SDF's profitability improved to LKR ~820.1Mn during FY26 (FY25: LKR ~473.8Mn), supported by lower funding costs, strong portfolio growth, and stable spreads. Although the Company has improved its earnings, its profitability (including ROA and ROE) remains modest. The Company's gross and net NPL ratios reduced to ~4.9% and ~2.9%, respectively, but is above industry averages. Better asset quality was supported not only by recoveries but also by the rapid expansion of the loan portfolio.
The Company has strong capitalization with a Capital Adequacy Ratio (CAR) of ~22.1% as of FY26 (FY25: ~20.6%), which is above the industry average. This capital buffer is expected to provide adequate headroom for the envisaged portfolio growth, facilitating the achievement of its FY27 projected growth. The Company's deposit base grew by ~7.8% to LKR ~10.6Bn during FY26 and makes up ~34% of the funding mix. The proportion of borrowings has increased in the total funding as observed in the LFC sector.
The rating is contingent upon the sustainability and improvement in the Company's quality of earnings and will be closely monitored. Similarly, upholding other key performance indicators like asset quality and capitalization will be important. Improvement in relative position within the sector and significantly enhancing profitability will have positive impact on the rating.