Diamond Trust Bank (DTB) reported stronger earnings for the nine months ended September 2018, with net profit rising 10.7 per cent to Sh5.2 billion from Sh4.7 billion a year earlier.
The lender said the improvement was driven mainly by higher income from government bonds and a lower charge for bad loans. Treasury income increased to Sh9.7 billion from Sh8.7 billion after DTB lifted its holdings in government securities to Sh98.6 billion from Sh84.3 billion.
Provisioning for bad debt fell by nearly Sh500 million to Sh2.3 billion, helping keep total operating expenses at Sh10.8 billion. The reduction came as gross non-performing loans eased by Sh240.2 million to Sh16.3 billion.
DTB’s loan book inched up to Sh197.6 billion, but interest income from lending declined by Sh249 million to Sh16.5 billion, pointing to tighter margins. Interest expenses rose 3 per cent to Sh11.5 billion, partly because customer deposits climbed 6.4 per cent to Sh282.1 billion.
The bank also said non-interest income, including fees and commissions, rose 6.3 per cent to Sh4.1 billion. Its subsidiaries contributed Sh830.2 million in consolidated net earnings, up from Sh731.2 million in the same period the previous year.
DTB said banks could benefit from the removal of the minimum interest payable on interest-bearing accounts. Under the former rule, such accounts had to earn at least 70 per cent of the Central Bank Rate, which meant a floor of 7 per cent for most of the period the law applied.
The lender has expanded across local and regional markets through acquisitions and greenfield ventures. In August 2017, it merged its Kenyan banking operations with Habib Bank in an all-stock transaction. Habib received 13.2 million DTB shares, lifting its stake in the Nairobi Securities Exchange-listed lender to 16.1 per cent from 11.9 per cent. DTB also increased its holding in its Ugandan subsidiary to 67 per cent from 62 per cent after taking part in a rights issue last year.
