Kenya's Diamond Trust Bank pretax profit up on larger loan book

Mon Nov 5, 2012 9:31am GMT
 

NAIROBI (Reuters) - Kenyan lender Diamond Trust Bank posted a 40.6 percent jump in pretax profit for the first nine months of the year, aided by growth in interest income on its loan book.

The bank, which also operates in Tanzania, Uganda and Burundi, said profit for the period to September 30 rose to 4.37 billion shillings from 3.11 billion in the same period last year.

The mid-tier bank said in a statement on Monday its total interest income rose by 85 percent to 12.38 billion shillings from 6.7 billion.

Diamond Trust's interest income was largely boosted by a bigger loan book, with net loans and advances to customers climbing to 85.52 billion shillings from 74.65 billion in 2011.

However, Eva Njuguna, a trader at Sterling Investment, said it was concerning that Diamond Trust's results indicated a slowdown in the rate of growth in interest income in the third quarter.

"It could be as a result of non-aggressive borrowing in that period," said Njuguna, adding that interest rate reductions by the Kenyan central bank were likely to encourage borrowers.

The central bank has cut official rates by 500 basis points to 13 percent this year and analysts said a drop in inflation in October to 4.14 percent pointed to yet another rate cut when policymakers meet on November 7.

Diamond Trust raised 1.81 billion shillings through a rights issue of new shares in August to fund its expansion plans in the east Africa region.

A currency dealer counts Kenya shillings at a money exchange counter in Nairobi October 23, 2008. REUTERS/Antony Njuguna

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