ECONOMYNEXT – Sri Lanka’s Hemas Holdings, through its subsidiary Atlas Axillia Company, has acquired a 75 percent stake in Twiga Stationers & Printers Limited, a Kenya stationery manufacturer, for 16.2 million dollars.

This is Hemas’ first international acquisition, the company said in stock exchange filing.

“It also positions Hemas with a strong operating platform in Kenya, one of East Africa’s most dynamic consumer markets, with a GDP of over USD 136 billion and a young, growing population of over 54 million.”

Twiga is the owner of well-known stationery and learning brands including “Kasuku”, “CrownBird” and “Envoy”, with regional exports.

“The acquisition strengthens Hemas’ Consumer Brands portfolio and creates meaningful synergies with Atlas Axillia, Sri Lanka’s leading learning brand, particularly in the back-to-school and education-linked consumer segments.”

Hemas stock closed flat at 31.40. (Colombo/Aug17/2026)

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange closed marginally down on Monday, CSE data showed.

The All Share Price Index was down 0.03 percent or 6.29 points at 21,616.88; while the S&P SL20 closed up 0.41 percent, or 24.62 points, at 6,090.34.

Market turnover was 1.89 billion rupees.

Top positive contributors to the ASPI were Sampath Bank (up 1.75 rupees at 141.75), Dialog Axiata (up 90 cents at 48 rupees), Commercial Bank (up 1.25 rupees at 205.75), Melstacorp (up 1.25 rupees at 192) and PickMe (up 3.25 at 163.50 rupees).

Lee Hedge announced a dividend of 2 rupees per voting share. (Colombo/Aug17/2026)

Fitch Ratings – Colombo – 17 Aug 2026: Fitch Ratings has affirmed Sri Lanka-based Sampath Bank PLC’s National Long-Term Rating at ‘AA-(lka)’. The Outlook is Stable. At the same time, Fitch has affirmed Sampath’s outstanding Sri Lankan rupee subordinated debt at ‘A(lka)’.

Key Rating Drivers
Intrinsic Profile Drives Rating: Sampath’s National Long-Term Rating reflects its own financial strength, which is highly influenced by exposure to the sovereign’s weak credit profile (Long-Term Foreign-Currency and Local Currency Issuer Default Rating (IDR) of ‘CCC+’). The rating reflects predominantly domestic operations and direct and indirect sovereign exposure, counterbalanced by a strong domestic franchise as Sri Lanka’s fifth-largest commercial bank.

Sovereign Profile Shapes OE: The sovereign’s weak credit profile continues to drive our assessment of the banks’ operating environment (OE) score of ‘ccc+’. This reflects predominant exposure to the domestic economic environment and large exposure to the sovereign through government securities and lending to the broader public sector, which links the banks closely to the state’s financial health. Fitch expects the OE to remain broadly supportive; however external headwinds may exert pressure on the domestic OE and thereby, sector performance.

Corporate Lending Gaining Traction: Corporate lending, including mid-sized corporates, continued to dominate Sampath’s loan book, representing 53% of total loans at end-2025 and rising further in 1Q26. We expect this shift to continue, as the bank looks to mitigate downside risks stemming from a weaker OE, which is likely to weigh more on retail and SME borrowers. Cross-border lending should remain a key driver of this shift – at least a quarter of incremental corporate loan growth in 2025 and 1Q26.

High Growth Plans: Sampath’s risk profile remains influenced by its exposure to the challenging OE. Government securities holdings accounted for nearly one-third of total assets at end-2025. Loan growth has also remained strong, expanding by 28% in 2025 and a further 11% in 1Q26. The bank intends to sustain this pace, targeting 2026 growth broadly in line with 2025, driven primarily by the corporate and retail segment. Persistent, rapid balance-sheet expansion could pressure loan quality and liquidity, if not held to consistent underwriting standards.

Asset Quality to Weaken: Sampath’s impaired (stage 3) loan ratio improved to 9.3% at end-2025 (end-2024: 13.5%), with the trend sustained into 1Q26 – largely from loan growth, while new defaults rose only modestly. Nevertheless, the ratio remains among the highest of similarly rated private-sector peers, weighed down by SME defaults. Fitch expects credit impairments to increase moderately over the near-to-medium term amid a challenging OE, although rapid loan expansion should lead to further drops in the impaired-loan ratio.

Profitability to Moderate: Sampath’s operating profit/risk weighted assets (RWA) dipped to 4.4% in 1Q26 from 6.5% in 2025, due primarily to credit costs which accounted for 26% of pre-impairment operating profit. We expect profitability to hold steady in 2026-2027, as higher income from loan growth should be offset by narrower margins and higher impairment charges from new lending. Profitability is supported partly by a rising share of non-interest income, mainly fees and commission income: 21% of total operating income in 1Q26 (2025: 19%).

Capital Buffers Narrowing: We expect the common equity Tier-1 (CET1) ratio to continue to decline from 14.0% (including 1Q26 profit) at end-1Q26, reflecting loan growth, dividend payments and mark-to-market losses on the Fair Value Through Other Comprehensive Income (FVOCI) government securities portfolio. We believe RWA growth and valuation losses as interest rates rise will continue to weigh on capital ratios. Any capital support extended to subsidiaries would have a limited impact on overall capital, given the size of likely injections.

Loan Growth Reducing Liquidity: We expect Sampath’s loan/deposit ratio (LDR) to rise further from 82% at end-1Q26(2025: 78%; 2024: 68%), returning to pre-crisis levels, as the bank pursues strong loan growth. This growth has so far been funded largely by deploying excess liquidity alongside moderate deposit growth. Narrower liquidity buffers mean we expect loan growth to become increasingly deposit-funded. We believe access to foreign-currency term funding is showing early signs of improvement, in tandem with reduced sovereign default risk.

Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Sampath’s National Rating is sensitive to a change in the bank’s creditworthiness relative to other Sri Lankan issuers. A downgrade of the National Rating would most likely stem from a deterioration in Sri Lanka’s sovereign rating, through its influence on the banks’ OE.

A deterioration in key credit metrics beyond our base-case expectations relative to peers would also lead to heavier downward pressure on the National Rating, which is driven by its intrinsic financial strength, independent of any sovereign rating changes.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Sampath’s National Rating is sensitive to a change in its creditworthiness relative to other Sri Lankan issuers. Upside to the National Rating is limited in the near term, due to our assessment of the sovereign rating and OE. That said, an improvement in the sovereign rating may lead to an upgrade of the bank’s National Rating.

OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
SUBORDINATED DEBT

Sampath’s Basel III-compliant Sri Lankan rupee subordinated debt is rated two notches below the National Long-Term Rating anchor. This reflects Fitch’s baseline notching for loss severity for this type of debt, and our expectation of poor recoveries. There is no additional notching for non-performance risks, as the notes do not incorporate going-concern loss-absorption features.

OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
The subordinated debt rating will move in tandem with the bank’s National Long-Term Rating.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria. (Colombo/Aug17/2026)

ECONOMYNEXT — Sri Lanka’s Lion Brewery reported a profit of 2.81 billion rupees for the quarter ended 30 June 2026, up 18 percent from June 2025. The group recorded basic earnings of 35.08 rupees per share for the three-month period.

Total revenue for the quarter rose 15 percent to 33.41 billion rupees, compared to 29.01 billion rupees in the corresponding period of the prior year. This top-line performance supported an operating profit of 4.34 billion rupees, which reflected 11 percent growth over the preceding year.

Earnings were significantly bolstered by a shift to a net finance income of 531.14 million rupees. This marks a sharp turnaround from the net finance cost of 22.35 million rupees recorded in the same quarter of 2025.

Total assets reached 74.29 billion rupees as of 30 June 2026, while total equity stood at 43.73 billion rupees. The group reported a net asset value per share of 546.68 rupees, up from 533.02 rupees at the start of the financial year.

During the quarter, the company paid a second interim dividend for the previous financial year totaling 1.83 billion rupees. Investing activities during the period included 1.46 billion rupees for the purchase and construction of property, plant, and equipment.

The company remains compliant with minimum public holding requirements, reporting a public holding percentage of 12.10 percent across 1,860 shareholders. It also maintained a strong capital base, with total equity increasing from 42.64 billion rupees at the beginning of the period. (Colombo/August17/2026)

ECONOMYNEXT – Anton James, founder of The Tree House International, Sri Lanka’s school for children with special needs, has been elected a Fellow of the Psychological Society of Ireland (PSI).

“This recognition belongs to the educators, therapists and families in Sri Lanka who strive every day for better neurodevelopmental care, and strengthens my resolve to ensure that every child with special needs has access to world class, evidence-based intervention,” said Anton.

The Fellowship is the highest individual distinction awarded by the PSI and is conferred on psychologists who have demonstrated superior psychological knowledge and made outstanding, sustained contributions to psychology.

“Sri Lanka is in the early stages of developing its own national professional body for psychologists, so it is a particular privilege to be recognised by the Psychological Society of Ireland this year, having also been elected a Fellow of the British Psychological Society two years ago.”

“Dr Anton’s extraordinary dedication to behaviour psychology and his transformative impact on special needs education in Sri Lanka embody the exact excellence the PSI Fellowship stands for. His global footprint and clinical leadership enrich our international psychological community,” President of the Irish Psychological Society of Ireland – Sarah Cassidy, said.

Anton is a neurodevelopmental care expert with over 20 years of global experience. (Colombo/Aug17/2026)

ECONOMYNEXT — Sri Lanka’s Softlogic Holdings PLC reported a loss of 2.79 billion rupees for the quarter ended 30 June 2026, a 5 percent increase from June 2025.

The group recorded a basic loss of 2.00 rupees per share for the three-month period. For the year ended March 31, 2026, the group announced a loss of 8.79 billion rupees.

Total revenue for the quarter rose 14 percent to 34.07 billion rupees, supported by performance across key business sectors. Growth was significantly bolstered by a 41 percent increase in revenue from insurance contracts, which reached 12.74 billion rupees.

The retail and telecommunication segment remained a major driver with revenue of 13.21 billion rupees, while financial services and healthcare services added 12.12 billion rupees and 9.72 billion rupees, respectively.

Results from operating activities for the quarter surged 107 percent to reach 4.19 billion rupees. However, the bottom line remained pressured by a 98 percent increase in the change in insurance contract liabilities, which reached 3.83 billion rupees during the period.

Net finance costs for the period rose 19 percent to 1.42 billion rupees, as finance expenses reached 3.90 billion rupees against finance income of 2.49 billion rupees. The group reported a loss before tax of 1.06 billion rupees for the three-month period.

Total assets reached 209.57 billion rupees as of 30 June 2026, while total equity stood at a negative 47.62 billion rupees. Interest-bearing borrowings reached 57.87 billion rupees in non-current liabilities and 22.33 billion rupees in current liabilities.

The group reported a net liability per share of 51.46 rupees at the end of the period. Public shareholding in the company was recorded at 11.22 percent across 10,766 shareholders.

A dispute has arisen with the Department of Inland Revenue regarding the applicability of income tax exemptions for Asiri Surgical Hospital PLC. The management has filed appeals against these assessments in the Court of Appeal and the Supreme Court. (Colombo/August17/2026)