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    Governance and accountability

    Statement of compliance

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    Further to the Annual Report of the Board of Directors on the Affairs of the Company appearing on pages 4 and 5, given below is a summary of the extent of compliance with the requirements of Section 168 of the Companies Act No. 07 of 2007 and amendments thereto, other relevant statutes and Recommended Best Practice (RBP).

    Statement of compliance Table 87

    Disclosure requirement Reference to the relevant statute/rule/RBP Compliance and other necessary disclosures Page/s
    Mandatory disclosures as required by the Companies Act No. 07 of 2007 and amendments thereto (CA)
    01. The nature of the business of the Group and the Bank together with any changes thereof during the
    accounting period     		Section
    168 (1) (a)     		Notes to the Financial Statements: Item 1.3: Principal Business
    Activities, Nature of Operations of the Group and ownership
    by the Bank in its subsidiaries and the Associate     		319 and 320
    02. Signed Financial Statements of the Group and the Bank for the accounting period completed in accordance
    with Section 152     		Section 168 (1) (b) Financial Statements of the Group and the Bank for the year ended
    December 31, 2025     		307 to 318
    03. Auditors’ Report on the Financial Statements of the Group and the Bank Section 168 (1) (c) Independent Auditors’ Report 300 to 304
    04. Accounting Policies of the Group and the Bank and any changes therein Section 168 (1) (d) Notes 5 to 10 to the Financial Statements: Material Accounting
    Policies adopted in the preparation of the Financial Statements
    of the Group and the Bank     		328 to 339
    05. Entries made in the Interests Registers of the Bank and its Subsidiaries during the accounting period Section 168 (1) (e) The Bank and all its Subsidiaries maintain Interests Registers. All Directors have made declarations as required by the Section 192
    (1) and (2) and all related entries were made in the Interests Registers
    during the year under review. The Interests Registers are available for inspection by shareholders or
    their authorised representatives as required by the Section 119 (1) (d). Refer “Directors’ Interest in Contracts with the Bank”. Note 62 to the Financial Statements: Related Party Disclosures






    271 and 272 430 to 435
    06. Remuneration and other benefits paid to Directors of
    the Bank and its Subsidiaries during the accounting period     		Section 168 (1) (f) and as per section 9.2 (d) of the CBSL Directions on Corporate Governance Note 21 to the Financial Statements: Other Operating Expenses Note 62 to the Financial Statements: Related Party Disclosures Report of the Board Human Resources and Remunerations Committee 351 430 to 435 244 and 245
    07. Total amount of donations made by the Bank and its Subsidiaries during the accounting period Section 168 (1) (g) Note 21 to the Financial Statements: Other Operating Expenses 351
    08. Information on Directorate of the Bank and its Subsidiaries during and at the end of the accounting period Section 168 (1) (h) Risk Governance and Management
    “Board of Directors and Profiles” for details of members of the Board of Directors of the Bank 32 to 39
    “Group Structure” for details of members of the Board of Directors of
    the Group     		24 and 25
    Recommendations for Re-election/election

    (i) In terms of Article 85 of the Articles of Association, two Directors are required to retire by rotation at each Annual General Meeting (AGM). Article 86 provides that the Directors to retire by rotation at an AGM
    shall be those who (being subject to retirement by rotation) have been in office for longest period, since their last re-election or appointment.

    The Board recommended the re-election of the following Directors,
    after considering the contents of the Affidavits & Declarations
    submitted by them and all other related issues:

    Ms Judy Lee

    Dr S Selliah

    (ii) Election of the Director who was appointed to fill a casual vacancy:

    Ms R M A S Parakrama

    (iii) Directors who served on the Board for nine years –
    None as at end of 2025.

    [In terms of the Banking Act Directions No. 05 of 2024 and amendment thereto on Corporate Governance, the total period of service of a Director (other than an Executive Director) is limited to nine years. Further, under the criteria to assess the fitness and proprietary of Directors, the age of a person who serves as director of a bank has been restricted to a maximum of 70 years.

    Accordingly, following Directors relinquished office during the year after serving the Board for nine years:

    Mr L D Niyangoda – with effect from August 27, 2025

    Ms N T M S Cooray – with effect from September 20, 2025
    09. Separate disclosure on amounts payable to the Auditors as Audit Fees and Fees for other services rendered during the accounting period by the Bank and its Subsidiaries Section 168 (1) (i) Note 21 to the Financial Statements: Other Operating Expenses 351
    10. Auditors’ relationship or any interest with the Bank and its Subsidiaries (Lead auditor’s independence) Section 168 (1) (j) Independence Confirmation has been provided by Messrs KPMG as required by Section 163 (3), in connection with the audit for the year ended December 31, 2025, confirming that Messrs KPMG is not aware of any relationship with or interest in the Bank or any of its subsidiaries that in their judgement, may reasonably be thought to have a bearing on their independence within the meaning of the Code of Professional Conduct and Ethics issued by CA Sri Lanka, applicable as at the reporting date. No prohibited non-audit services have been provided by Messrs KPMG as per the Direction issued by the CBSL on “Guidelines for External Auditors relating to their Statutory Duties”. The Bank adhered to the Board approved policy governing Non-Audit services, ensuring that all engagements involving the external auditors undergo formal review and approval. The Directors are satisfied as the BAC has assessed each service, having regard to auditor’s independence requirements of applicable laws, rules and regulations, and concluded in respect of each non-audit service or type of non-audit service that the provision of that service or type of service would not impair the independence of Messrs KPMG.
    11. Acknowledgement of the Contents of this Report/Signatures on behalf of the Board of Directors Section 168 (1) (k) The Board of Directors have acknowledged the contents of this
    Annual Report as disclosed.     		4 and 5
    Other Disclosures as required by the RBP, Listing Rules (LR) of the Colombo Stock Exchange, Companies Act No. 07 of 2007 and amendments thereto (CA) and the Banking Act Directions No. 05 of 2024 and amendments thereto (the Direction)
    12. Vision, Mission and
    Corporate Conduct     		RBP The business activities of the Group and the Bank are conducted maintaining the highest level of ethical standards in achieving our “Vision and Mission”, which reflect our commitment to high standards of business conduct and ethics. The Bank issues a copy of its Code of Ethics to each and every staff member and all employees are required to abide by the provisions contained therein. Inner Front Cover
    13. Review of Business operations of the Group and the Bank and future developments RBP “Chairman's Message” and “Managing Director/Chief Executive Officer's Review” 26 to 31
    Embedding sustainability into operations 78 to 171
    Note 61 to the Financial Statements: Operating Segments 428 and 429
    14. Gross Income RBP Notes 12 & 61 to the Financial Statements: Gross Income &
    Operating Segments     		340, 428 and 429
    15. Dividends on Ordinary
    Shares     		RBP Notes 25 & 68 to the Financial Statements: Dividends on ordinary shares
    & Events after the reporting period     		354 and 470
    Item 3 of “Investor information and performance trends” 196
    16. Reserves and appropriations RBP Statement of Changes in Equity 310 to 317
    Notes 53, 54 & 55 to the Financial Statements: Statutory reserves, Retained earnings & Other reserves 419 to 422
    17. Corporate Social Responsibility (CSR) RBP “Community Engagement- Empowering lives and creating shared value” 126 to 137
    18. Issue of Shares and Debentures by Subsidiaries RBP Note 50 to the Financial Statements: Subordinated Liabilities Annex 2 – Basel III – Disclosures under Pillar III as per Banking Act No. 01
    of 2016 – Disclosure 6 – Main features of regulatory capital instruments Group     		414 to 416 512 and 513
    19. Share information and Substantial Shareholdings
    19.1 Minimum public holding requirement LR 7.13.1 (a) Item 4.3 of “Investor Relations” 198
    19.2 Own Share Purchases CA S.64 The Bank does not purchase its own shares. N/A
    19.3 Equitable Treatment to Shareholders RBP Statement of Directors' Responsibility for Financial Reporting – item (k) Annual Corporate Governance Report – Shareholder engagement and voting (Principles C.1, C.2, C.3, E and F) 265 230
    20. Information on Directors’ Meetings and Board Committees
    20.1 Directors' Meetings RBP Composition of the Board, Committees and attendance at meetings – Table 78 for details of the meetings of the Board of Directors Board Processes and Meetings (Principles A.1.1 A.1.3, A 1.5, A 1.6, A.6) 223 224
    20.2 Board Committees RBP Board Committee Reports 233 to 257
    21. Disclosure of Directors’ dealings in shares
    Directors’ Interest in Contracts or Proposed Contracts and Remuneration & other benefits of Directors during the year under review CA S.192 Directors declare their outside business interests on appointment and quarterly thereafter, details of which are recorded in the Directors’ Interests Register, and available for inspection in terms of the
    Companies Act. Directors’ interest in contracts with the Bank     		271 and 272
    Note 21 to the Financial Statements: Other Operating Expenses 351
    Note 62 to the Financial Statements: Related Party Disclosures 430 to 435
    RBP As a standard practice, Directors abstain from voting on matters where they have a material interest. Furthermore, they do not hold any direct or indirect interest in any contract or proposed contract with the Bank, except for those explicitly disclosed under the Directors’ interests in contracts with the Bank. Related Party Transactions of the Bank governed by the Board approved Related Party Transactions Policy. 271 and 272
    There are no arrangements that enable the Non-Executive Directors of the Group and the Bank to acquire shares or debentures of the Bank or its Subsidiaries, other than via the market. N/A
    CA S.217 (2) (d) There are no restrictions on the approval of loans to Directors in the Bank’s ordinary course of business, subject to compliance with all applicable regulations.
    22. Directors’ and Officers’ Insurance CA S.218 During the financial year, the Bank paid an insurance premium for a policy covering the Bank, along with its directors, legal representatives, officers, certain employees, and related corporate entities as specified in the policy.
    As per commercial practice, the policy restricts disclosure of its terms, including the nature of the liability covered and the premium amount.
    23. Environmental Protection RBP The Group and the Bank have not, to the best of their knowledge, engaged in any activity, which was detrimental to the environment. N/A
    Specific measures taken to protect the environment are disclosed in the section on “Environmental Engagement” 127 to 128
    24. Declaration on Statutory Payments RBP Statement of Directors' Responsibility for Financial Reporting – item (h) 264
    25. Events after the reporting period RBP Note 68 to the Financial Statements: Events after the reporting period 470
    26. Going Concern RBP Statement of Directors' Responsibility for Financial Reporting – item (m) 265
    27. Directors’ Responsibility
    for Financial Reporting     		9.2(a) of
    the Direction     		Statement of Directors' Responsibility for Financial Reporting 264 and 265
    28. Appointment of auditors
    and their remuneration     		1.1(r) of
    the Direction     		The Board has adopted a policy of rotation of auditors, once in every six years, in keeping with the principles of good corporate governance and the provisions of the Directions. M/s KPMG was appointed as the external auditor in year 2024 and
    reappointed at the AGM held on March 28, 2025, and the Directors were authorised to fix their remuneration as approved by the shareholders. In addition, External Auditors submit a statement annually confirming
    their independence as required by Section 163 (3) of the Companies
    Act No. 07 of 2007 (as amended) in external audit.
    29. Corporate Governance RBP The Directors declare that – (a) the Bank has complied with all applicable laws and regulations in conducting its business and have not engaged in any activity contravening the relevant laws and regulations. Officers responsible for ensuring compliance with the provisions in various laws and regulations, confirm compliance in each quarter to the BIRMC; (b) they have declared all material interests in contracts involving the Bank
    and refrained from voting on matters in which they were materially interested; (c) they have conducted a review of internal controls covering financial, operational & compliance controls, risk management and have obtained a reasonable assurance of their effectiveness and proper adherence. (d) the Bank has complied with the Section 9.14 of the Listing Rules on Related Party Transactions Review Committee and has made the required disclosures in the Financial Statements and to the market when applicable; (e) the business is a Going Concern with supporting assumptions or qualifications as necessary, and that the Board of Directors has reviewed Corporate/Business plans of the Bank and is satisfied that the Bank has adequate resources to continue its operations in the foreseeable future. Accordingly, the Financial Statements of the Bank, its Subsidiaries and the Associate are prepared based on the Going Concern assumption.
    30. Focus on new regulations RBP Accounting Standards Note 11 to the Financial Statements: New Accounting Standards issued but not yet effective as at the reporting date. Banking Act Directions No. 01 of 2024 on Large Exposures of Licensed Banks The Bank is well poised to meet this regulatory requirement with effect from January 01, 2026. Tax Reforms Note 9 to the Financial Statements: Material Accounting Policies –
    Taxes and Levies     		339 338-339
    31. Sustainability RBP The Bank has been a pioneer in adopting sustainability practices and reporting, integrating sustainability considerations into its business strategy. The Bank initiated reporting SLFRS S1 and S2 requirements, reinforcing its commitment to transparency and responsible business conduct effective from January 01, 2025.
    SLFRS Sustainability Related Financial Disclosures 141 to 171
    32. Human Resources RBP The Bank remains committed to Human Capital Development, implementing effective HR practices and policies to enhance workforce efficiency, effectiveness, and productivity. Further, it fosters collaborative partnerships that enrich both the work and learning environment for employees.
    Specific measures taken in this regard are detailed in the “Report of the Board Human Resources and Remuneration Committee”. 244 and 245
    Embedding Sustainability into Operations 78 to 171
    33. Technology RBP Aligned with our Vision and Mission, technology serves as the foundation
    of our business processes. Every aspect of our operations is driven by
    information technology, enabling us to deliver superior products and
    services to our customers. As a result, our business is now more deeply integrated with technology than ever before, enhancing efficiency,
    innovation, and customer experience.
    Key achievements in this regard during the year are detailed in the
    “Report of the Board Technology Committee”.     		252 and 253
    Embedding Sustainability into Operations 78 to 171
    34. Operational excellence RBP To enhance efficiency and reduce operating costs, the Bank is actively implementing initiatives aimed at policy and process standardisation while optimising the use of existing technology platforms, ensuring streamlined operations and improved productivity.
    35. Outstanding Litigation RBP Based on the Directors' assessment and legal consultation, any pending litigation against the Bank is not expected to have a material impact on
    its financial results or future operations.
    Note 59 to the Financial Statements: Litigation Against the Bank 425
    36. Disclosure on Related
    Party Transactions     		LR 9.14.8
    (1) and (2)     		Note 62 to the Financial Statements: Related Party Disclosures 430 to 435
    LR 9.14.8 (3) Report of the Board Related Party Transactions Review Committee 246 and 247
    LR 9.14.8 (4) Annual Report of the Board of Directors 4 and 5
    37. Annual General Meeting
    and the Notice of Meeting     		CA S.133 and CA S.135 (a) The 57th AGM of the Bank will be held at the Galadari Hotel,
    “Grand Ballroom”, No. 64, Lotus Road, Colombo 01,
    on Tuesday, March 31, 2026 at 2.30 p.m. Notice relating to the 57th AGM of the Bank is enclosed at
    the end of the Annual Report.
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