AAF loan book rises 39% as Sri Lanka network reaches 125

Asia Asset Finance PLC (AAF) expanded its Sri Lankan network to 125 branches in H1 FY 2027, 18 more than a year earlier, while loan assets under management rose 39% to LKR 5,393.9 crore. Profit after tax increased 110% to LKR 83.9 crore, although the capital adequacy ratio declined to 18% from 26%.

How much did AAF expand its Sri Lanka branch network?

AAF added 18 branches year on year, taking its network to 125 branches in H1 FY 2027 from 107 in H1 FY 2026. The network was also five branches larger than the 120 reported in Q1 FY 2027 and 10 above the 115 branches at FY 2026, indicating that expansion continued during the first half.

Employee numbers rose to 1,251 in H1 FY 2027 from 1,003 a year earlier, an increase of 248 people. Headcount was also 54 above the 1,197 employees in Q1 FY 2027, compared with the five-branch sequential increase over the same period.

AAF is a fully licensed deposit-taking institution registered with the Central Bank of Sri Lanka and listed on the Colombo Stock Exchange. Established in 1970 for retail finance, hire purchase and business loans, it became a foreign subsidiary of Muthoot Finance in December 2014 and subsequently pivoted to gold loans, its primary business line.

How fast did AAF's loan book grow in H1 FY 2027?

AAF's loan assets under management, or AUM, rose 39% year on year to LKR 5,393.9 crore in H1 FY 2027 from LKR 3,868.3 crore in H1 FY 2026. The LKR 1,525.6 crore increase also put the loan book above LKR 5,269.8 crore in Q1 FY 2027 and LKR 4,918.1 crore at FY 2026.

Loan AUM increased by LKR 124.1 crore from Q1 FY 2027 to H1 FY 2027, while branches increased from 120 to 125. From FY 2026 to H1 FY 2027, loan AUM increased by LKR 475.8 crore and branches rose from 115 to 125.

Total assets rose 56% to LKR 6,662.7 crore in H1 FY 2027 from LKR 4,278.5 crore a year earlier, growing faster than loan AUM. Total outside liabilities increased to LKR 5,961.4 crore from LKR 3,860.9 crore, while shareholders' funds rose to LKR 701.3 crore from LKR 417.6 crore.

Why did AAF's profit more than double?

AAF's profit after tax rose 110% year on year to LKR 83.9 crore in H1 FY 2027 from LKR 40 crore in H1 FY 2026. Profit before tax increased to LKR 162.3 crore from LKR 67.6 crore, but the presentation does not attribute the earnings growth to a specific operational factor.

Total revenue increased 63% to LKR 719 crore from LKR 440.4 crore, while total expense rose 49% to LKR 556.7 crore from LKR 372.9 crore. Revenue therefore increased by LKR 278.6 crore, compared with a LKR 183.8 crore rise in expense, alongside the increase in reported profit before tax.

Quarterly profit after tax was LKR 40.9 crore in Q2 FY 2027, below LKR 42.9 crore in Q1 FY 2027. Q2 revenue rose to LKR 362.3 crore from LKR 356.7 crore in Q1, but expenses increased to LKR 287.8 crore from LKR 268.9 crore and profit before tax declined to LKR 74.5 crore from LKR 87.8 crore.

What changed in AAF's capital and funding position?

AAF's capital adequacy ratio declined to 18% in H1 FY 2027 from 26% in H1 FY 2026, an eight-percentage-point movement. The ratio was also below 19% in Q1 FY 2027 and 24% at FY 2026, while the presentation gives neither a reason for the decline nor a capital target.

Shareholders' funds increased 68% year on year to LKR 701.3 crore from LKR 417.6 crore. Total outside liabilities increased 54% to LKR 5,961.4 crore from LKR 3,860.9 crore, and the reported LKR-to-Indian-rupee rate was 0.2901 in H1 FY 2027 compared with 0.2932 in H1 FY 2026.

Conclusion

AAF combined a larger Sri Lankan footprint with higher lending and earnings in H1 FY 2027. Its 125 branches, LKR 5,393.9 crore loan AUM and LKR 83.9 crore profit after tax were ahead of the 107 branches, LKR 3,868.3 crore AUM and LKR 40 crore profit reported a year earlier, while revenue growth of 63% exceeded the 49% increase in expense.

The unresolved matter for subsequent updates is capital adequacy, which moved from 26% in H1 FY 2026 to 18% in H1 FY 2027 despite shareholders' funds rising to LKR 701.3 crore. The presentation does not disclose a reason for the movement, a capital target or a branch-expansion plan beyond the 125 branches reported for H1 FY 2027.