dfcu Bank posts Shs9.3 billion profit in 2021

dfcu Bank has announced a net profit of UGX9.3 billion in the year 2021, indicating a 3% growth.

According to the dfcu Bank financial results released on Thursday, March 31, 2022 at Serena Hotel in Kampala, trade made the biggest profit contribution of 39%.

The other contributors were manufacturing and agriculture.

dfcu Bank Chief Executive Officer Mathias Katamba emphasized that agriculture is “our key growth area and so is manufacturing.”

“Within manufacturing, there are different segments. We continued to support manufacturing and agricultural sectors in 2021 and we will continue to because these are key focus areas for the bank,” Katamba said.

Figures show that dfcu Bank cut ‘wastage’ by 26%.

“dfcu Bank delivered strong topline growth with a 21% increase in operating income driven by a 17% increase in net interest income and a 35% increase in non-interest income. We also achieved a 26% reduction in interest expense and improved operational efficiency demonstrated by a significant improvement in the cost to income ratio from 63% to 49%,” Katamba noted.

“dfcu Bank delivered strong topline growth with a 21% increase in operating income driven by a 17% increase in net interest income and a 35% increase in non-interest income. We also achieved a 26% reduction in interest expense and improved operational efficiency demonstrated by a significant improvement in the cost to income ratio from 63% to 49%,”

dfcu Bank Chief Executive Officer Mathias Katamba

He added: “This speaks to the impact we create for people, especially our customers and the impact we create in the communities where we operate in order to deliver value to all our stakeholders. This renewed vision is the thrust that’s going to drive our strategy over the coming years.”

Interest expense reduced by 26% from UGX 110b in 2020 to UGX 82b in 2021. Net interest income increased by 17% from UGX233b in 2020 to UGX273b in 2021.

Non-interest income increased by 35% from UGX 70b in 2020 to UGX 93bn in 2021. Operating income increased by 21% from UGX 304b in 2020 to UGX 369b in 2021.

Cost to income ratio reduced to 50% in 2021 from 63% in 2020. Borrowed funds reduced by 12% from UGX 217b in 2020 to UGX 191b in 2021.

Explaining the results, a statement from the Board of Directors of dfcu Limited underscored that while credit impairments had a substantial impact on earnings, the company demonstrated resilience in 2021 showing continued improvement in most of the top line figures driven by strong income growth and cost control.

Operating income grew by 21% year on year while cost to income ratio improved to 50%, an indication that the company is beginning to reap benefits due to efficiencies derived from its investment in technology and cost optimisation.

The company remained well capitalised with capital ratios of 22.28% and 23.46% for tier one and tier two capital, respectively.

The liquidity position remained strong with an average liquid assets ratio above 36%. With the robust liquidity, strong equity shareholders, healthy capital position and a refreshed five-year ‘customer obsessed’ strategy, the company said it will continue to play its role in supporting the recovery of its customers and their businesses; and is well positioned to seize the emerging opportunities in several sectors.

“We achieved a good leap forward on the core metrics with robust growth in total income and continued reduction in operating costs. The pre-provisioning profit i.e. profit before provisions, fair value losses and tax grew significantly from Shs114 Billion in 2020 to Shs190 Billion in 2021.

The bank’s overall profit was significantly impacted by the loan impairment charge, resulting from the adverse impact of the Covid – 19 pandemic, the associated containment measures on our customers’ businesses and the impairment of the financial asset. We continued to support our customers, especially those operating in sectors that remained locked down for an extended period, with credit relief and business recovery loans,” Katamba said.

Looking ahead, Katamba added: “We will continue to focus on the growth of our retail business, supporting businesses and individuals in the post covid recovery during 2022, in addition to building resilience in our loan book through rehabilitation and debt recovery programmes.”