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DTB to float 24m shares in Rights Issue

NAIROBI, Kenya, Mar 1- Diamond Trust Bank (DTB) has announced plans to float 24.5 million shares through a Rights Issue.

The bank’s chairman Abdul Samji disclosed on Thursday that the Rights Issue will be offered on the ratio of one share for every eight held although this is subject to the requisite regulatory and shareholder approvals.

The funds will be used to expand its footprint in Africa as it eyes a larger market share.

“The raising of additional capital through the Rights Issue is aimed at funding the bank’s plans to explore opportunities to further strengthen its current presence in East Africa through its subsidiary banks,” Samji said while hinting that they plan to venture in other markets in the region.

The bank has operations in Tanzania, Uganda and Burundi as well as a branch network of 32 outlets in Kenya.

Finer details of the Rights Issue such as the subscription price and the date of the launch will be determined once the board receives the green light from market regulators as well as shareholders during the Annual General Meeting on May 4.

“The board is confident that the shareholders will wholeheartedly support the 2012 Rights Issue as was the case with the 2006 and 2007 Rights Issues, both of which were oversubscribed,” the chairman added.

DTB becomes the second bank after NIC to announce its intention to raise additional capital through this mode. NIC targets Sh2 billion with which it expects to fund its programs.

Samji spoke as the bank released its financial results for the year ended December 2011 where they reported a 16.2 percent jump in profit after tax to Sh2.6 billion.

During the period, customer deposits grew 29.9 percent to Sh85.9 billion while their loan book grew 36.59 percent to Sh71.29 billion. Operating income rose from Sh7.7 billion during the corresponding period in 2010, to Sh9.5 billion.

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And just like many banks, DTB increased its loan loss provisions by 10.5 percent to Sh631 million as the threat of increased default rates became imminent due to the rapid rise in interest rates.

Further, its exposure to government securities reduced from Sh9.07 billion to Sh8.08 billion due to the high interest rate regime.

The board has recommended the payment of a first and final dividend of Sh1.70 per share.

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