Dfcu bank’s net profit more than quadrupled to Shs 114bn for the six months ending June 30 after the acquisition of Crane Bank but analysts remain cautious on whether the bank will maintain the bullish performance years ahead.
Analysts say the bank’s future prospects partly lies in the performance of the economy, which is projected to grow at 5.5% in FY2017/18, up from 3.9% last year driven by efficiency in implementation of public sector investments.
“The harsh business environment continues to be a big drag on the commercial banks profitability demonstrated by rising loan provisions, high cost of doing business among others which have got many bankers wondering about the earning prospects in this financial year,” said Stephen Kaboyo, a financial analyst and managing director at Alpha Capital Partners.
He said as the year progresses, the banking industry is likely to experience restructuring characterised by closure of branches and job losses.
Another analyst working with a brokerage firm told The Independent on August 24 that with a huge asset base, Dfcu’s managers need to position themselves to fit in and grow with the anticipated US$15 billion financing in oil and gas activities for the period 2018-2020.
“It is okay to have huge asset base but it is risky to invest it in a bad economic environment,” the analyst said
Dfcu officials, however, say they are optimistic to maintain the profitability above Shs 100 billion by end of 2017 and beyond after recording a jump in net profit from Shs 23 billion in the first half of 2016 to Shs 114 billion in the same period of 2017.