Diamond Trust Bank profit growth of 22% could be an indicator of a recovering economy

Diamond Trust Bank Uganda ATM Machine. Courtesy Photo
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Diamond Trust Bank Uganda has registered a 22 percent growth in its profits before tax in 2018 compared to the previous year. According to the audited results released last week, the bank’s profits before tax in the last financial year grew to Ugx18.45 Billion compared to Ugx15.12 the previous year.

Industry watchers say the bank’s
positive results could be an indicator that the sector and the economy as a
whole is on recovery path after several years of slowdown. The news comes with
a sigh of relief to Uganda’s banking industry which is on a recovering trail from
the hard economic times experienced in the previous year.  Commercial banks have now started to record
surge in profits amid drops in Non-Performing Loans (NPLs).

DTB’s financial statements
indicate that the increase in profit was mainly due to prudent management that
saw the reduction in Non-Performing Loans (NPLs) from Shs40bn in 2017 to
Shs27bn in 2018. This means NPLs reduced by Shs13bn.

Available
statistics from the Ministry of Finance shows that commercial banks recorded
double digit growth in net profits in financial year 2017-2018, with huge
reductions in their NPLs. However, financial analysts remain cautious arguing
that it is early days before banks can start celebrating about getting back on
their feet.

The bank also saw bad loans
written off reduce to Shs26.27bn, down from Shs35.7bn recorded in 2017. The
bank’s total expenditure also reduced to Shs145.14bn down from Shs157bn.

However, DTB’s total income
reduced to Shs163.59bn in 2018, down from Shs172.2bn recorded a year earlier.

The results also show that the
bank was cautious with its lending; loans advanced to customers reduced to
Shs534.18bn, down from Shs623bn in 2017.

Customer deposits also slightly
reduced to Shs1.14 trillion down from Shs1.16 trillion recorded a year earlier.

The bank’s total assets increased
to Shs1.6 trillion up from Shs1.54 trillion in

2017.

The bank’s conservative approach which
resulted to low loan growth also meant that deposits dropped marginally by 2
percent.

Due to prudent fund management, Net
Interest Income of the Bank grew by 4% from UGX 92.34 bn to UGX 96.18 bn. Operating
income has also grew by 5% to UGX 128.55 bn from 122.83 bn the previous year

Retained earnings increased by 45 % from
UGX 79.68 bn in 2017 to UGX 115.62 bn in the last financial year. 

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