State-owned enterprises (SOEs) and companies with a Government stake have long been regarded as a major financial burden on the State, with international institutions such as the World Bank and the International Monetary Fund repeatedly calling for cost reductions and structural reforms to improve sustainability.

Fresh figures released by the Privatization and Corporatization Board (PCB) suggest that meaningful progress is now being made. The PCB’s first quarter financial report for 2025 indicates that SOEs are beginning to rein in costs, strengthen balance sheets and move towards more sustainable operations.

Cost controls lift profits despite revenue decline

According to the report, SOEs recorded total revenue of MVR 13.29 billion in the first quarter of 2025, representing a nine per cent decline compared to the same period last year. Despite the drop in revenue, net profits increased by 10 per cent to MVR 1.76 billion.

This improvement reflects tighter cost controls, operational rationalisation and better financial discipline, rather than revenue expansion.

Commercial SOEs lead performance

Commercially oriented SOEs delivered the strongest performance during the quarter. Maldives Airports Company Limited (MACL) emerged as a strong performer, posting a net profit of MVR 572 million. MACL’s total assets also increased by 13 per cent quarter-on-quarter, reflecting continued expansion in airport operations. Similarly, Housing Development Corporation (HDC) and Maldives Ports Limited (MPL) reported strong profit performances.

Financial institutions continue steady growth

Financial institutions recorded the strongest overall growth among SOEs. Compared to the first quarter of 2024, revenue in the financial sector increased by 12 per cent, while profits rose by six per cent. Assets held by financial institutions grew by 16 per cent over the period.

Maldives Islamic Bank (MIB), in which the Government holds a minority stake, recorded the most significant growth. MIB’s revenue increased by 42 per cent, while profits surged by 55 per cent, highlighting both operational improvements and rising demand for Islamic financial services. Bank of Maldives (BML) also reported an eight per cent increase in revenue.

Assets outpace debt growth

The report shows encouraging trends in SOE balance sheets, with asset growth exceeding debt accumulation. Total SOE assets rose to MVR 205.24 billion in the first quarter, marking a 10 per cent increase year-on-year. In comparison, total debt increased by seven per cent.

The relatively moderate debt-to-asset ratios, particularly among commercially run entities, suggest that these companies retain the capacity to access market financing if required.

Liquidity position shows signs of improvement

Liquidity constraints have long been a concern for budget-supported SOEs. However, the report indicates improvements in the short-term financial positions of several entities.

Liquidity ratios improved significantly at Maldives Marketing and Public Relations Corporation (MMPRC), Fund Management Corporation (MFMC) and Maldives Post Limited.

Overall, the first quarter 2025 financial results suggest that SOEs are making tangible progress in improving efficiency, reducing reliance on Government support and building more sustainable business models. The PCB report indicates that structural reforms within the sector are beginning to translate into measurable financial outcomes, rather than remaining policy intentions on paper.