DTB Group reported a 10.9 percent growth in earnings in the first quarter ended March, helped by higher income from lending and transactions.
The bank’s net profit stood at Sh2.4 billion in the review period, rising from Sh2.1 billion the year before.
Total interest income increased 32 percent to Sh12.1 billion as earnings from ordinary loans and investment in government debt securities went up.
DTB’s loan book expanded 20.2 percent to Sh270.3 billion while its holdings of government bonds and T-bills declined by Sh5.8 billion to Sh131.6 billion.
The Nairobi Securities Exchange-listed firm is among the lenders that have reduced their investment in treasuries in favour of increased lending to the private sector.
The strategy is aimed at raising their interest income besides reducing the risk of paper losses that face holders of fixed-income securities in a rising interest rates environment.
DTB, however, bucked the trend, recording a net gain of Sh753.8 million in the revaluation of its government debt securities, reversing a loss of Sh586.4 million recorded a year earlier.
The bank also benefitted from a 59 percent surge in non-interest income to Sh2.8 billion, with notable contributions from multiple sources including foreign exchange trading.
DTB’s revenue from forex transactions nearly doubled to Sh1.4 billion, joining other lenders that have also recorded strong growth in this business line.
Banks have benefitted from the volatility in the forex markets, with the weakening of the shilling prompting businesses and individuals to initiate more transactions as they stock up on hard currencies.
The local currency has depreciated 15.7 percent against the dollar in the past 12 months alone to trade 138.4 units to the greenback.
DTB saw a 49.1 percent jump in interest expenses to Sh5.5 billion as it collected more deposits, which increased 17.9 percent to Sh404.6 billion.
The bank’s loan loss provisions more than doubled to Sh1.3 billion in response to increased defaults. The lender’s non-performing loans increased by Sh5.1 billion to Sh35.1 billion.
The jump in loan loss provisions contributed to total operating expenses increasing 50.3 percent to Sh5.8 billion. Other items that contributed to the higher costs include employee compensation.
DTB has increased its investment in local expansion, implementing its strategy of growing in its core areas besides recruiting clients in new sectors of the economy.
The bank will open a total of 24 more branches in Kenya this year and had already established three new branches in Kiambu town and Nairobi's Baba Dogo and Kijabe Street as of March.
The strategy will cement Kenya as its most important market with 70 branches so far. DTB also operates in Tanzania, Uganda and Burundi in a growth and diversification model.
While the uptake of digital banking platforms has accelerated in recent years, physical branches are still seen as important for the recruitment of new customers and boosting service delivery for existing clients.
"We see branches no longer as just transaction processing centres but, increasingly as centres where our customers can consult and get advice from our staff as well as business meeting points for their use," DTB’s chairman Linus Gitahi said in the bank’s latest annual report.