Diamond Trust Bank’s profit dropped to Sh4.7 billion compared to the Sh4.7 billion it posted in a similar period last year.
Commercial banks have posted lower or marginal growth in earnings this year as the effect of a rate capping law takes toll on the sector.
While DTB’s total income stagnated, shrinking by 0.2 per cent to Sh18.36 billion, its total costs inched higher by 2.5 per cent to Sh10.85 billion.
Diamond Trust Bank (DTB) #ticker:DTK profit after tax for the nine months to the end of September slipped by 3.7 per cent.
The bank’s profit dropped to Sh4.7 billion compared to the Sh4.7 billion it posted in a similar period last year.
Commercial banks have posted lower or marginal growth in earnings this year as the effect of a rate capping law takes toll on the sector.
The interest rates cap has squeezed lenders’ margins after it fixed rates at four percentage points above the Central Bank Rate and imposed a minimum deposit rate of 70 per cent of the benchmark rate.
The company’s performance was also dragged down by a jump in bad loans that increased five-fold within the July-September quarter to Sh7.5 billion.
While DTB’s total income stagnated, shrinking by 0.2 per cent to Sh18.36 billion, its total costs inched higher by 2.5 per cent to Sh10.85 billion.
Interest from loans to customers was down 8.7 per cent to Sh16.8 billion. The loan book rose by Sh14.7 billion to Sh196.3 billion.
DTB’s holdings of government securities rose 13.6 per cent to Sh84.3 billion from Sh74.15 billion in September 2016.
This builds on the increased investment in government assets the bank embarked on in the previous financial year to hedge from loss of revenue from interest income.
The lender joined the class of large banks in 2015 after it was given access to deposits of collapsed Imperial Bank as the receiver manager sought to refund small depositors.
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