Diamond Trust rides on interest income to push its profit to Sh5.3b

What you need to know:

  • The top tier lender’s interest income from government securities rose by 132 per cent, from Sh2.96 billion in September 2015 to billion to Sh6.9 billion this year.
  • Banks have been increasing their lending to government in response to the capping of customer loans at four percentage points above the prevailing Central Bank Rate (CBR).

Diamond Trust Bank (DTB) has recorded an 11.5 per cent increase in after-tax profit to Sh5.3 billion for the nine months to September 2016, backed by higher interest income on government securities.

The NSE-listed lender's net interest income rose by 35 per cent or Sh3.6 billion to Sh14.7 billion, while non-funded income was up by 9.1 per cent or Sh310 million to Sh3.7 billion.

The top tier bank's interest income from government securities rose by 132 per cent, from Sh2.96 billion in September 2015 to Sh6.9 billion this year.

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DTB's holdings of government securities rose three and a half times from Sh21.7 billion in September 2015 to Sh74.15 billion in September 2015.

Banks have been increasing their lending to government in response to the capping of customer loans at four percentage points above the prevailing Central Bank Rate (CBR).

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Interest from loans to customers was up 21 per cent or Sh3.2 billion to Sh18.4 billion. The loan book rose by Sh9.3 billion to Sh181.6 billion.

DTB increased its provision for bad loans to Sh3.6 billion from Sh1.3 billion, in line with an increase in its non-

The bank’s staff costs increased 15.1 per cent to Sh2.6 billion. Total operating expenses increased by Sh3.2 billion to end the nine months at Sh10.6 billion.

The lender joined the class of large banks last year, driven by new business from the collapsed Imperial Bank.

DTB’s market share grew 0.7 percentage points to 5.32 as at December to rank seventh and surpass the five per cent mark used by the Central Bank of Kenya (CBK) to classify banks as large industry players.

DTB, together with KCB, were last year given access to deposits of collapsed Imperial Bank as the receiver manager sought to refund depositors up to Sh1 million placed with the ill-fated lender.

Imperial Bank customers had a choice of whether to withdraw their cash or open new accounts with either bank and keep the money there.

DTB closed the nine months to September with deposits of Sh227.4 billion, representing a Sh52.3 billion jump from the amount recorded during a similar period last year. Interest expenses on the deposits increased by 42.4 per cent to Sh9.7 billion.

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