dfcu Bank flags first-half loss as Crane Bank court battle in London drives up legal costs

KAMPALA — dfcu Limited has issued a profit warning to shareholders and investors, projecting a loss for the first half of 2026 that it attributes largely to the mounting cost of defending itself in the long-running Crane Bank dispute before the English High Court.

In a notice issued under Rule 38(3)(c) of the Uganda Securities Exchange Listing Rules, 2025, the lender said its unaudited results for the six months ended 30 June 2026 would show a loss compared with the corresponding period last year. Management linked the outcome to substantial legal expenses incurred while contesting claims arising from the 2017 transfer of selected assets and liabilities from the collapsed Crane Bank.

The warning marks a sharp reversal from dfcu’s recent trajectory. At its annual general meeting earlier this year, the group reported a four percent rise in net profit after tax to Shs74.9 billion for 2025, supported by a 16 percent increase in operating income, growth in lending and higher customer deposits. Customer loans rose 12 percent to Shs1.265 trillion and deposits grew 15 percent to Shs2.714 trillion, even as directors acknowledged that legal costs tied to the London case were weighing on expenses.

Despite the anticipated loss, dfcu emphasised that its core operations remain stable and that underlying fundamentals continue to improve, describing overall business performance as being on a positive growth path even as exceptional legal costs distort reported results.

The case was filed in 2020 by Crane Bank Limited and several of its former shareholders against dfcu Limited, dfcu Bank and other parties. The claimants challenge the Bank of Uganda’s 2016 intervention in Crane Bank and the subsequent transfer of its assets to dfcu in January 2017 in a transaction reportedly valued at Shs200 billion, alleging that the sale occurred at a significant undervalue and formed part of a broader corrupt scheme involving central bank officials. The claimants, led by Dr Sudhir Ruparelia, are seeking damages exceeding £170 million, equivalent to roughly Shs825 billion.

dfcu has consistently maintained that the claim is without merit and has said it will continue to defend the matter, retaining experienced foreign lawyers for the litigation. The group has previously told shareholders it remains confident in its legal position ahead of the substantive trial, which is expected to begin in London in October 2026 and to run for about 12 weeks.

The rising costs come against the backdrop of a procedural ruling delivered by Deputy High Court Judge Paul Stanley KC, who rejected key elements of dfcu’s attempt to amend its defence. Stanley held that the bank could not treat findings in forensic reports prepared by PricewaterhouseCoopers as established facts without proving them at trial, ruling that while dfcu may refer to the existence of the reports and the regulators’ reliance on them, it cannot present their conclusions as proven.

The court cautioned that incorporating large portions of the reports would broaden the scope of already complex litigation and introduce numerous additional factual disputes, and limited reliance on the PwC material to providing context for the decisions taken by the Bank of Uganda and other regulators. In the same ruling, the court declined an application by the claimants to exclude the PwC reports altogether, allowing them to remain in the proceedings as evidence rather than conclusive proof. dfcu was ordered to meet part of the claimants’ costs.

The dispute continues to generate significant legal expenditure for the Ugandan lender as proceedings advance in London.