Dfcu Group, parent company of Dfcu Bank, one of the country’s largest lenders by assets, warned Friday its full-year earnings for 2021 will fall by as much as 25 per cent on an increase in loan-loss provisions and the impairment of some assets acquired from Crane Bank.
“The decline was occasioned by an increase in loan provisions made by the company as a result of the impact of Covid-19 on its business customers and the impairment of some loans and advances that formed part of the financial asset acquired by the company in the 2017,” the company said in a statement to the Uganda Securities Exchange.
The fall in net profit will be the second in as many years for the bank. It reported a 67.5 per cent decline in profit for 2020 on government securities losses, a rise in credit-impairment charges, and a drop in fee and commission income. Then, Dfcu attributed its performance to the “impact of the [Covid-19] pandemic and a declining interest rate environment”.
Most banks — twelve out of 23 at the time — reported declines in profits for 2020, including Stanbic, Standard Chartered, and Absa Bank Uganda. Banks blamed the Covid-19 pandemic, as economic activity fell during the lockdowns and clients struggled to service loans. The closure of several sectors and reduction in operating hours also affected income earned from fees and commissions.
“The company remains robust and adequately capitalised,” Dfcu said.
