Sri Lanka’s Primary Dealer Companies (PDCs) profits decreased by 68% year-on-year (y-o-y) in 2024 with a decrease in interest income and capital gains, the Central Bank of Sri Lanka (CBSL) said.

In its annual economic review, the Central Bank said that PDCs reported a profit-after-tax (PAT) of Rs. 9.7 billion in 2024, a significant decline from Rs. 30.4 billion of PAT reported in 2023.

It said that this drop in profitability was primarily driven by decrease in interest income and capital gains, along with higher revaluation losses on financial assets held for trading, which are measured at fair value through profit and loss.

Total assets of PDCs increased by 9.7% to Rs. 297.2 billion in 2024, compared to Rs. 270.9 billion in 2023.

Central Bank said the participation of PDCs in primary auctions for Treasury bills and Treasury bonds showed a mixed performance during 2024, while secondary market transactions in government securities (in terms of value) by PDCs decreased by 25.4% falling to Rs. 18,639.9 billion in 2024, with repurchase transactions accounting for 72.9%.

“By the end of 2024, there were five licensed commercial banks (LCBs) and five PDCs active in the government securities market as primary dealers,” Central Bank said.

Moreover, it said that the total investment portfolio of government securities by primary dealers amounted to Rs. 277.9 billion by end 2024, recording a y-o-y increase of 5.7% from Rs. 262.9 billion in 2023.

Furthermore, it said that net credit to the government by LCBs recorded an increase of Rs. 587.8 billion during the year, reflecting their increased investments in government securities.

“However, the increased investments in government securities were lower compared to previous year. This could be explained by the reduced attractiveness of such investments due to the low rate of return,” Central Bank report said.