Armed with profits, Diamond Trust heads to Zanzibar, Burundi

Friday March 13 2009

By CATHERINE RIUNGU

Diamond Trust Bank is heading for Zanzibar then Burundi after successfully stamping its presence in Kenya, Uganda and Tanzania.

The expansion comes on the back of a year of spectacular growth in Kenya’s banking sector with DTB joining in the party after posting an impressive 52 per cent growth in pretax profit for the year ended December 31, 2008.

During the period under review, DTB Kenya acquired a controlling interest in its Uganda affiliate, a year after its acquisition of DTB Tanzania.

The bank has signed up for a Ksh2 billion ($25.9 million) financing package from the International Finance Corporation, the private lending arm of the World Bank, to boost its expansion and increase lending to small and medium enterprises.

The group plans to open 25 new branches in the region, including the Zanzibar branch, which is due to open immediately.

DTB is an affiliate of the Aga Khan Fund for Economic Development, the economic development arm of the Aga Khan Development Network. Among the bank’s key shareholders are Habib Bank Ltd and the International Finance Corporation.

Equity Bank opened the roll call of record profits when it announced a 111 per cent growth, followed by other banks with equally impressive returns. Only Standard Chartered Bank reported reduced profits.

Like its counterparts, DTB attributes its strong performance to its customer lending portfolio, with a preview of its books showing that income from interest on loans and advances grew by Ksh1.2 billion ($15.6 million) to Ksh3.8 billion ($49.4 million) from Ksh2.6 billion ($33.8 million) in 2007.

The group’s customer deposit base grew by 55 per cent from Ksh29 billion ($376.6 million) in 2007 to Ksh45 billion ($584.4 million) during the period under review.

This positive performance taking up from the previous financial year effectively helped the bank avoid the negative effects of the economic slowdown, especially in the Kenyan market, to post Ksh1.6 billion ($20.8 million) in before tax profits — a 52 per cent growth over 2007.

Treasury estimates showed that the economy may have grown just 2.5 per cent in 2008 due to the effects of the violence triggered by the disputed presidential election results.

DTB’s forex trade portfolio also had a good run over 2008, raking in an additional Ksh298 million ($3.9 million) in earnings compared with the Ksh190 million ($2.5 million) in the previous year.

In terms of individual portfolios at DTB, forex trade posted the largest percentage change, having realised a growth of 156 per cent.

The group asset base grew by 56 per cent to stand at Ksh56.1 billion ($728.6 million); while total group operating income rose to Kshs3.7 billion ($48.1 million) up from Kshs2.4 billion ($31.2 million) realised over the same period in the previous year.

“Based on the year-end results achieved, the board of directors will recommend payment as a first and final dividend of 35 per cent for 2008 and issued and paid up share capital of Ksh652 million subject to withholding tax where applicable”, the company secretary, Habil Waswani, said in a statement.

The official said the share register will be closed from May 29 to June 5, 2009 to enable the pay out of dividends by June 18.

Financial results of its Uganda unit that was previously accounted for as an associate would now be accounted for as a subsidiary following an increase in the bank’s shareholding in Diamond Trust Bank Uganda Ltted from 26.7 per cent to 51 per cent.

The group asset base grew by 56 per cent to stand at Kshs56.1 billion up from Kshs 36 billion; the total group operating income rose to Kshs3.7 billion up from Kshs2.4 billion realized over the same period in the previous year.