Diamond Trust Bank (DTB) has reported a 9.7 percent net profit growth for the six months ended June 2025, driven by a lower cost of funds and expansion of its loan book.
The regional lender posted a profit after tax of Sh4.7 billion for the half year to June, up from Sh4.3 billion in a similar period last year.
This followed a 10.8 percent drop in the lender's cost of funds to Sh13.5 billion from Sh15.1 billion despite customer savings with the bank rising 11.8 percent to Sh483 billion compared to June last year.
The group’s net interest income rose 11.7 percent to Sh15.8 billion, riding on reduced cost of funds after the bank cut its borrowed funds by Sh16 billion in the last 12 months to Sh2.5 billion.
The cost of funds is how much money financial institutions must pay in order to get money for lending to customers.
The spread between the cost of funds and the interest rate charged to borrowers represents one of the main sources of profit for many financial institutions because a lower cost of funds means a bank will earn better returns.
The bank's loan book expanded 7.7 percent over the period under review to Sh288 billion from Sh267 billion, resulting in its interest income remaining flat despite a Sh700 million hit from a drop in income from government securities.
“Growth in the loan book is commendable, particularly considering the decline across its peers in the banking industry,” said investment bank Sterling Capital in a note to investors.
“This growth proved to be sufficient to stave off a decline in total interest income, a decline which has been prevalent across the banking sector due to lower yields on interest-bearing assets,” added the investment bank.
DTB attributed its growth to the expansion of its customer base, driven by an increase in branches and uptake of digital products.
“We have had 120 percent growth in customer base; from 1.9 million customers to 4.1 million across East Africa due to our digital proposition and expansion of branch network,” said DTB’s chief finance officer Alkarim Jiwa.
The bank, which is mainly in the trade, manufacturing, and transport sectors, has widened its reach to new sectors to accommodate the new client base. Mr Jiwa disclosed that the bank was now in agriculture, especially tea, and the public sector, having been accredited to receive government payments such as Social Health Authority (SHA) collections and E-citizen revenues.
DTB plans to open four new branches in Kenya in the second half of the year, even as the volume of transactions conducted on digital platforms continues growing at the expense of those conducted in branches.
Ninety-two percent of the bank’s transactions were conducted on digital platforms in the year to June, up from 87 percent in a similar period the previous year, underscoring the shift away from physical branches.
“Customers prefer to get their services through digital, but that you reach them through traditional physical outlets…so we have to go out to them physically,” said Mr Jiwa.
DTB has regional operations in Uganda, Tanzania, and Burundi, which contributed 24.5 percent of the net profit, being Sh1.1 billion.
Its non-interest income took a five percent drop following a shrinking of forex earnings. The forex earnings shrank by Sh1.1 billion owing to a stable shilling, which took away the trading margins availed by volatility.
A 55.4 percent growth in other income, driven by trading gains from the bank's bond portfolio, helped absorb a portion of the decline in forex income.
