DTB raises stake in Uganda unit with $10.9 million injection

Thursday May 5 2016

A customer at a Diamond Trust Bank ATM machine in Nairobi. DTB Group has invested an additional Sh1.1 billion in its Ugandan unit. PHOTO | SALATON  NJAU

A customer at a Diamond Trust Bank ATM machine in Nairobi. DTB Group has invested an additional Sh1.1 billion in its Ugandan unit. PHOTO | SALATON NJAU  

By VICTOR JUMA

Diamond Trust Bank (DTB) Group has invested an additional $10.9 million in its Ugandan unit, raising its stake in the subsidiary.

The Nairobi Securities Exchange-listed firm participated in DTB Uganda’s rights issue in April that raised a total of $13.9 million.

DTB, which previously held a 56.97 per cent stake in the subsidiary, did not say to what level its equity had jumped after the cash call.

The move comes soon after the lender invested a similar amount to participate in a rights issue at its Tanzanian subsidiary where it acquired an extra 2.75 per cent stake after taking up shares worth $1.7 million left by a section of minority investors.

This saw its interest in the subsidiary rise to 65.68 per cent from the previous 62.93.

“The reason for the investments is to allow the subsidiaries to grow and meet higher capital requirements that have been announced in the two markets,” said Alkarim Jiwa, the chief financial officer at DTB.

The company is the latest Kenyan multinational bank to raise its investment in regional subsidiaries, with NIC Bank also disclosing it provided $3.7 million of capital to its Ugandan unit last year to boost its capital ratios.

The capital injections will see DTB claim a larger share of the subsidiaries’ assets and future earnings, with the company keen on growing its presence in the East African region.

DTB plans to expand to other African markets in the next three years, eyeing an entry into Rwanda, South Sudan, Democratic Republic of Congo, Mozambique and Madagascar.

“This transformational journey is anchored on DTB evolving as a regional, omnichannel bank that is centred on providing a seamless banking experience to its customers,” the bank said in its latest annual report.

DTB Tanzania made a net profit of $9.3 million last year while that of Uganda stood at $8 million in the same period.

The lender’s Burundi unit had a net profit of $550,202, with the regional units boosting DTB’s total earnings.

The parent company posted a 15.6 per cent growth in net profit for the year ended December, helped by higher income from lending and transaction charges.

Note: $1 = Ksh100.690 

Advertisement