DTB raises dividend as profit grows to Sh6.8bn

Diamond Trust Bank (DTB) chairman Linus Gitahi (left) with the CEO Nasim Devji and the CFO Alkarim Jiwa during the release of 2021 financial results in Nairobi on March 28, 2022. FILE PHOTO | NMG

DTB Group raised its dividend payout to a record of Sh6 per share for the year ended December when its net profit grew 13.4 percent to Sh6.8 billion on higher interest and transaction-based income.

The company had paid a dividend of Sh5 per share for the prior year. The new dividend, amounting to a total payout of Sh1.6 billion, will be distributed on June 28 to shareholders who will be on record as of May 24.

The dividend represents a payout of 24.3 percent of the net income in the review period, rising from 23 percent in the prior year when the lender posted a net profit of Sh6 billion.

DTB had earlier announced that it would be making incremental dividend payouts comprising the distribution of a higher percentage of rising earnings.

The payout ratio has risen from 21.4 percent in 2021 when the dividend per share was Sh3 and the net income stood at Sh3.9 billion.

“Going forward, we will continue to progressively increase the dividend payout ratio, on the back of an improving performance by your bank as well as ensuring that there is an equitable balance between rewarding shareholders and conserving capital to fund the ambitious growth aspirations of the Group,” DTB said in its 2022 annual report.

DTB is among the listed lenders that raised their dividends to record levels in the latest full year earnings announcements, joining Standard Chartered Bank Kenya, Absa Bank Kenya, Stanbic Holdings and I&M Group and NCBA Group.

DTB’s profit growth in the year ended December was driven by higher income from transactions as well as lending to the government and ordinary customers.

Net interest income, for instance, rose 20.4 percent to Sh27.5 billion. Non-interest income including fees and commissions meanwhile increased 34.2 percent to Sh12.1 billion.

The jump in interest income came as the bank’s loan expanded 54.7 percent to Sh308.4 billion. DTB saw its interest income from government securities rise 29.1 percent to Sh24.1 billion despite reducing its investment in the assets to Sh120.1 billion from Sh133.1 billion.

This reflects the impact of rising interest rates on bonds and T-bills last year.

DTB grew its deposits to Sh486 billion from Sh387.5 billion, a move that contributed to its interest expenses jumping to Sh25.7 billion from Sh17.1 billion.

Banks have seen their cost of funds rise in line with the increase in interest rates, with the average deposit rate standing at 10.18 percent in January 2024 from a low of 7.47 percent in the same month last year.

DTB’s operating expenses surged 39.7 percent to Sh30.8 billion on increased loan loss provisions, staff costs and other items.

Its provision for bad debt went up by Sh3.1 billion to Sh10.3 billion as the stock of non-performing loans expanded by Sh11.4 billion to Sh43.6 billion.