While an increasing number of specialized microfinance institutions (MFIs) have shown that microfinance can be profitable (usually following years of subsidies for start-up and innovation) and an increasing number of banks have entered the microfinance market, literature and data on the profitability of microfinance in commercial banks are essentially nonexistent. This is due to the limited number of banks that offer microfinance on a commercial basis, the difficulty of obtaining proprietary information on banking operations, and difficulties in accurately costing and measuring the profitability of a specific product within multiservice finance intermediaries. However, if microfinance is to continue to expand and attract private, commercial investors, including banks, the profitability case must be explicitly demonstrated in a variety of institutions and environments. The objective of this case study is to measure the profitability of a microfinance unit related to a private commercial bank, regardless of the business model chosen. Hatton National Bank (HNB) in Sri Lanka was selected as the subject of this case study because, as an Asian commercial bank with microcredit operating as an integrated product line, it provides an organizational and geographic contrast to CREDIFE,1 the subject of the companion case study on profitability written under this project.