dfcu Limited has registered an impressive performance in the first six months of 2018, with the Group saying that the outlook for the remaining period to close the year is positive.
According to dfcu’s consolidated results released on Friday, the bank’s profit for the 6 months ended 30 June 2018 normalised following the integration of the acquired net assets of Crane Bank Limited (In Receivership).
The results show a profit of Shs41.3bn compared to Shs114.1bn for the same period in 2017.
Kate K. Kiiza, dfcu’s Chief Finance Officer explained the factors behind the reduction in profits.
She revealed that as per the requirements of International Financial Reporting Standard (IFRS) 3-Business Combination, dfcu Group was required to carry out a fair valuation of the Crane Bank assets acquired and the liabilities assumed.
Kiiza said the results for the period ended 30 June 2017 included a one off bargain purchase of Shs121.8bn.
It should be noted that on 27 January 2017, dfcu Limited’s wholly owned subsidiary, dfcu Bank Limited acquired certain assets and assumed certain liabilities of Crane Bank Limited (in receivership). dfcu Bank Limited was able to successfully integrate the acquired assets and liabilities into its business operations.
“The bargain purchase is required to be amortised over a period of up to 5 years and hence the 2018 results include an amortization charge of Shs12 billion in respect of this item,” Kiiza said, adding that every month, Shs2bn is dedicated towards the bargain purchase of Crane Bank.
However, dfcu’s interest expense reduced by 17% to Shs53.42bn in June 2018, from Shs64.32bn in 2017 attributed mainly to the repayment of the US$50m bridging facility acquired in 2017 and other obligations.
William Sekabembe (in featured photo), the Chief of Business & Executive Director at dfcu bank revealed that the dfcu Ltd acquired the US$50m bridging loan in 2017 in order to raise its capital as required in order to acquire Crane Bank.
He noted that the loan has fully been settled by the bank’s shareholders through the rights issue that was oversubscribed, a thing he said shows confidence they (shareholders and Ugandans) have in the bank.
Impressive results
Away from profits, the bank registered positive results in all key performance parameters.
Customer deposits grew by 10% to Shs2.02 trillion in June 2018 compared to Shs1.83 trillion over the same period in 2017.
“This was mainly driven by our ongoing digitization program and customer confidence in our brand,” Sekabembe said.
The Group’s asset base remained stable Shs3 trillion as at 30 June 2018. The loans and advances to customers continued to grew by 9% which is above market average for the period. Loans advanced to customers increased to Shs1.42 trillion in June 2018, from Shs1.31 trillion in June 2017.
Shareholders’ equity
dfcu Group’s equity increased significantly by 52% to Shs552.1bn in June 2018 from Shs363.7bn in June 2017.
Sekabembe said the increase was driven by the successful rights issue and retained profits.
“This is an indication of the confidence the shareholders have towards the Group,” he said.
Top 5 shareholders of dfcu Limited
| Shareholder | Percentage |
| Arise B.V*** | 58.71% |
| CDC Group Plc | 9.97% |
| National Social Security Fund | 7.46% |
| Kimberlite Frontier Africa Master Fund | 7.34% |
| SSB Russel Investment Company Plc Fund | 1.71% |
***Arise B.V is a consortium of Norfinance, FMO and Rabo Development BV.
Operating expenses & Loan Impairment
Total operating costs grew by 6% during the 6 months period to 30 June 2018 compared to same period in 2017.
“This increase was mainly attributed to two major items: the amortization of the bargain purchase (Shs12bn) and continued investment in the digital infrastructure in line with our strategic aspirations. If adjusted for the amortization, the overall Cost: Income ratio would be 58%,” Sekabembe said.
He added that there was a marked improvement in the portfolio management resulting in the reduction in the non-performing assets and related provisions. dfcu’s NPLs stand at 5% which is considered not risky by the Bank of Uganda.
Why dfcu acquired Crane Bank
Sekabembe said they don’t regret acquiring some assets of Crane bank as well as assuming some liabilities, noting that they made research before taking a final decision.
“We wanted to grow our retail position while at the same time retaining our SME position,” he said, adding: “dfcu group is very strong; we have strong shareholders who are committed to our vision of seeing dfcu become the leading bank in Uganda.”
Speaking about the outlook for the remaining part of the year, Sekabembe said it is positive because inflation is contained; economy is recovering supported by the rebounding of private sector, good rains and the gaining of the Uganda Shilling in recent months.
