BANKING

DTB profit dips 51 per cent to Sh3.5 billion

Assets however cross Sh400 billion threshold for the first time

In Summary

•The group’s gross non-performing loans rose to Sh22.8 billion during the period, compared to Sh15.9 billion in 2019.

•The additional provisions for bad loans made during the year increased the group’s specific provision coverage ratio to 43 per cent, compared to 33 per cent a year earlier.

DTB bank. /FILE
DTB bank. /FILE

Diamond Trust Bank (DTB) total assets have crossed the Sh400 billion threshold for the first time, rising by 10 per cent to Sh425 billion at the end of 2020.

Regional banking group also recorded growth in customer deposits from Sh280 billion to Sh298 billion over the year.

Even so, the Group’s after- tax profits dipped by 51 per cent to Sh3.5 billion, attributed to the prudent approach it adopted by making stringent provisions of Sh7.3billion against the loan book in 2020.

This is a reflection of the elevated credit risk environment prevalent since the outbreak of the Covid-19 pandemic in March last year.

The group’s gross non-performing loans rose to Sh22.8 billion during the period, compared to Sh15.9 billion in 2019.

The additional provisions for bad loans made during the year increased the group’s specific provision coverage ratio to 43 per cent, compared to 33 per cent a year earlier.

Net interest income dropped marginally by three per cent to Sh18 billion during the year under review.

None-interest income grew by six per cent to Sh6.1 billion.

Whilst income from foreign exchange trading improved, loan commissions and transaction- based fee income suffered from a slowdown in business activity, new lending and waiver of charges on mobile transactions.

The year 2020 will go down in history as one of the most difficult ones faced by businesses around the world
managing director and Group CEO Nasim Devji

During the year, the bank granted repayment holidays to its borrowers, "given the sudden and very drastic cash flow constraints many of them were faced with."

In total, DTB group restructured repayment terms for existing loan facilities amounting to Sh101 billion, representing over 45 per cent of the group’s loan portfolio.

In the face of a very difficult business environment, the Group redoubled its focus on containing operating costs growth during the year, anchoring its position as a Tier 1 bank with one of the lowest cost income ratios in the industry, managment noted in a statement on Thursday.

Net loans advanced to customers grew conservatively from Sh199 billion in 2019 to Sh209 billion.

The pandemic has had a detrimental effect on lives and livelihoods across the Globe and, as with other players in the industry, DTB group has had to navigate through the resulting very challenging business environment, fraught with significantly elevated credit risk, by taking a prudent view and significantly ramping up provisions” managing director and Group CEO Nasim Devji said.

As a prudent measure, DTB’s Board has resolved not to propose any dividends for the year 2020.

“The year 2020 will go down in history as one of the most difficult ones faced by businesses around the world,"Devji said.

The lender has maintained a healthy liquidity ratio of 56 per cent, as  at the end of 2020, remaining one of the most well-capitalised banks in Kenya, with its core capital sitting at Sh48 billion.

Last year, the lender invested more than Sh100 million in several Covid-19 relief efforts region wide.

This included a Sh50 million donation to the Kenya Covid-19 Emergency Response Fund and initiatives to support more than 30,000 economically vulnerable households across East Africa.

Devji  has since expressed optimism about the future.

“As East Africa continues on its march to a digital economy, DTB will leverage on its many strengths and strive to be at the forefront of offering appropriately tailored solutions which not only meet changing consumer expectations, but also provide enriched customer experiences," she noted.