General

The Board of Directors of DFCC Bank PLC (“the Bank”) present their Report on the State of Affairs of the Bank as published in this Annual Report of the Bank which also consists of the Audited Financial Statements of the Bank, the Consolidated Financial Statements of the Group and the Auditors’ Report on those Financial Statements.

The disclosures in this Annual Report conform to the requirements of the Companies Act No. 07 of 2007 (as amended), the Banking Act No. 30 of 1988 (as amended), the Directions issued by the Central Bank of Sri Lanka (CBSL) under the Banking Act and the Listing Rules of the Colombo Stock Exchange (CSE).

The disclosures required under Section 168 of the Companies Act No. 07 of 2007, published in this Annual Report are tabulated in the table below:

Section	Disclosure requirement	Reference to the Annual Report
168 (1) (a)	Nature of business of the Bank and the Group	Page 315 (Note 1.4 to the Financial Statements)
168 (1) (b)	Signed Financial Statements of the Bank in accordance with Section 152	Page 307 (Financial Statements)
168 (1) (c)	Auditors’ Report on the Financial Statements of the Bank and the Group	Page 297
168 (1) (d)	Changes in accounting policies made during the accounting period	Page 325 (Note 6 to the Financial Statements)
168 (1) (e)	Particulars of entries in the interests register made during the accounting period	Page 272 of this Report
168 (1) (f)	Remuneration and other benefits of Directors during the accounting period	Pages 272 and 391 (Notes 19 and 59.2 to the Financial Statements and this Report)
168 (1) (g)	Total amount of donations made by the Bank during the accounting period	Page 273 of this Report
168 (1) (h)	Names of persons holding office as Directors of the Bank as at the end of the accounting period and names of persons who ceased to hold office as Directors during the accounting period.	Page 213 and page 270 of this Report
168 (1) (i)	Amounts payable by the Bank to the Auditors’ as audit fees and fees for other services rendered during the accounting period as a separate disclosure	Page 391 (Note 19 to the Financial Statements)
168 (1) (j)	Auditors’ relationship (other than that of auditor) or any interest with the Bank and its subsidiaries	Page 270 of this Report
168 (1) (k)	Annual Report of the Board of Directors on the State of Affairs of the Bank signed on behalf of the Board of Directors	Page 276 (Signed with an acknowledgement by two Directors and the Company Secretary)

Constitution

DFCC Bank was incorporated in 1955 under the Development Finance Corporation of Ceylon Act No. 35 of 1955 as a limited liability public company and the ordinary shares of the Bank were listed on the CSE.

Consequent to the enactment of the DFCC Bank (Repeal and Consequential Provisions) Act No. 39 of 2014, the Development Finance Corporation of Ceylon Act No. 35 of 1955 was repealed and with effect from 6 January 2015 the Bank was incorporated under the Companies Act No. 07 of 2007 (as amended) as a public limited company listed on the CSE with the name “DFCC Bank PLC”.

The shareholders at the Extraordinary General Meeting held on 28 August 2015 approved the amalgamation of DFCC Vardhana Bank PLC (DVB) with DFCC Bank PLC (the Bank). On 1 October 2015, the Registrar General of Companies issued the Certificate of Amalgamation in accordance with the terms of Section 244 (1) (a) of the Companies Act No. 07 of 2007 that DVB has been amalgamated with DFCC Bank PLC in accordance with the provisions of Part VIII of the Companies Act, with DFCC Bank PLC surviving as the amalgamated entity.

DFCC Bank PLC also obtained a commercial banking license from the CBSL in accordance with the terms of the Banking Act No. 30 of 1988 (as amended) and accordingly, upon the amalgamation the Bank has been operating as a Licensed Commercial Bank since 1 October 2015.

Going Concern

The Directors are satisfied that the Bank has adequate resources to continue its operations in the future and as such, the Financial Statements are prepared on a going concern basis. The Auditors have declared the Bank solvent even after the payment of dividends.

Financial Statements

The Financial Statements of the Bank and the Group are given on pages 304 to 480 of this Annual Report. The Financial Statements of the Bank and the Group have been prepared in accordance with the Sri Lanka Accounting Standards prefixed SLFRS and LKAS, the Banking Act No. 30 of 1988 (as amended), the Companies Act No. 07 of 2007 (as amended) and other applicable statutory and regulatory requirements.

Review of Business during the Year

The year 2025 saw a notable improvement in economic activity, supported by the gradual removal of import restrictions, improved market liquidity, and stronger foreign inflows. Against this backdrop, trade, commerce, and consumer financing gained momentum, contributing to more positive market sentiment. The Bank responded with a growth strategy, focusing on sectors demonstrating strong expansion potential, while remaining firmly aligned with its heritage of long-term project financing, sustainable development, and the strengthening of Small and Medium Enterprises (SMEs) and Micro, Small and Medium Enterprises (MSMEs). The year’s progress, however, unfolded amid continued global uncertainty and weather-related disruptions during the latter part of the year, reinforcing the importance of resilience and the need for inclusive, sustainable growth.

The Message from the Chairman, Chief Executive Officer’s Review, and the Management Discussion and Analysis provide further details of the operations of the Bank and the Group, and the key strategies that were adopted during 2025.

Profit and Appropriations

Year ended 31 December 2025	LKR ’000
Profit for the period	16,028,237
Appropriations
Transfer to:
Reserve fund (statutory requirement)	802,000
First and final dividend recommended for the financial year ended 31 December 2025	3,288,032
Unappropriated profit for the period	11,938,205

Accounting Policies

The accounting policies adopted in the preparation of the Financial Statements of the Bank and the Group are stated on pages 319 to 480 of this Annual Report.

There were no changes to the accounting policies of the Group in 2025.

Auditors’ Report

The Auditors’ Report on the Financial Statements, which is unqualified, is given on page 297.

Appointment of External Auditors

In accordance with the Banking Act Direction No. 05 of 2024 on Corporate Governance for Licensed Commercial Banks in Sri Lanka, the External Auditors is to be changed every six years, and the Audit Engagement Partner is to be rotated every three years. In order to comply with these regulatory requirements, quotations were obtained from audit firms approved by the regulator, prior to the recommendation of new Auditors.

The Audit Committee recommended to the Board of Directors the appointment of Messrs Ernst & Young (E&Y), Chartered Accountants, as the Bank’s External Auditors for the financial year 2026, subject to shareholder approval at the Annual General Meeting. A confirmation was also obtained from E&Y regarding their independence and objectivity, in accordance with applicable auditing standards and regulatory requirements. Based on the written representation made by the Auditors, the Directors are satisfied that the Auditors have no relationship with or interest in the Bank or any of its subsidiaries, which would impair the Auditors’ independence. A resolution pertaining to the appointment of the Auditors, and authorising the Directors to determine their remuneration, will be proposed at the Annual General Meeting for adoption.

Board of Directors

As at 31 December 2025, the Board of Directors of the Bank consisted of eight members with wide knowledge and experience in the fields of banking, finance, trade, law, commerce, or services. Profiles of the Directors are given on pages 34 to 39.

The Directors of the Bank as at 31 December 2025 categorised in accordance with the criteria specified in the Banking Act Direction No. 05 of 2024 issued by the CBSL are given on page 213.

Appointment, Retirement/Resignation, and Re-election of Directors

There were no new appointments during the year.

Subsequent to the year end, I A Wickramasinghe and Ms A K Moonesinghe were appointed as Directors with effect from 1 February 2026 and 5 February 2026 respectively. In accordance with the terms of Article 46 (ii) of the Articles of Association, they will retire and offer themselves for re-election at the Annual General Meeting.

The Nomination and Governance Committee has recommended the re-election of I A Wickramasinghe and Ms A K Moonesinghe. The Board of Directors has concluded that they are fit and proper persons to be Directors in accordance with the terms of the provision of the Banking Act and CSE Listing Rules, and has unanimously endorsed the recommendation of the Nomination and Governance Committee.

There were no retirements during the year.

W R H Fernando resigned from the Board of Directors with effect from 18 December 2025.

Retirement by Rotation and Re-election of Directors

In accordance with the terms of Article 44 of the Articles of Association, J Durairatnam and H A J de S Wijeyeratne will be retiring by rotation. They offer themselves for re-election under the said Article with the unanimous support of the Directors.

Details relating to Directors seeking Re-election

Name of Director/Date of appointment	Date last re-elected	Board committees served during 2025	Directorships and other principal commitments from 2023 to 2025
J Durairatnam/ 30 August 2018	28 March 2024	Chairman – Credit Approval Committee Chairman – Credit Restructure Committee Member – Nomination and Governance Committee Member – Human Resources and Remuneration Committee Member – Related Party Transactions Review Committee Member – Audit Committee*	Director – Asian Hotels and Properties PLC Director – Ceylinco Life Insurance Co. Ltd. Director – Assetline Finance Ltd. Director – Enviro Solutions (Pvt) Ltd. Director – Tokyo Cement Company (Lanka) PLC
H A J de S Wijeyeratne/ 1 July 2020	30 March 2023	Chairman – Audit Committee	Director – Trans Asia Hotels PLC and Chairman – Audit Committee Director – Ceylon Tobacco Company PLC and Chairman – Audit Committee Director – Ceylon Cold Stores PLC and Chairman – Audit Committee Chairman – Audit Committee MAS Holdings Director – Gamini Corea Trust Trustee – SLINTEC Endowment Trust Fund Founder/owner – Avastha Financial Advisory Services Co-Founder – Kalyana SL Guarantee Ltd.
I A Wickramasinghe/ 1 February 2026	N/A	N/A	Director – AIA Insurance Lanka Ltd. Director – Diesel and Motor Engineering PLC Director – Overseas Realty PLC Director – C W Mackie PLC Director – Ceylon Grain Elevators PLC Director – Three Acre Farms PLC Director – Colombo Fort Land and Building PLC Director – Fintrex Finance (Pvt) Ltd. Director – NDB Securities (Pvt) Ltd. CEO/Director – Union Bank of Colombo PLC Director – National Asset Management Ltd. Director – UB Finance Company Ltd. Chairman – Financial Ombudsman Sri Lanka (Guarantee) Ltd.
Ms A K Moonesinghe/ 5 February 2026	N/A	N/A	Director – hSenid Business Solutions PLC Director – Wealth Trust Securities Limited Director – Pembridge Holdings (Pvt) Ltd. Director – John Keells Hotels PLC Director – Lankan Angel Network

* Functions as a member with effect from 18 December 2025.

 

None of the above Directors (including close family members) has had any relationship with other Directors, the Bank or any shareholders holding more than 10% of shares of the Bank.

Directors’ Remuneration

The Directors’ remuneration in respect of the Bank and the Group for the financial year ended 31 December 2025 is given below:

Year ended 31 December	2025 LKR ’000	2024 LKR ’000
Bank	109,348	105,620
Group	113,631	134,829

Directors’ Meetings

The Bank held 14 Board meetings during the year. The table on page 215 of this Annual Report provides details of the attendance of Directors at Board and Board Committee meetings during the year.

Directors’ Interests in Shares/Debentures/Bonds

	Number of shares
Year ended 31 December	2025	2024
J Durairatnam	Nil	Nil
Ms L K A H Fernando	Nil	Nil
W R H Fernando*	–	Nil
P A Jayatunga	Nil	Nil
N K G K Nemmawatta	Nil	Nil
N H T I Perera	26,820	26,469
Ms A L Thambiayah	Nil	107,761
N Vasantha Kumar	Nil	1,845
H A J de S Wijeyeratne	13,407	13,232

*Not a Director as at 31 December 2025

No Director directly or indirectly holds debentures, bonds, or options of the Bank.

Directors’ Interests Register

The Directors have made the general disclosure as provided for in Section 192 of the Companies Act No. 07 of 2007. They have declared all material interests in contracts involving the Bank and have not participated in the decision-making related to such transactions. As required by the Companies Act No. 07 of 2007 (as amended), an interests register is maintained by the Bank and relevant entries are recorded therein.

Directors’ Interests in Transactions with the Bank

The Directors’ interests in transactions carried out in the ordinary course of business on an arm’s length basis with entities/persons (other than subsidiaries, the joint venture, and the associate) listed under each Director for the year ended 31 December 2025 is as follows:

	LKR ’000
J Durairatnam Tokyo Cement Company (Lanka) PLC Aggregate amount of accommodation	3,500,000
Asian Hotels and Properties PLC Aggregate amount of payment for services	2,307
Ms L K A H Fernando Aggregate amount of accommodation	7,500
Panasian Power PLC Unimo Enterprises Limited United Motors Lanka PLC Aggregate amount of accommodation	2,375,000
United Motors Lanka PLC Aggregate amount of payment for services	2,618
W R H Fernando* Aggregate amount of accommodation	1,500
P A Jayatunga Aggregate amount of accommodation	2,000
Ms A L Thambiayah Renuka Hotels PLC Aggregate amount of payment for services	2,143
N Vasantha Kumar Senkadagala Finance PLC Aggregate amount of accommodation	1,000,000
H A J de S Wijeyeratne Aggregate amount of accommodation	13,700
Trans Asia Hotels PLC Aggregate amount of payment for services	146

*Not a Director as at 31 December 2025.

 

During the year, N H T I Perera has been Chairman/Director of one or more of the subsidiary, joint venture, or associate company. Details of transactions with subsidiary, joint venture, and associate company are disclosed in Note 59.4.

No Director (or their close family members) has had any material business relationship with other Directors of the Bank during the year.

Corporate Donations

During the year, the Bank made donations amounting to LKR 135,000/-.

Board Committees

The present members of the permanent committees of the Board of Directors are shown in the table below. Changes to the composition of the committees during the year are set out in the respective Committee Reports of this Annual Report:

Committee	Members	Nature of Directorship	Date appointed to the Committee
Audit Committee	H A J de S Wijeyeratne – Chairman	Independent	1 July 2020
	J Durairatnam	Independent	18 December 2025
	Ms L K A H Fernando	Independent	1 November 2017
Credit Approval Committee	J Durairatnam – Chairman	Independent	31 August 2018
	N K G K Nemmawatta	Independent	1 February 2026
	Ms A L Thambiayah	Independent	1 January 2022
	I A Wickramasinghe	Independent	1 February 2026
Credit Restructure Committee	J Durairatnam – Chairman	Independent	28 July 2019
	N K G K Nemmawatta	Independent	24 June 2020
	N Vasantha Kumar	Independent	28 September 2021
Human Resources and Remuneration Committee	Ms A L Thambiayah – Chairperson	Independent	24 November 2021
	J Durairatnam	Independent	28 July 2019
	P A Jayatunga	Non-Independent	27 November 2024
Nomination and Governance Committee	N K G K Nemmawatta – Chairman*	Independent	18 December 2025
	J Durairatnam	Independent	28 July 2019
	N Vasantha Kumar	Independent	1 July 2022
Integrated Risk Management Committee	N Vasantha Kumar – Chairman	Independent	1 September 2021
	P A Jayatunga	Non-Independent	27 November 2024
	I A Wickramasinghe	Independent	1 February 2026
Related Party Transactions Review Committee	N K G K Nemmawatta – Chairman	Independent	1 July 2022
	J Durairatnam	Independent	28 July 2019
	Ms A L Thambiayah	Independent	1 February 2024

*With effect from 18 December 2025

 

In addition, from time to time the Board of Directors appoint committees to deal with specific matters. They also invite external advisors and Key Management Personnel to serve on some of the committees as and when necessary.

Further details relating to the committees are given in the section on Corporate Governance and Committee Reports.

Dividend

The Directors have approved the payment of a first and final dividend of LKR 7.50 per share, (final dividend paid in the previous financial year, LKR 6.00 per share). The total dividend for the year will amount to approximately LKR 3,288 Mn (LKR 2,596 Mn in the previous financial year), which amounts to 22% of the Bank’s distributable profit.

The Directors unanimously declare that, DFCC Bank PLC will satisfy the solvency test stipulated in Section 57 of the Companies Act No. 07 of 2007 immediately after the dividend payment is made and a certificate of solvency is obtained from its Auditors.

Property, Plant, and Equipment, and Leasehold Property

The total expenditure of acquisition on property, plant, and equipment during the year amounted to LKR 2,742 Mn, of which intangible assets amounted to LKR 1,137 Mn. Details of these are given in Notes 39 and 40 to the Financial Statements.

Reserves

Total reserves and retained profit amounted to LKR 91,967 Mn.

Market Value of Freehold Properties

Information on the market value of freehold properties are given in Note 39.1.2 to the Financial Statements.

Stated Capital and Subordinated Debentures/Bonds

The stated capital as at 31 December 2025 was LKR 15,446 Mn. The number of shares in issue was 438,404,250. As a result of the scrip issue approved during the year, the stated capital was increased by LKR 735.5 Mn.

Subsequent to the Board of Directors’ approval for the raising of up to LKR 10,000 Mn through the issuance of 100,000,000 Basel III Compliant, Tier II Subordinated, Listed, Rated, Unsecured, Redeemable GSS+ Bonds with a term of up to 10 years, with a non-viability conversion feature, the Bank on 6 February 2026 raised LKR 10,000 Mn.

Further information is given on pages 459 and 464.

Share Information

Information relating to earnings, net assets, and market value per share is given on pages 101 and 103 of this Annual Report and also contain information pertaining to the share trading during the period.

Shareholders

As at 31 December 2025, there were 17,028 registered shareholders and the distribution is indicated on page 102.

The 20 largest shareholders as at 31 December 2025 are listed on page 103.

Employment and Remuneration Policies

The policy of the Bank is to develop and maintain a dedicated and highly motivated group of employees who are committed to creating sustainable value through effective risk management and high quality service while supporting the public and private sectors in their development efforts within the ambit of the Articles of Association of the Bank. DFCC Bank PLC continuously invests in the training and development of its staff to meet these objectives. The Bank is an equal opportunity employer. Remuneration of employees consists of fixed and variable payments. Annual increments and pay awards are based on the performance of the Bank and the individual. It is the Bank’s policy to fix remuneration at a level which will attract, motivate, and retain high quality employees.

Statutory Payments

To the best of their knowledge and belief, the Directors are satisfied that all statutory payments due to the Government and in relation to the employees have been made on time.

Review of Related Party Transactions

The Related Party Transactions Review Committee is responsible for ensuring compliance with the code specified in Section 6.6 of the Banking Act Direction No. 05 of 2024 and Section 9.14 of the CSE Listing Rules. The Committee reviewed the related party transactions carried out during the year and ensured that the transactions were in compliance with the said Rules.

Compliance with Laws, Regulations, and Prudential Requirements

DFCC Bank PLC has not engaged in any activities contravening applicable laws and regulations, and has complied with prudential requirements. The Directors are provided with updates on revisions to rules, directions and other applicable laws. They obtain a confirmation report from the Management regarding compliance with laws, regulations, and prudential requirements on a quarterly basis.

Events Occurring after the Reporting Period

Subsequent to the date of the statement of financial position, no circumstances have arisen that would require adjustments to the accounts. Significant events occurring after the reporting period which in the opinion of the Directors require disclosure are described in the Note 61 to the Financial Statements.

Corporate Governance

Corporate governance practices of the Bank are governed by the Banking Act Direction No. 05 of 2024 of the CBSL and Section 9 of the Listing Rules of the CSE. Details of governance practices are given on pages 205 to 238 of this Annual Report.

The Directors have obtained assurance from the External Auditors on the effectiveness of the internal control mechanisms as well as the compliance with each sub direction of Banking Act Direction No. 05 of 2024 of the CBSL on Corporate Governance.

Sections 9.1 and 9.2 of Banking Act Direction No. 05 of 2024 of the CBSL prescribe disclosures to be made in this Annual Report. These disclosures have been made on pages 234 to 235:

The Annual Report disclosures prescribed by Section 9 of the Listing Rules of CSE have been made in this Annual Report as shown in the table below:

Reference to Section	Requirement	Reference to Annual Report
9.1.3	Statement on compliance with corporate governance rules	Corporate Governance Report on page 208.
9.2.2	Any waivers or exemptions granted	None.
9.2.3	List of Policies	Corporate Governance Report on page 207.
9.4.2 (a) and (c)	Communication and relations with shareholders and investors	Corporate Governance Report on page 207.
9.5.2	Policy governing matters relating to the Board	Corporate Governance Report on page 207.
9.7.5	Fit and proper assessment criteria	Corporate Governance Report on page 213.
9.8.5 (b)	Names of Directors determined to be “independent”	Corporate Governance Report on page 213.
9.10.1	Policy on the maximum number of directorships permitted to be held by Board members	20 directorships.
9.10.4	Details with respect to Directors	Profiles on pages 34 to 39. This Report on page 273. Corporate Governance Report on pages 213 and 215.
9.11.4 (3)	Members of the Nomination and Governance Committee	This Report on page 273.
9.11.6	Report of the Nomination and Governance Committee	Page 282
9.12.8	Members of the Remuneration Committee, remuneration policy and aggregate remuneration	This Report on pages 273, 274 and 272.
9.13.5	Report of the Audit Committee	Page 277
9.14.8 (1) and (2)	Non-recurrent and Recurrent Related party Transactions in terms of the Section	Financial Statements Note 59.7 on page 476.
9.14.8 (3)	Report of the Related Party Transactions Review Committee	Page 287
9.14.8 (4)	Affirmative declaration	This Report on page 274.
Reference to Section	Requirement	Reference to Annual Report
9.16	Additional disclosures that Directors have: i. Declared all material interests in contracts and have refrained from voting on matters in which they were materially interested	This Report on page 272.
	ii. Conducted a review of the internal controls covering financial, operational and compliance controls and risk management and obtained reasonable assurance of their effectiveness and successful adherence	Directors’ Statement of Internal Control on page 288. Independent Assurance Report on page 291.
	iii. Made arrangements to make themselves aware of applicable laws, rules and regulations and are aware of changes particularly to Listing Rules of CSE and applicable capital market provisions	This Report on page 274.
	iv. Disclosed any material non-compliance with law or regulation and any fines, if any which are material, imposed by any government or regulatory authority	None

Annual General Meeting

The 70th Annual General Meeting will be held on 31 March 2026 at 10.00 a.m.

Acknowledgement of the Content of this Report

As required by Section 168 (1) (k) of the Companies Act No. 07 of 2007, the Board of Directors hereby acknowledge the contents of this Report.

For and on behalf of the Board of Directors,

J Durairatnam
Chairman

N H T I Perera
Director and Chief Executive Officer

Ms N Ranaraja
Company Secretary

24 February 2026