By
Frontline Media
KAMPALA, UGANDA: DFCU Bank said
earlier this year that its shareholders would have to wait longer for dividends
in 2021 as the bank battles to conserve capital.
According to the bank's most recent audited financial
statements, which were just disclosed, the bank's total profitability for 2021
was significantly impacted by loan impairments, which depleted the bank's
productivity.
According to the bank's report, impairment losses increased
by 382% from Shs 30.6 billion to Shs 148.3 billion in 2020. As a result, profit
margins would fall from Shs 24.3 billion to Shs 13.3 billion in 2020. Profit
margins measure how much money a firm or business activity generates by
dividing income by revenue. The loan value losses incurred by the institution
were mostly the result of financial assets purchased from the defunct Crane
Bank in 2017.
In addition, the bank recorded a slight decrease in client
deposits in 2020, from Shs 2.5 trillion to Shs 2.2 trillion. The bank also
wiped down debts totaling Shs 37.5 billion, representing a roughly 170 percent
increase over 2020. To avoid the write-off, the bank stated that it lent
cautiously during the period, giving preference to select industries that shown
resilience during the epidemic.
The aforementioned findings appear to have irritated
shareholders, who have since requested that the bank pay their dividends
without referencing the fact that rival banks have already paid their
stockholders.
According to an insider, at the virtual AGM on Thursday this
week, a segment of over 250 shareholders, particularly those owning over 519
million shares totaling to 15%, questioned why the bank is not paying dividends
for the third consecutive year.
"Why aren't you reporting dividends for 2021?" I
own stock in other banks, but they have all declared dividends; why have they
decided not to pay us?" Betty Nabutto, one of the stockholders present
virtually, inquired.
In response, DFCU General Manager George Ochom stated that
financial restrictions prevent them from paying.
"As you may recall, the Bank of Uganda prohibited us
from paying discretionary dividends in 2019 and 2020." However, for 2021,
we are hampered by a shortage of cash. "Remember, the majority of our
resources come from our financial arm, the DFCU bank, but several of our
significant local corporates have been impacted by delayed receivership of
contractual payments," he stated.
As it sought sufficient cash to maintain the economy, the
Bank of Uganda 2020 halted all dividend and bonus payments by banking firms.
The moratorium was lifted, and banks began paying dividends in June 2022, but
DFCU stockholders are still reading about it in the press.
"There is no way you can persuade us that you are unable
to pay since your colleagues are paying while you are at the same
institution," an angry shareholder stated.
0 Comments