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Q&A: We Are More Focused Than Ever To Win Big Market Share By Prioritizing 8 Key Sectors -dfcu Bank CEO

Charles M. Mudiwa, the Chief Executive Officer, dfcu Bank

dfcu bank has announced its audited financial results for the year ended 31st  December 2023, indicating a growth in customer numbers, transaction volumes, fees and commissions.

The results show that dfcu bank recorded a net profit of Shs34.03bn in 2023, up from Shs30.64bn in 2022.

The results further  indicate that dfcu bank’s total assets almost remained unchanged at Shs320 trillion in 2023, from Shs3.28 trillion recorded a year earlier.

The Company also recorded a 1.5% increase in  total interest income from 345 billion to 350  billion Shillings and a 12% increase in non-funded income from 86 to 97 billion Shillings  due to a significant recovery on the fair value asset, which resulted in a 4% increase in total income for the year from Shs431 to Shs449 billion.

In this interview, Charles M. Mudiwa, the Chief Executive Officer at dfcu Bank, talks about the facts behind the figures, revealing that their refreshed strategic direction galvanized efforts to propel the Bank forward. He also talks about the eight key sectors that will help dfcu bank win more market share.

Q: What key developments in the operating environment impacted the Bank during the year?

A: Global trends continued with the push towards de-dollarization with international growth  declining by 0.4% due to continued geo political tensions in Europe and the Middle  East.

Domestic growth remained strong during the year registering a 5.3% GDP growth for the financial year 2022/2023 and growth for the financial year 2023/2024 is projected in the range of 6.5% to 7% supported by the recovery in external demand as well as the low inflationary environment.

Q: How did you position the Bank to navigate  and respond to these developments?

A: During the year, we refreshed our strategy to  adapt to the dynamic shifts in the operating environment and ambitions of our stakeholders.

The refreshed strategy dubbed, “Fired-Up” is a rallying call towards achieving our purpose  of “Transforming Lives and Businesses in Uganda” and our goal “To sustainably grow Stakeholder value with Innovative Solutions, inclusivity, and Empowered People”.

The purpose of the strategy refresh was to reaffirm our institutional goal, clarify where we play and how we shall win, define our digital and technology priorities and show the value drivers that will enable us to achieve improved financial performance and social economic environmental impact.

Q: What is the “Fired-Up Strategy” all about?

A: The strategy is meant to position dfcu Bank as the financial institution of choice for Ugandan businesses. Our strategy emphasizes eight (8) economic sectors which include Agriculture, Manufacturing, Infrastructure & Energy, ICT, Trade & Business, Public Sector, Financial Institutions and Education & Health.

These sectors fall into the Bank’s existing customer segments which are Corporate & Institutional Banking, Commercial Banking, Enterprise Banking and Personal Banking.

We believe that we will see positive changes  from implementing ‘Fired Up’, for us, our shareholders, and our customers. We are now more focused than ever to stabilize and win market share, reorganize for effectiveness, and enable transformation through operational efficiency.

It’s important to understand that our ‘Fired Up’ strategy is hinged on who we are as  an institution – our values and culture and how we uphold them.

Q: In what ways is dfcu Bank enabling sustainability?

A: In our commitment to fostering sustainable development within the communities we serve, dfcu Bank has continued to implement initiatives through various programs such as our Agribusiness Development Centre (ADC), Women in Business program, Rising Woman Program, Investment Clubs, and partnerships with diverse stakeholders and governmental bodies.

Throughout the year, we successfully graduated over 200 entrepreneurs via our Business Accelerator program, specifically designed to empower women-led SMEs and agribusinesses. Additionally, we provided fully funded exposure tours to Nairobi, Kenya, for more than 60 women who completed the Rising Woman mentorship program, enabling them to enhance their businesses significantly.

Our strategic focus on key agricultural value chains including coffee, cocoa, bananas, cereals, oilseeds, dairy, and livestock has resulted in the training of over 28,000 smallholder farmers and beneficiaries. These programs, facilitated through our Agribusiness Development Centre, encompass a wide range of activities such as training, capacity building, price risk management for agricultural commodities, as well as general financial management and governance support.

Q: What were the key highlights for the year from a financial performance standpoint?

A: We maintained a strong capital position to cushion against the key risks in the bank’s operating environment. The core capital ratio improved by 3.2% from 25.6% in 2022 to 28.9% in 2023 and the total capital ratio also improved by 3% from 26.5% in 2022 to 29.5% in 2023 which is well above the regulatory limits of 13% for core capital and 15% for total capital.

The Company recorded a 1.5% increase in total interest income from 345 billion to 350 billion Shillings and a 12% increase in non-funded income from 86 to 97 billion Shillings  due to a significant recovery on the fair value asset, which resulted in a 4% increase in total income for the year from 431 to 449 billion Shillings.

Interest expenses increased by 24% from 74 to 92 billion Shillings driven by a rising cost of deposits with the industry average time deposits rate going up by 1.2% from 10.7% in 2022 to 11.9% in 2023.

The Bank continued to exercise a cautious approach to credit extension which resulted in a 17% reduction in the loan book.

However, the total number of borrowers continued to grow, increasing by 19% as the  Bank expanded its credit outreach to more households across the country.

The concerted effort put in place to manage credit risk led to the impairment of loans and advances to customers reducing by 6% from 88 to 83 billion Shillings.

Q: What were some of the key drivers of the performance of the company?

A: We doubled our active customer base through participation in the Parish Development Model (PDM) program where the government is our key partner.

This led to a 103% increase in the total number of customers, a 17% increase in transaction volumes and a 33% uptake of  our digital banking offerings, especially mobile banking.

We have a network of 54 branches spread across the Country. During the year, we increased our agent banking footprint by 15% to 2,015 outlets. We also deployed 78 deposit-taking ATMs to offer added convenience to our customers.

Q: dfcu is making 60 years of existence in 2024, what key milestones has the Company achieved?

A: dfcu was established in 1964 by the Government of Uganda and Commonwealth Development Corporation (CDC) as the Development Finance Company of Uganda, to provide long term financing to local business enterprises. The Company is one of a handful of institutions that withered the storms of the 70’s and early 80’s when the country went through a difficult period and has been one of the key cornerstones in Uganda’s financial services sector.

dfcu has achieved many milestones over the years such as pioneering into the leasing business in 1999, being listed on the securities exchange in 2004, bringing on board strategic partners in the shareholding i.e. Rabobank, Arise and IFU  and making bank acquisitions in 2000, 2015 and 2017 that promoted and supported stability of the financial sector in Uganda.

Therefore, we not only celebrate the longevity, stability and resilience of the Company, but  more importantly celebrate a rich heritage of supporting local businesses and households across the country over the years to deliver social economic transformation.

Q: What can customers and stakeholders expect from dfcu going forward?

We are committed to building on our strong foundation and delivering even greater value through future ready innovations in our products and services, a focus on enhancing customer experience and a dedication to winning market share.

We strive to exceed expectations and remain a trusted partner for all your banking needs.

We appreciate the continued support from all our customers and stakeholders over the year and we ask you to journey with us as we strive towards the achievement of our purpose to “Transform Lives and Businesses in Uganda.”

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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