Dfcu Bank has reported a large rebound in profitability helped by strong growth in fees and commissions income, with the company’s results boosted further by a drop in operating expenses.
The bank made a profit of Shs74.8bn in 2019, 21.2% higher than a year earlier. Net income in 2018 declined by 51.6% to Shs61.7bn after a gain on Dfcu’s bargain purchase of Crane Bank in 2017 — reported at Shs119.3bn — was moved from earnings to the balance sheet .
Dfcu Bank saw profit before tax rise 20.4% to Shs101.5bn, thanks in large part to a reduction in operating expenses and loan loss provisions, and an increase in fees and commissions income.
The bank’s income rose 1.7% year on year to Shs417.4bn, up from a decline of 21% in 2018. Fees and commissions income was the largest contributor to income growth, increasing by 27.6% to Shs65.2bn.
Net interest income increased to Shs229.9bn, 3.2% higher than a year earlier, driven by a 7.1% decline in interest expenses to Shs97.6bn. Interest income was down 0.1%, reflecting a 2.5% fall in interests on loans and advances to Shs253.8bn. Interest expenses on borrowings fell 18.5%, while interest expenses on customer deposits were down by 3.3% to Shs76.2bn.
The bank’s expenses fell by 3.2% from a year earlier to Shs315.8bn. A reduction in operating expenses and loan loss provisions was responsible for most of the decline; operating expenses reduced by 4.4% to Shs193.2bn, while loan loss provisions fell 35.8% to Shs14.7bn.
Dfcu Bank’s income tax expense for 2019 was Shs26.7bn, an increase of 18.2% from the previous year.
