Diamond Trust Bank (DTB) has announced a profit after tax of Ksh6.7 billion for the year ended December 31, 2018.
This has been supported by Net Interest Income (NII) which grew 1.8% y/y to Ksh20.0 billion, coupled with Non-interest Revenue (NIR) that grew 3.0% y/y to Ksh 5.4 billion.
The Nairobi Securities Exchange (NSE) listed bank’s operating income was up 2.0% y/y to Ksh 25.5 billion.
Total operating expenses grew 8.9% y/y to Ksh 11.5 billion attributed to a 5.5% y/y rise in staff costs to Ksh 4.2Bn, while Loan Loss Provisions (LLP) declined 30.7% y/y to Ksh 3.0Bn.
Deposits rose 6.2% y/y, and consequently, the balance sheet grew 4.0% y/y.
The loan book remained depressed (-1.5% y/y) at Ksh 193.1 billion as the investment in government securities increased by 4.3% y/y to Ksh 117.3 billion.
A dividend of Ksh 2.60 has been declared, similar to FY17, which translates to a dividend yield of 1.9%.
Revenue diversification will be key for the bank and it should be keen in supplementing this area of its business. We note that DTB is currently the bank with the lowest level of diversification (NIR/Total Income at 21.3%).
Additionally, revenue growth was muted (2.0% y/y) in FY18 and we expect this to improve in 2019 as the bank reduces CoF to aid in NIM stability. Consequently, we view NIR/Total income will remain depressed in 2019 due to the expected pick up in NII.
We view the decline in NPL as a result of write-offs on the NPL book and expect a conservative strategy to cushion credit risk.
Comments by Genghis Capital Analysts