• Record revenue in banking and food and beverage sectors drove strong year-on-year growth
• Earnings expected to normalise by year-end, with overall 2024 earnings hitting a decade high

The Colombo Stock Exchange (CSE) corporate earnings grew by 66% year-on-year in the first quarter of 2025, driven by record revenue in the banking and food and beverage sectors, Softlogic Stockbrokers said.

A summary report on corporate earnings at the CSE in Q1 of 2025 by Softlogic Stockbrokers said that corporate earnings marked a 66% year-on-year growth in Q1 despite recording a 16% drop quarter-on-quarter.

It said that the quarterly drop in earnings is mainly owing to many international sovereign bond (ISB) related write-backs in banks recorded in Q4 of 2024.

“When excluding those one off gains recorded by banks, the quarterly earnings for Q1 of 2025 get diluted. Additionally, Q1 is inclusive of some one-off gains recorded by some listed entities which may not recur in the coming quarter,” the report said.

Moreover, Softlogic Stockbrokers said that earnings are likely to normalise by the end of 2025 and hover around Rs. 615 -640 billion levels, amidst a 5-10% year-on-year drop.

Corporate earnings in 2024 witnessed a 47% year-on-year growth to Rs. 666.3 billion, becoming the highest annual corporate earnings over the past decade, owing to ISB reversals of banks, too, getting consolidated in Q4.

In Q1, the banking and food, beverage and tobacco sectors dominated earnings with earnings growth of 44% and 170% year-on-year during the quarter.

Softlogic Stockbrokers said that the top 10 counters who marked the highest earnings in Q1 accounted for 42% of total corporate earnings in the quarter.

Further, it said that CSE currently trades at an 18% discount to its 10-year average PER, whilst the main index is likely to bypass the 18,250 levels by the end of 2025.