By Uganda Vanguard
KAMPALA – Dfcu Bank has recorded a severe drop in profits in the period January to June 2018 according to dfcu bank’s financial statements released on Thursday. For the six month period, the bank made a profit of Shs41.3 billion in the year ended June 30 compared to Shs114 billion posted for the year ended December 31, 2017 making a difference of Shs73 billion.
“The results show a profit after tax of Shs41.3 billion compared to Shs114.1 billion for the same period in 2017. The results for 2017 included a one off bargain purchase of Shs121.8 billion,” the statement read in parts.
In 2017, Dfcu controversially acquired Crane Bank months after Bank of Uganda had taken over the bank. The acquisition of Crane Bank, which had a vast network of branches initially helped Dfcu coast to a Shs127 billion profit for the year that ended December 31, 2017.
According to the results, the drop in profit is as a result of a repayment of $50 million loan to Arise BV, one of the largest shareholders in the bank extended the loan to help recapitalize.
The bank’s loan book grew to Shs1.4 trillion up from Shs1.3 trillion in the period under review.
Dfcu Bank’s 2018 profit falls by 51.6% amidst falling deposits and incomes
- Customers, shun dfcu- Deposits fail to grow, in fact declining by 0.4% from UGX1.987 trillion in 2017 to UGX1.979 trillion in 2018.
- Liquidity squeeze curtails lending; lending grows by a mere 4% from UGX1.334 trillion to UGX1.393 trillion in 2018.
- Assets decline by 4.6% from UGX3 trillion to UGX2.88 trillion
- As a result, dfcu in 2018 experienced a 21% decline in income from UGX519.8 billion to UGX410.6 billion
- Net profit nosedives by 51.6% from UGX127.6 billion to UGX61.7 billion
- Shareholders expected to take a 51.6% fall in dividends as the money set aside for dividends reduces by 51.6% from UGX51 billion to UGX24.7 billion
- This is further pain for dfcu shareholders who have seen the value of their shares fall by 28.8% from UGX970 on 17th July 2018 to the current UGX670 by closed of trading today, March 27th 2019. As a result, shareholders lost wealth, worth UGX212.9 billion.
- This meagre performance does not augur well for holders of dfcu stock as it could trigger a further fire sale of existing shares. Sudden supply of dfcu shares on the market could trigger further price cuts.
- Investment advisors and brokers, Crested Capital- had earlier warned that the dfcu’s one time windfall registered in 2017, as a result of Crane Bank’s acquisition would wane and that earnings would normalise to pre-acquisition levels.