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But loans and advances to customers reduced by 16%
Kampala, Uganda | THE INDEPENDENT | dfcu Bank has reported a 56% improvement in net profit to Shs29.3bn in the first six months to June.30 driven by a reduction in loan impairment.
The lender’s financial results released on Aug.24 show continuous growth in performance owed to aggressive loan collections and recoveries and intensified portfolio management that enabled it to deliver a 33% reduction in loan impairment and advances.
The results further indicate that the bank booked new business and grew its non-funded income by 25% with the mass customer acquisition done over the period.
On the balance sheet side, the lender’s liquid assets grew by 20% to Shs1.9tn in the first six months of 2023 from Shs1.5tn in the same period of 2022.
Growth in liquid assets was boosted by a 2% increase in customer deposits, an 8% growth in shareholders’ equity, and a 16% reduction in loans and advances.
Overall, total assets grew from Shs3.2tn in the first six months of 2022 to Shs3.3tn in the same period this year.
Key to note is that whereas loans and advances to customers reduced by 16% to Shs1.1tn in the first six months of 2023 from Shs1.3tn in the same period last year, the total number of borrowers served grew by 11% over the period as the bank increased its lending to individuals and businesses across the country.
Operating expenses grew from Shs85bn in the first half of last year to 114bn in the same period of 2023 – signaling to management to further cut spending to drive the profitability of the business.
Well capitalized
Meanwhile, the bank’s executives said the business is well-capitalized and met the new capital requirements by the central bank without the need for new capital from the shareholders.
“As a company, we are committed to delivering shareholder value and paid dividends to shareholders after the recently concluded Annual General Meeting (AGM),” Charles M. Mudiwa, chief executive officer said, “We thank our shareholders for making the time to attend the AGM which was held virtually and all the relevant information was posted on our website.”
Besides financing large players in key economic sectors, dfcu continues to support Uganda’s economic transformation through support of national programs such as the Parish Development Model to drive economic growth at the household level according to Mudiwa.
“We remain a strong player in the agri-business space through strategic partnerships with key players such as Rabo Foundation, MasterCard, and our Agribusiness Development Centre (ADC),” he added.
Through these partnerships, the bank has provided access to finance for smallholder farmers, supported women in business, and accelerated small and medium enterprise growth.
Broadly, Mudiwa said, the first half of the year was marked by consistent improvement in the operating environment with inflation and other economic indicators trending positively, impacting the bank’s customer acquisition which grew by over 50%.
He also said, there was an uptick in cyber-related risks. “We enhanced our risk management capabilities and improved our operating efficiencies to deliver a seamless customer experience,” Mudiwa said.
Looking ahead, Mudiwa said the lender’s strategy is hinged on its purpose which is to “transform lives and businesses in Uganda”.
“We shall play in key sectors of the economy through our business segments in the areas of corporate and institutional banking, and retail banking through sector specialization, customer relationships, being digital and data-driven, and most importantly driving a performance culture,” Mudiwa said.
He added: “We will deliver greater customer and employee engagement, manage business risks, and ultimately deliver sustained financial performance.”
