Nations Trust Bank IFC financing has strengthened Sri Lanka’s banking sector outlook after the lender secured a major funding package from the International Finance Corporation, underscoring renewed international confidence as the country’s economic recovery gathers pace.
Nations Trust Bank IFC financing boosts lending capacity amid recovery
Nations Trust Bank has secured a debt financing package of up to 70 million US dollars from the International Finance Corporation, marking a notable milestone for Sri Lanka’s financial sector as international funding channels continue to reopen following the country’s recent economic crisis. The transaction represents IFC’s first debt investment in Sri Lanka’s banking sector since the 2022 financial turmoil, according to disclosures made by the bank.
The financing structure consists of a 50 million dollar senior unsecured loan alongside a 20 million dollar line under IFC’s Global Trade Finance Program. Together, the facilities are expected to provide Nations Trust Bank with enhanced flexibility to support key economic segments, particularly trade, small and medium-sized enterprises, and corporate borrowers, as domestic activity continues to stabilise.
In a filing to the Colombo Stock Exchange, the bank stated that the funds would strengthen its ability to expand lending at a time when credit demand is gradually improving. The timing of the transaction is significant, as Sri Lanka’s banking sector seeks to balance cautious risk management with the need to support growth across productive sectors of the economy.
Market observers note that the IFC facility carries broader implications beyond Nations Trust Bank alone. As a member of the World Bank Group, IFC’s renewed engagement is often viewed as a signal of improving confidence in a country’s macroeconomic direction and regulatory environment. The transaction may therefore encourage other multilateral lenders and foreign investors to re-evaluate opportunities within Sri Lanka’s financial system.
The latest financing also builds on a period of strategic repositioning for Nations Trust Bank. In September last year, the bank announced that it had entered into a sale and purchase agreement with the Sri Lanka branch of The Hongkong and Shanghai Banking Corporation to acquire its retail banking business. The transaction, valued at 18 billion rupees excluding applicable taxes, is expected to broaden NTB’s customer base and enhance its footprint in the domestic retail banking segment once fully integrated.
Financial performance indicators suggest the bank has already benefited from improving operating conditions. According to its financial report released in November, Nations Trust Bank recorded a 48 percent increase in profits compared to the previous year, with earnings rising to 6.1 billion rupees. The growth was largely driven by stronger net interest income, reflecting improved margins and balance sheet management in a gradually normalising interest rate environment.
Credit quality and capital market perceptions have also shown signs of stabilisation. NTB’s proposed debenture issue amounting to 15 billion rupees has received an expected National Long-Term Rating of ‘BBB+(lka)(EXP)’ from Fitch Ratings. The assessment reflects the agency’s view of the bank’s standalone credit profile and its capacity to meet long-term obligations, providing additional reassurance to investors.
Analysts say the combination of multilateral funding, improved profitability, and strategic acquisitions positions Nations Trust Bank to play a more active role in supporting Sri Lanka’s economic recovery. The availability of longer-term foreign currency funding, particularly through trade finance lines, is expected to support exporters and importers navigating volatile global conditions.
While challenges remain, including external risks and domestic fiscal adjustments, the successful conclusion of Nations Trust Bank IFC financing highlights a gradual rebuilding of trust between Sri Lanka’s financial institutions and international development partners. For the banking sector, such transactions are increasingly seen as essential for restoring sustainable credit growth and reinforcing financial stability.