Dfcu bank’s latest financial statement shows a drop of 14.4 per cent in net profit to Shs35.6 billion for the first six months of this year due to a sharp reduction in borrowings, lower recoveries and increased operating expenses.
This contrasts sharply with the earnings of the same period of 2017 after the Bank of Uganda handed over former Crane Bank assets to Dfcu bank, contributing to Shs114 billion in net profits, up from Shs23 billion in 2016.
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Figures show that loans and advances slightly increased to Shs1.42 billion from Shs1.36 billion in first half of 2019.
The financial statement shows 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.
Meanwhile, customer’s deposits dropped to Shs1.99 billion from Shs2.0 billion during the period under review. The bank’s net operating income grew marginally from to Shs148.5 billion from Shs146 billion while its operating expenses grew by 3 per cent to Shs99.1billion.
This is the second time in a row that Dfcu bank is recording a sharp decline in profits following last year’s 52 per cent slump in net profit to Shs61.7 billion.
The bad business 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 recruited Mathias Katamba as the Managing Director in 2018 to replace Juma Kisaame, who had served for 11 years and was crucial in the acquisition of Crane Bank Limited.
Dfcu bank took Uganda’s banking industry by surprise when it took over assets of Crane Bank Limited but the latest analysis, according to experts could be attributed to the exit of former Crane Bank customers and the current customer mistrust.
Dfcu bank has of recent been hit by fraud that involved loss of billions of customers’ money.