The first financials released by Dfcu Bank since its acquisition of Crane Bank this January show a rapid rise in the bank’s profits and asset base, developments the company attributes to the transaction.
After-tax profits for the first six months of 2017 rose 389% compared to the same period last year, coming in at Shs114 bn, unaudited results released on Tuesday show. The bank’s total assets in the period increased to Shs3,053bn from Shs1,623.30bn. At the end of 2016, Dfcu’s balance sheet was Shs1,757.72bn.
Total revenue rose 204.33% to Shs255bn compared to Shs83.79bn in the first six months of 2016, while operating expenses increased by 90% to Shs91.44bn. Profit before tax was Shs151.67bn versus Shs30.43bn in the same period last year.
Additionally, the bank revealed that it spent Shs68.31bn on the acquisition of Crane Bank’s current assets. After the acquisition of Crane Bank, Dfcu took out a $50 million loan from a Cape Town-based investment company, Arise, to help it meet short-term capitalisation needs. Arise later converted the loan into a 55% stake.
“We believe that the acquisition [of Crane Bank], which placed dfcu Bank amongst the top three banks in the market in terms of total assets, puts the Group firmly on the path to transforming from a niche bank to a universal bank,” the company said in the release. “Overall we expect the transaction to result in enhanced value to our shareholders through superior financial performance.”
The bank said customer numbers increased by over 50% in the first six months of 2017 from the close of 2016, when it had 239,245 customers. Loans and advances to customers were also up by 72.52%, rising to Shs1,310bn from Shs759bn in the same period last year. Loans and advances at the end of 2016 were Shs842.36bn.
Although Dfcu inherited Crane Bank’s loan book – bad loans played the biggest role in Crane Bank’s fall, Bank of Uganda said in justifying its takeover and subsequent sale – its provisions for bad loans as at 30 June declined compared to last year. Its loan loss provision was Shs11.89bn, down from Shs17.83bn at the close of 2016. It, however, rose by 125% compared to the first half of 2016.
On the other hand, customer deposits increased to Shs1,838.92bn as at 30 June 2017 from Shs982bn last year.
The earnings per share of dfcu Limited, the bank’s holding company which trades on the Uganda Securities Exchange, rose to Shs459 during the first half of 2017 from Shs94 last year, and from Shs91.16 in 2016.
Arise B.V. is dfcu Limited’s largest shareholder with a 55% stake. Other shareholders are CDC Group PLC with 15%, the National Social Security Fund with 5.93%, Kimberlite Frontier Africa Naster Fund with 5.90%, National Social Security Fund – Pinebridge with 1.09%, and SCBM Pictet and Cie (Europe) S.A Blakeney LP with 1.04%.
Dfcu’s share price on the USE closed at Shs758.00 on Tuesday, unchanged from the day’s opening.