dfcu Bank approves Shs16.3b dividend after stronger 2025 earnings

Kampala — Shareholders of dfcu Limited have approved a higher dividend after the banking group posted improved earnings for 2025, even as rising loan defaults, higher funding costs and increased operating expenses weighed on profitability.

At the company’s annual general meeting in Kampala on Wednesday, shareholders approved a dividend of Shs21.8 per share, amounting to Shs16.32 billion, up from Shs15.03 billion paid for the previous financial year.

The payout follows a 15 per cent increase in profit after tax by dfcu Bank, the group’s main operating subsidiary, to Shs81.58 billion from Shs71.57 billion in 2024. At the group level, dfcu Limited posted a profit after tax of Shs74.99 billion, compared with Shs72.08 billion the previous year.

Board chairman Jimmy Mugerwa said the bank deliberately prioritised resilience over aggressive expansion in response to a challenging operating environment characterised by elevated funding costs, global trade uncertainty and geopolitical tensions.

“Rather than pursuing growth at any cost, we focused on disciplined capital allocation, prudent liquidity management and careful risk management,” Mugerwa told shareholders.

Despite the improved earnings, the bank’s results point to mounting pressure on asset quality.

Non-performing loans and other impaired assets rose sharply from Shs51.83 billion to Shs84.94 billion, while impairment charges swung from a net recovery in 2024 to a Shs9.95 billion charge last year. Bad debts written off also increased to Shs19.92 billion.

At the same time, the cost of mobilising deposits continued to rise as competition for customer savings intensified across the banking industry. Interest paid on customer deposits climbed by more than 25 per cent to Shs81.04 billion, while interest expenses on borrowings more than tripled to Shs19.81 billion.

Although total group income increased by more than 16 per cent to Shs529.29 billion, higher funding costs and operating expenses meant profit before tax grew only marginally to Shs79.88 billion.

The bank attributed the stronger bottom-line performance partly to a significantly lower tax charge.

Chief executive officer Charles Mudiwa said the bank’s diversification strategy helped cushion earnings against slowing credit growth.

Non-funded income, generated mainly from fees, commissions, foreign exchange trading and digital banking, rose 20 per cent to Shs108 billion.

Foreign exchange and trading income was the standout performer, jumping more than 84 per cent to Shs43.66 billion, supported by increased cross-border transactions and favourable foreign exchange market conditions.

Customer deposits grew 15 per cent to Shs2.74 trillion, while the loan book expanded by 12 per cent to approximately Shs1.27 trillion. Total assets increased to Shs3.74 trillion.

Mudiwa said the bank has entered what it calls the “Reengineering” phase of its transformation programme, focusing on sector-specific lending, digital banking, customer experience and operational efficiency.

He said customers are now transacting more than Shs240 billion every two weeks through dfcu’s digital platforms, reflecting growing adoption of digital banking services.

Beyond its financial performance, the bank highlighted its development programmes, including support to more than 74,000 women entrepreneurs, financing through SACCOs and investment clubs serving over 600,000 members, and health and education initiatives implemented through partnerships with Rotary Uganda and other organisations.

The bank also announced that its Agribusiness Development Centre has been transferred to the dfcu Foundation to strengthen support for farmers and rural enterprises while allowing the commercial bank to focus on its core banking business.