dfcu Bank has recorded another whooping drop in profits for the second year running. (PHOTO/File) KAMPALA — dfcu Bank who was previously taking Uganda’s market by storm has faced a worse revenue picture in the first six months of the year ended June 30, a situation industry experts believe could have been driven by the exodus of former Crane Bank customers and the current customer mistrust.
The bank which was recently
hit by a huge fraud that involved loss of billions of customers’ money is unable to push up revenue for the second year running and gross earnings seem to be headed for the worst growth record in two years at the end of this year — forcing the lender into another sharp drop in profits and a difficult position to recover.
According to financial figures released last month, the dfcu Bank which had previously recorded continuous growth in profits prior to acquisition of Crane Bank assets, has recorded a 14.4% drop in net profit to UGX35.6bn for the first six months of this year due to a sharp reduction in borrowings, lower recoveries and increased operating expenses.
During the first year of Crane Bank takeover in 2017, dfcu recorded a whooping UGX114bn in net profit for the half year, up from UGX23bn in 2016.
Figures show that loans and advances took a nasal dive from UGX1.42bn in 2018 to UGX1.36bn in 2019.
The bank has maintained a cautious view of lending to small and medium enterprises citing turbulent circumstances in the international financial markets such as Brexit, trade wars, lower growth in China and Europe.
Revenue weakness continues to come from interest earnings – the main revenue line of the bank.
Similarly, customer’s deposits fell from UGX2.0bn to UGX1.99bn during the period under review while the bank’s net operating income grew marginally from UGX146bn to UGX148.5bn, its operating expenses grew by 3% to UGX99.1bn.
This is the second time in a row that the lender is registering a sharp drop in profits following last years 52% decline in net profit to UGX61.7bn.
This worrying situation is attributed to decline in earnings from investment in government securities and huge expenditures in legal battles.
This comes barely a year since the financial institution hired Mathias Katamba as the managing director in 2018 to replace Juma Kisaame, who had served for 11 years.Decelerating profit is however the price the bank is paying for inability to achieve a healthy growth in revenue.This […]