Uganda’s second biggest bank dfcu’s consolidated profit for the 6 months ended 30 June 2018 normalised following the integration of the acquired net assets of Crane Bank Limited (In Receivership).
The results show a profit of Shs 41.3 billion compared to Shs 114.1 billion for the same period in 2017. The results for the period ended 30 June 2017 included a one off bargain purchase of Shs 121.8 billion. The bargain purchase is required to be amortised over a period of up to 5 years and hence the 2018 results include an amortization charge of Shs 12 billion in respect of this item.
On 27 January 2017, dfcu Limited’s wholly owned subsidiary, dfcu Bank Limited acquired certain assets and assumed certain liabilities of Crane Bank Limited (in receivership). dfcu Bank Limited was able to successfully integrate the acquired assets and liabilities into its business operations. As per the requirements of IFRS 3-Business Combination, dfcu Group was required to carry out a fair valuation of the assets acquired and the liabilities assumed. The fair valuation exercise resulted into a fair value gain of Shs 121,850 million that was recognized in the results for the 6 months ended 30 June 2017. In order to comply with the IFRS standards, dfcu Group has to amortize the gain over an average period of 5 years. This amortization has been included in the results for the 6 months ended 30 June 2018.
Interest expense: The interest expense reduced by 17% from Shs 64,317 million in 2017 to Shs 53,426 million in 2018 attributed mainly to the repayment of the bridging facility and other obligations.
Operating expenses: Total operating costs grew by 6% during the 6 months’ period to 30 June 2018 compared to same period in 2017. This increase was mainly attributed to two major items: the amortization of the bargain purchase (Shs 12 billion) and continued investment in the digital infrastructure online with its strategic aspirations. If adjusted for the amortization, the overall Cost: Income ratio would be 58%.
Loan Impairment: There was a marked improvement in the portfolio management resulting in the reduction in the non-performing assets and related provisions.
Total assets: The Group’s asset base remained stable Shs 3 trillion as at 30 June 2018. The loans and advances to customers continued to grow by 9% which is above market average for the period.
Customer deposits: Customer deposits grew by 10% over the period under review, mainly driven by the ongoing digitization program and customer confidence in the brand.
Shareholders’ equity: dfcu Group’s equity increased significantly by 52% to Shs 552.1 billion in June 2018 from Shs 363.7 billion in June 2017. The increase was driven by the successful rights issue and retained profits – an indication of the confidence the shareholders have towards the Group.