Banking Towards National Recovery: HNB’s Award-Winning Blueprint for Resilient Growth

HNB’s recognition as Sri Lanka’s ‘Best Bank for 2025’ by The Banker magazine (UK), alongside being named the ‘Strongest Bank in Sri Lanka’ by The Asian Banker, comes at a pivotal moment for both the nation and its financial sector.

These prestigious accolades—awarded based on rigorous assessments of financial strength, innovation, governance, and long-term strategic performance—underscore HNB’s resilience and clarity of purpose at a defining point in Sri Lanka’s economic journey.

Sri Lanka’s transition from stabilisation to recovery—with GDP growth of around 5% in the first half of 2025, easing inflation, and rebuilding foreign reserves—has nevertheless been tested by persistent structural challenges and, most recently, the widespread devastation caused by Cyclone Ditwah. Against this backdrop, HNB Managing Director and CEO Damith Pallewatte reflects on how the bank navigated a turbulent year, emerged as a catalyst for national recovery, and laid the groundwork for sustained resilience.

Reconciling Recognition with National Challenges

Reflecting on the awards, Pallewatte notes that the recognition carries particular significance given the extraordinary conditions faced by the country.

While external shocks such as the COVID-19 pandemic and Cyclone Ditwah were unavoidable, he observes that their cumulative impact exposed long-standing vulnerabilities and systemic gaps within the Sri Lankan economy. Prior to the cyclone, macroeconomic indicators had begun to show encouraging signs: GDP expanded by 4.8% in the first half of 2025, inflation fell sharply from a peak of 69.8% in September 2022 to single-digit levels, and worker remittances reached US$7.2 billion by November 2025.

Yet, despite these gains, many households and SMEs remained highly vulnerable. The cyclone struck at a critical moment, disrupting livelihoods—particularly in agriculture during the Maha cultivation season. As a bank serving more than seven million Sri Lankans, many of whom are connected to the agricultural economy, HNB experienced these impacts firsthand.

“In moments of national crisis,” Pallewatte emphasizes, “the true measure of an institution is not its balance sheet, but its commitment to the communities it serves.” He adds that strong financial performance is not an end in itself, but a responsibility that enables meaningful support for national recovery.

Building Operational Resilience

From an operational standpoint, HNB’s performance through 2025 was underpinned by three deliberate strategic pillars: digital infrastructure, human capital development, and dynamic risk management.

HNB accelerated its digital transformation, driving significant growth in transaction volumes across all digital channels. Its mobile banking platform saw exponential adoption, while initiatives such as HNB Accept expanded low-cost digital payment access to entrepreneurs and small businesses. A landmark milestone during the year was the launch of Sri Lanka’s first bank-led cashless payment solution for public buses, in collaboration with the National Transport Commission—an initiative aimed at transforming daily commuting while advancing financial inclusion.

Risk management frameworks were also reengineered. Traditional models proved insufficient in a highly volatile environment, prompting the bank to introduce dynamic stress-testing, enhanced early-warning systems, and closer engagement with SME and retail customers. This proactive approach enabled timely restructuring of facilities, preserving asset quality while supporting customer sustainability.

Importantly, The Banker’s evaluation highlighted HNB’s ability to maintain service excellence while expanding inclusion. Despite disruptions, the bank continued to open accounts in underserved areas, rolled out targeted solutions for women entrepreneurs through initiatives such as ‘SOLO Podi Podi Business’, and sustained its school banking programmes. As Pallewatte notes, operational excellence in crisis is not about preserving the status quo, but evolving to meet urgent needs.

Balancing Growth with Prudence

HNB’s financial results reflect this disciplined approach. The bank reported a profit after tax of Rs. 31.5 billion for the first nine months of 2025, marking a 42% year-on-year increase, driven primarily by margin management and operational efficiency rather than aggressive balance-sheet expansion.

Throughout periods of peak interest rates and currency volatility, HNB made deliberate choices to support vulnerable customers and trade-oriented businesses—often absorbing short-term costs to preserve long-term relationships and portfolio quality. Since the depths of the post-2022 crisis, the bank has grown its loan book by approximately Rs. 350 billion by December 2025, focusing on productive sectors critical to economic recovery.

Capital adequacy remained robust, with a Tier I ratio of 16.74% and Total Capital Adequacy of 20.13%, comfortably above regulatory thresholds. These buffers, Pallewatte explains, provide the confidence to support recovery without compromising stability.

The recognition from The Banker and The Asian Banker ultimately validates this balanced strategy. “Trust,” Pallewatte concludes, “is our most valuable asset.” HNB’s performance and accolades, he says, reflect why customers, regulators, and international peers continue to place their confidence in the institution and its people.