DTB Group profits Increase by 11% due to a Larger loan Book

DTB Group reported a 10.9 percent increase in earnings in the first quarter ended March, aided by higher lending and transaction income.

The bank’s net profit in the review period was Sh2.4 billion, up from Sh2.1 billion the previous year.

Total interest income increased by 32% to Sh12.1 billion, owing to higher earnings from ordinary loans and investments in government debt securities.

While DTB’s holdings of government bonds and T-bills decreased by Sh5.8 billion to Sh131.6 billion, its loan book increased by 20.2 percent to Sh270.3 billion.

The company, which is listed on the Nairobi Securities Exchange, is one of the lenders that have decreased their holdings in Treasury securities in favour of increasing their lending to the private sector.

Along with lowering the risk of paper losses faced by holders of fixed-income securities in an environment of rising interest rates, the strategy aims to increase their interest income.

DTB, however, defied the general trend and turned a loss of Sh586.4 million from a year earlier into a gain of Sh753.8 million from the revaluation of its government debt securities.

The bank also benefited from a 59 percent increase in non-interest income, which reached Sh2.8 billion. A number of noteworthy contributors included foreign exchange trading.

DTB joined other lenders who have seen significant growth in this area of their business by seeing its revenue from foreign exchange transactions nearly double to Sh1.4 billion.

As a result of the shilling’s decline and people and businesses stocked up on hard currencies, banks have benefited from the volatility in the foreign exchange markets.

The local currency now costs 138.4 units of the US dollar after losing 15.7 percent of its value over the past year.

As it received more deposits, which increased 17.9% to Sh404.6 billion, DTB saw an increase in interest expenses of 49.1%, or Sh5.5 billion.

In response to an increase in defaults, the bank’s loan loss provisions more than doubled to Sh1.3 billion. Non-performing loans held by the lender rose by Sh5.1 billion to Sh35.1 billion.

The increase in loan loss provisions was one factor in the overall operating expenses’ 50.3 percent increase to Sh5.8 billion. Employee compensation was one of the other items that contributed to the higher costs.

DTB has increased its investment in local expansion, putting into practice its plan to expand in its key markets while also bringing on clients from new economic sectors.

The bank has already opened three new branches in Kiambu town, Nairobi’s Baba Dogo, and Kijabe Street as of March, and will open a total of 24 more in Kenya this year.

With 70 branches so far, the strategy will firmly establish Kenya as its most significant market. DTB also conducts business using a growth and diversification strategy in Tanzania, Uganda, and Burundi.

Physical branches are still considered crucial for attracting new customers and improving service to current customers, despite the recent acceleration in the adoption of digital banking platforms.

“We see branches no longer as just transaction processing centres but, increasingly as centres where our customers can consult and get advice from our staff as well as business meeting points for their use,” DTB’s chairman Linus Gitahi said in the bank’s latest annual report.