embedded value system. We aim to be the top-of-mind bank for every customer, offering cutting-edge financial solutions, unparalleled service excellence, and sustainable banking practices.

With a strong foundation, forward-thinking leadership, and a culture of innovation, we are well-positioned to navigate the opportunities and challenges of the evolving financial landscape and achieve our medium-to long-term objectives.

Acknowledgements

Our achievements are a testament to the collective efforts of our stakeholders. I extend my sincere gratitude to the Board of Directors and the Chief Executive Officer for their unwavering support and strategic foresight. I deeply appreciate our dedicated employees, whose commitment and passion continue to drive the Bank forward.

I also extend my heartfelt thanks to the Central Bank of Sri Lanka for their guidance and oversight, and to our loyal customers and business partners, whose trust and confidence fuel our journey of success.

With optimism and determination, we look forward to an era of growth, transformation, and sustainable prosperity.

J Durairatnam
Chairman

19 February 2025