Diamond Trust Bank Kenya Ltd (DTK) has reported its profit increased 11.5% year-over-year (or YoY) to Ks5.3 billion for the nine months ending September 2016. Investing in government securities and overall growth of the loan book backed the earnings growth, the bank said.
The bank’s net interest income, also known as net interest revenue, rose 35% YoY to Ks14.7 billion. Interest income from lending to government was Ks6.9 billion, indicating a sharp increase of 132% YoY. The bank more than tripled its holding of government securities to K74.2 billion in the latest nine months period compared to the same period last year.
On the other hand, non-interest income increased 9.1% to Ks3.7 billion.
Loan book expands
Diamond Trust Bank appears to be seeing early benefits of the interest rate cap as indicated by growing demand for its loans. The company said loan book expanded by Ks9.3 billion over a year ago period to Ks181.6 billion.
Diamond Trust Bank appears to be seeing early benefits of the interest rate cap as indicated by growing demand for its loans. The company said loan book expanded by Ks9.3 billion over a year ago period to Ks181.6 billion.
However, regulatory pressure ate into the bank’s earnings as it nearly tripled its provision for loan losses to Ks3.6 billion. The increase in loan provisions matches a sharp rise in non-performing loans to Ks7.8 billion in the latest period compared to Ks2.7 billion a year earlier.
The Central Bank of Kenya (CBK) is piling pressure on lenders to increase their provisions for sour loans as a part of the measure to strengthen the country’s financial system. CBK has repeatedly accused some banks of under provisioning for loans to inflate their profits.
Lenders’ appetite for government securities
Diamond Trust Bank joins Equity Group (EQTY) and Kenya Commercial Bank (KCB) in reporting high returns from investing in government papers. Diamond Trust Bank, with a market cap of Ks36 billion, is one of the largest banks in the country by market share. The bank is a component of Nairobi All Share Index (NASI). The index tracks all stocks listed on the Nairobi Securities Exchange (NSE).
Diamond Trust Bank joins Equity Group (EQTY) and Kenya Commercial Bank (KCB) in reporting high returns from investing in government papers. Diamond Trust Bank, with a market cap of Ks36 billion, is one of the largest banks in the country by market share. The bank is a component of Nairobi All Share Index (NASI). The index tracks all stocks listed on the Nairobi Securities Exchange (NSE).
Diamond Trust Bank stock gained 0.76% to close at Ks133 on November 17 after the lender reported earnings improvement. However, the stock is down 28% so far in 2016 and down 30% since the last one year.
0 comments:
Post a Comment