dfcu Limited's operating income increased by 21% from Shs304 billion in 2020 to Shs369 billion in 2021, according to the dfcu Bank Cheif Executive Mathias Katamba, who attributed the positive growth amidst slowed business activity during the Covid pandemic to the innovativeness of the company.
The financial institution's 2021 results, for instance, show that non-interest income increased by 35% from Shs70bn in 2020 to Shs93bn in 2021, and this, according to Katamba, was because they've been able to develop monetizable solutions for banked Ugandans.
The company's financial results, which were announced Thursday also show that interest expense was reduced by 26% from Shs110bn to Shs82bn, borrowed funds reduced by 12% from Shs217bn to Shs191bn in 2021, net interest income increased by 17% from Shs233bn to Shs273bn, and cost to income ratio reduced to 50% from 63%.
The main drivers of the company's performance were Interest which registered a 3% increase due to deliberate attention to the Retail Business, Trade and Finance also increased by 39%, Digital Channels accounted for over 76% of all transactions.
However, Katamba noted that the company’s performance was majorly impaired by loans, as customers’ businesses were affected by restrictions instituted during the pandemic.
“We achieved a good leap forward on the core metrics with robust growth in total income and continued reduction in operating costs. The pre-provisioning profit i.e. profit before provisions, fair value losses, and tax grew significantly from Shs114 billion in 2020 to Shs190 billion in 2021,” he said.
“The Bank’s overall profit was significantly impacted by the loan impairment charge, resulting from the adverse impact of the Covid - 19 pandemic, the associated containment measures on our customers’ businesses and the impairment of the financial asset. We continued to support our customers, especially those operating in sectors that remained locked down for an extended period, with credit relief and business recovery loans,” he added.
“Looking ahead, we will continue to focus on the growth of our retail business, supporting businesses and individuals in the post covid recovery during 2022, in addition to building resilience in our loan book through rehabilitation and debt recovery programs.”
The company deployed the risk management team to reduce the trading positions by 89% and this helped in avoiding losses in the financial markets.
Net loans and advances to customers reduced by 15.5% due to slow credit growth.
“While the value of loans reduced, the number of borrowers grew significantly by 40% during the period, which demonstrates our commitment to… retail and serving small businesses and individuals to thrive and grow,” he said. Customer deposits also reduced by 12% to Shs313bn due to shedding expensive fixed deposits and focusing on growing current and savings accounts," said Katamba.