Diamond Trust Bank announced results for the half year ended 30 June 2015 with the following highlights:
- Net interest income grew by 18.9 percent from KES 9.85bn in 2014 to KES 11.71bn in 2015 driven by a stronger loan book growth.
- Interest expense went up by 27.8 percent to KES 4.84bn in 2015 due to increased borrowings and customer deposits.
- Non-interest income increased by 28.4 percent from KES 1.84bn in 2014 to KES 2.37bn in 2015 following growth in fees and commissions, forex income and other income by 21.5 percent, 41.8 percent and 10.0 percent respectively.
- Operating income inched up 16.8 percent to KES 9.24bn in 2015 while operating expenses increased by 20.2 percent from KES 3.80bn in 2014 to KES 4.57bn in 2015. Cost to income ratio stood at 49.5 percent in 2015 from 48.1 percent in 2014.
- Loans and advances to customers went up by 34.8 percent from KES 120.20bn in 2014 to KES 161.99bn in 2015 while customer’s deposits grew by 27.1 percent to KES 173.30bn in 2015.
- The bank recorded a 13.8 percent growth in pretax income from KES 4.11bn in 2014 to KES 4.67bn in 2015. Net income grew by 10.7 percent to KES 3.26bn in 2015. This translated to a 2.9 percent increment in EPS to KES 11.92 in 2015.
- Deposits and balances from banking institutions grew by 37.2 percent to KES 7.15bn in 2015, while customers’ deposits grew by 27.1 percent to KES 136.36bn in 2015 from KES 136.36bn in 2015.
- Total shareholders’ equity grew by 34.5 percent from KES 23.05bn in 2014 to KES 31.00bn in 2015.
Our View
We expect net interest income to grow going forward due to accelerated regional expansion initiatives supported by a larger capital base creating greater potential for loan book growth
We expect high quality loan book and prudent NPL provisions to be sustained going forward as the Bank has historically had lower non performing ratios.
Key risk:
The company faces stiff competition from its peers who have a larger capital base, ventures in regional markets and are diversifying away from traditional banking.