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How Crane Bank Acquisition Has Made dfcu Uganda’s 2nd Top Bank

Crane Bank

Crane Bank acquisition by dfcu on February 27, 2017 at a paltry fee of Shs200bn has elevated it to the table of big boys in the banking industry, Business Focus exclusively reports.

Before the acquisition, dfcu wasn’t among the top five banks in Uganda. It was competing for the 6th and 7th position on key performance parameters.

According to the 2017 banking results obtained by this site, dfcu is now the 2nd top bank in Uganda. This means that it is now one of the systemic banks in the country just like Crane Bank was before its controversial takeover and sale.

A systemically important bank is one whose failure might trigger a financial crisis. They are colloquially referred to as “too big to fail”.

After acquiring Crane Bank, dfcu recorded an impressive Shs127.6bn net profit in the year ended 31 December 2017, up from Shs46.2bn registered in 2016. This means that the profit increased by a record Shs81.4bn.

This makes it the 2nd most profitable bank in Uganda after Stanbic Bank.

Stanbic Bank Uganda made Shs200bn net profit in 2017, up from Shs191bn in 2016.

Further, dfcu is now the 2nd largest bank in Uganda in terms of assets after Stanbic going by the 2017 results.

dfcu bank’s total assets increased to a record Shs3 trillion, up from Shs1.7 trillion in 2016.

This possibly explains why Crane Bank shareholders argue that Bank of Uganda’s ‘giveaway’ of their bank to dfcu at Shs200bn was way below the value of the bank’s assets which they put at Shs1.3 trillion.

Additionally, riding on Crane Bank acquisition that brought in more high net customers, dfcu bank’s loans advanced to customers increased to Shs1.3 trillion, up from Shs834.8bn in 2016. Under this category, dfcu is still second to Stanbic.

dfcu’s  customer deposits also increased to Shs1.98 trillion in 2017, up from Shs1.13 trillion a year earlier.

Late last year, dfcu indicated that certain assets and liabilities acquired from Crane Bank had been successfully integrated into their operations, a development that has seen the bank become neck and neck with Stanbic Bank.

The bank’s shareholders will soon be smiling to the bank after proposed dividends increased to Shs51bn, up from Shs18.5bn in 2016.

As of October 2017, the major shareholders of dfcu bank are;  Arise BV (majority shareholder with 58.71% ownership), CDC Group of the United Kingdom (9.97%), National Social Security Fund (Uganda)-7.69%, Kimberlite Frontier Africa Naster Fund (6.15%), SSB-Conrad N. Hilton Foundation (0.98%), Vanderbilt University (0.87%) and Blakeney Management (0.63%).

Others are Bank of Uganda Staff Retirement Benefits Scheme (0.59%), Retail investors (11.19%) and two undisclosed Institutional Investors (3.22%).

dfcu shareholders are not only smiling about increased profitability and dividends, but they must be jubilating silently for getting Crane Bank at such an unbelievable fee of Shs200bn that has made their bank the 2nd top bank in Uganda.

The top five banks in Uganda now are; Stanbic, dfcu, Standard Chartered Bank, Centenary and Barclays.

 

 

 

 

Taddewo William Senyonyi
https://www.facebook.com/senyonyi.taddewo
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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