NAIROBI, Kenya, Mar 26 – Regional banking group Diamond Trust Bank (DTB) total assets crossed the Sh400 billion threshold for the first time, rising by 10% to Shs 425 billion at the end of 2020, with customer deposits growing from Shs 280 billion to Shs 298 billion over the year.
Commenting on the results, Nasim Devji, DTB’s Managing Director and Group Chief Executive Officer said: “The year 2020 will go down in history as one of the most difficult ones faced by businesses around the world. Thankfully, DTB’s underlying resilience, solid brand equity, established market presence in East Africa and loyal customer base built over the last 75 years, have enabled us to absorb the shocks brought about by the pandemic.”
As a reflection of the Group’s inherent resilience, DTB maintained a healthy liquidity ratio of 56 percent at the end of 2020 and remains one of the most well-capitalised banks in Kenya, with its core capital sitting at Shs 48 billion.
DTB invested more than Shs 100 million in several Covid-19 relief efforts region wide.
This included a Shs 50 million donation to the Kenya Covid-19 Emergency Response Fund and initiatives to support more than 30,000 economically vulnerable households across East Africa.
The Bank also granted repayment holidays to its borrowers, given the sudden and very drastic cash flow constraints many of them were faced with.
In total, DTB group restructured repayment terms for existing loan facilities amounting to Shs 101 billion, representing over 45% of the group’s loan portfolio.
In the face of a very difficult business environment, the Group redoubled its focus on containing operating costs growth during the year, anchoring its position as a Tier 1 bank with one of the lowest cost income ratios in the industry.
Net loans advanced to customers grew conservatively from Shs 199 billion in 2019 to Shs 209 billion a year later.
“The pandemic has had a detrimental effect on lives and livelihoods across the Globe and, as with other players in the industry, DTB group has had to navigate through the resulting very challenging business environment, fraught with significantly elevated credit risk, by taking a prudent view and significantly ramping up provisions”, Devji added.
Consequently, the group’s after- tax profits dipped by 51% to Shs 3.5billion last year.
The bank attributed the performance to the prudent approach it adopted by making stringent provisions of Shs 7.3billion against the loan book in 2020, a reflection of the elevated credit risk environment prevalent since the outbreak of the COVID-19 pandemic in March last year.
The group’s gross non-performing loans rose to Shs 22.8 billion during the period, compared to Shs 15.9 billion in 2019.
The additional provisions for bad loans made during the year increased the group’s specific provision coverage ratio to 43%, compared to 33% a year earlier.
Net interest income dropped marginally by 3% to Shs 18 billion in 2020.
DTB’s noninterest income grew by 6% to Shs 6.1billion in 2020.
Whilst income from foreign exchange trading improved, loan commissions and transaction- based fee income suffered from a slowdown in business activity, new lending and waiver of charges on mobile transactions.
As a prudent measure, DTB’s Board has resolved not to propose any dividends for the year 2020.
Expressing optimism about the future, Devji said: “As East Africa continues on its march to a digital economy, DTB will leverage on its many strengths and strive to be at the forefront of offering appropriately tailored solutions which not only meet changing consumer expectations, but also provide enriched customer experiences, truly embedding ourselves in the lifestyles of our customers.”