Dfcu posts record profit with Crane Bank deal boost

A Dfcu Bank branch on Kampala Road in what was previously Crane Bank’s head office. Dfcu took over Crane Bank in January 2017. Credit: Edgar Batte/Uganda Business News

Dfcu Bank Limited became much bigger after its acquisition of the troubled Crane Bank. Its first full year earnings after the deal show the extent to which the acquisition has helped Dfcu transition into one of Uganda’s biggest three banks.

Dfcu’s revenue in 2017 more than doubled to Shs519.8 billion from Shs257.3 billion in 2016. Interest income increased by 59.8% to Shs350.3bn, driven by a 68.9% rise in interest on loans to Shs242.5bn. The bank’s loan book expanded by Shs499.7bn to Shs1.3 trillion; in 2016 it expanded by only Shs28.4bn.

The biggest increase in revenue was recorded under other income, though, which grew by Shs117.5bn to Shs119.3bn. The gain is most likely due to Dfcu’s bargain purchase of Crane Bank. Last September, Dfcu revealed that the gain on the purchase of the shuttered lender – the difference between the fair market value of Crane Bank’s assets and the price Dfcu paid for it – was Shs121.8bn. The gain is recorded under income.

The bank’s pre-tax profit rose 183.1% to Shs169bn. Its total expenses were Shs350.8bn, rising by Shs153.2bn from 2016. The rise in expenses stems from a 94.7% increase in operating expenses to Shs188.7bn; in addition to usual operating expenses, the figure also includes costs related to the acquisition of Crane Bank. Dfcu’s provision for bad and doubtful debts also more than tripled to Shs48.7bn.

After-tax profit was Shs127.6bn versus Shs46.2bn in 2016. The bank’s income tax expense increased by 208.2% to Shs41.4bn.

Dfcu’s assets also increased significantly, reflecting the acquisition of Crane Bank’s assets. Its total assets increased to Shs3 trillion, 76.4% higher than in 2016. Loans and advances rose 59.9% to Shs1.3 trillion, investment securities increased by 15% to Shs453.7bn, while cash and balances with the central bank increased 105.2% to Shs362.2bn. Property and equipment increased by Shs73.3bn to Shs107.2bn.

The acquisition of Crane Bank, effected in January 2017, added assets worth Shs1.1 trillion to the bank’s balance sheet, Dfcu revealed last year. These included a loan book worth Shs771.2bn, government securities worth Shs158.9bn, and property, plant, and equipment valued at Shs89.1bn. Liabilities, on the other hand, were valued at Shs896.6bn.