dfcu Bank Posts 45% Surge in Net Profit on Lower Credit Losses and Strategic Fee Growth

Kampala, Uganda | THE INDEPENDENT | dfcu Bank has recorded a robust 45% increase in net profit to Shs 42 billion for the first half of 2024, buoyed by significant reductions in credit losses and strategic cost management.

This marks a substantial rise from Shs 29 billion in the same period last year, highlighting the bank’s successful efforts to strengthen its financial performance.

The bank’s profit growth, a 48% year-on-year improvement compared to the full year 2023, was driven by a combination of factors. Key among them was a 114% reduction in net loan loss provisions, which shifted from a loss of Shs 50 billion in June last year to a credit of Shs 6 billion in June this year.

This sharp turnaround, the lender said, was achieved through proactive management strategies aimed at reducing non-performing loans, diversifying the loan portfolio, and minimizing concentration risk. As a result, the non-performing loans ratio was slashed to 5.2% from 15.2% in the previous year.

This comes as Stanbic Bank Uganda; a unit of South Africa’s Standard Bank Group recorded a 17.6% increase net profit to Shs 235.5 billion for the first half of 2024 on the back of robust revenue growth and improved asset quality despite operating in a challenging economic environment characterized with high inflation.

dfcu Bank’s asset base also saw a modest increase, growing by Shs 6.5 billion to Shs 3.16 trillion in June 2024, up from Shs 3.15 trillion in December last year. This growth was primarily driven by a 4% increase in investments in government securities, reflecting a cautious approach to credit risk during the first half of the year.

The Bank maintained a stable deposit base at Shs 2.32 trillion as of June 2024, with management focusing on balancing the deposit mix to keep interest expenses in check.

In addition, shareholders’ funds grew by 6%, rising from Shs 644 billion in December 2023 to Shs 684 billion in June 2024. This increase was largely attributed to higher retained earnings at the half-year mark.

The bank remains well-capitalized, with core and total capital ratios at 29% and 30%, respectively. Its liquidity position continues to be strong, with an average liquid assets ratio exceeding 40%.

With such a solid financial foundation, dfcu Bank is well-positioned for future growth and enhanced financial performance, according to management.