News & market updates

Government unveiled structural reforms at the AmCham CEO Forum aiming for 7% annual growth and a LKR 200 billion economy, including a 70% renewable-energy target by 2030, bank consolidation, port upgrades and support for IT, pharma and SME finance (LKR 300m ITIA allocation).

Fintrex Finance PLC reported PAT of Rs. 478 million for the nine months to 31 Dec 2025, a 352% year‑on‑year increase. Gross income rose 79% to Rs. 4.80 billion and NII grew 91% to Rs. 2.38 billion, driven by loan growth, higher fee income and recent capital-raising steps.

Senior bankers at the Association of Professional Bankers convention urged caution, prioritising balance-sheet discipline—liquidity, capital buffers, and managing interest-rate and FX exposure—over rapid expansion. Speakers also highlighted selective growth, risk-adjusted returns, and greater use of digital capability and sustainable debt instruments.

Sri Lanka's rupee closed at 310.30/60 to the US dollar on Wednesday, slightly weaker than 310.10/30 on Tuesday; short‑term government bond yields edged up while the rest of the yield curve remained broadly steady.

Sri Lanka sold 47.83 billion rupees of Treasury bills at Wednesday's auction out of 120 billion offered, with yields mostly flat: 3M 7.63%, 6M 7.92%, and the 12M yield down 1 bp to 8.23%.

Sri Lanka’s rupee weakened to 310.20/50 per USD while bond yields were broadly steady, with 2029–2034 maturities quoted slightly higher. A LKR 120,000 million Treasury bill auction was ongoing and the ASPI rose 1.62% to 22,806.01.

Analysts warn the war in Iran could push Brent crude above $100 — Brent was near $83.36, touching $85.12 — and that a sustained oil shock would widen current account deficits, raise inflation and trigger currency falls and capital outflows in emerging markets. Low-reserve countries such as Sri Lanka, Pakistan, Argentina and Turkey face heightened risks.

Asian stocks slid as investors feared a wider Middle East conflict could spark an energy shock; Seoul plunged 4% (two-day losses over 11%) while Brent crude jumped over 12% to $81.40/bbl. Markets flagged higher inflation and delayed rate-cut expectations, and gold fell about 4.5%.

Former Central Bank deputy governor W A Wijewardene recommends Sri Lanka adopt a 2% inflation target with a 1 percentage point leeway (2–3%) to encourage long-term saving and investment, lower interest rates and help stabilise the exchange rate.

Secondary bond yields spiked sharply in early trade on escalating Middle East tensions but rebounded after renewed buying, with two-way quotes closing higher and healthy volumes. The rupee traded between Rs.309.70 and Rs.310.40 intraday before settling at a weaker close.

First Capital Research says March 2026 Iran conflict risks could push Brent to $95–110/bbl and raise Sri Lanka's inflation, external deficits and market volatility, complicating monetary policy. It notes shipping diversions may boost Colombo's transshipment role and that equity corrections could offer selective entry points.

Secondary Treasury bond yields swung intra-day and closed higher (key maturities trading ~8.30%–10.74%); the weekly T-Bill auction offers Rs.120 billion vs. Rs.125.95 billion maturing, and the rupee weakened to Rs.310.10/310.30.

Seylan Bank PLC fully disbursed Rs. 1.2 billion under the government Seylan Atha Hitha MSME loan programme in 2025 and has received a Rs. 1 billion allocation for the first tranche of 2026. Loans of up to Rs. 25 million are offered at a concessional 5% p.a., with tenors up to 10 years and an 80% credit guarantee for eligible women-led enterprises.

Central Bank Governor Dr. P. Nandalal Weerasinghe will join IMF Managing Director Kristalina Georgieva at a high-level roundtable on “Policy Challenges for Asia Going Forward” at the Asia in 2050 conference in Bangkok on March 6. The session is part of a conference that precedes the 2026 IMF–World Bank Annual Meetings.

Rupee closed at 310.10/30 per USD on Monday, weaker than Friday's 309.20/25, while government bond yields rose across maturities (e.g. 15.12.2026: 8.20-8.35%; 01.06.2033: 10.45-10.50%).

Sri Lanka's outstanding government external debt rose to $37,663 million at 31 Dec 2025, up $425 million from end‑September 2025. Debt restructuring is about 95% complete, stabilising the debt profile and allowing the resumption of regular debt servicing.

Headline inflation (CCPI) YoY decelerated to 1.6% in February 2026 from 2.3% in January, with food inflation falling to 0.2% while non-food inflation rose and core inflation eased to 2.1%. The CBSL projects inflation will move toward a 5% target by H2 2026, and the target is under review amid criticism.

Bond yields fell across the curve after the PDMO raised the full Rs.140bn in Thursday’s Treasury Bond auction (bid-to-cover 2.79x), with T-Bill weighted averages declining and secondary yields closing lower week-on-week. February CCPI eased to 1.60% y/y, system liquidity rose to Rs.358.76bn and USD/LKR closed near Rs.309.31.

Pan Asia Banking Corporation PLC plans to raise up to Rs. 5 billion via a listed rated unsecured senior redeemable debenture issue (up to 50 million debentures of Rs.100 each, tenors up to five years), subject to regulatory approvals and proposed CSE quotation.

Union Bank of Colombo proposes a Basel III-compliant debenture issue to raise up to Rs. 3 billion in 5-year subordinated Tier II debentures (Rs.100/unit), opening 10 March 2026. Three interest options are offered — 13% fixed annual (Type A), 12.5% fixed semi‑annual (Type B, 12.89% AER), and 182-day T-bill + 400bps floating (Type C); rated BB (lka) by Fitch.

Rupee opened weaker at 309.75/310.20 to the USD, down from 309.20/25 on Friday; government bond yields rose across maturities (e.g. 15.12.2028 at 9.15–9.20%, 01.06.2033 at 10.45–10.55%) before renewed buying prompted a partial recovery.

SLT Group PAT surged 221% to Rs. 10.0 billion in FY2025, driven by cost savings, lower finance costs and steady revenue growth. SLT PLC posted PAT of Rs. 6.2 billion and Mobitel Rs. 3.1 billion as the group expanded fibre, data services and rolled out 5G.

U.S. stocks finished narrowly mixed after U.S. and Israeli air strikes on Iran triggered volatile trading; U.S. crude rose about 6% to $71.23, boosting energy and defense while tech stocks later led gains.

CFA Society Sri Lanka and Frontier Research will run a half-day "Economics in Practice" executive programme on 12 March 2026 in Colombo to help professionals interpret economic indicators and fiscal/external trends (trade balances, capital flows, reserves) for business and investment decisions.

Seylan Bank PLC fully disbursed LKR 1.2 billion across 90 loans under the government-funded 'Atha Hitha' MSME programme in 2025 and has been allocated LKR 1 billion for the first tranche of 2026. Loans are available up to LKR 25 million at a concessionary 5% p.a., with tenors up to 10 years and an 80% credit guarantee for eligible women-led businesses.

Commercial Bank of Ceylon Plc has partnered with David Pieris Automobiles to offer specially structured leasing for GWM and BAIC vehicles in Sri Lanka, with attractive interest rates, documentation concessions, a complimentary first-year credit card and flexible repayment plans; the promotion runs until 30 January 2027.

U.S. and Israeli strikes on Iran sent oil sharply higher (WTI ~+8% to $72.70, Brent ~+9% to ~$79.19), dragging global equities lower and lifting gold and the dollar; bond yields fell while higher-than-expected wholesale inflation may complicate Fed rate-cut timing.

Union Bank of Colombo (UBC.N0000) plans to raise up to LKR 3 billion via a Basel III-compliant, listed 5-year Tier II debenture issue (LKR100 par) opening 10 March 2026; coupons include 13% fixed (annual), 12.5% fixed (semi-annual) or 182-day T-bill + 400bp.

Sri Lanka sold Rs14 billion of Treasury bonds on tap, taking weekly bond sales to Rs154 billion; yields were 9.50% (2030), 10.70% (2034) and 10.88% (2037), with settlement on March 3.

The Central Bank of Sri Lanka released key findings of the Systemic Risk Survey for H1 2026 on market participants' perceptions of risks to the financial system; the survey was conducted 19 Dec 2025–16 Jan 2026 in the aftermath of the Ditwah cyclone. Respondents included executives from banks, finance companies, insurance firms, brokers and other financial service providers.