DCB Commercial Bank Plc (Tanzania) – FY 2021 profit after tax up 29% to TZS 798 million

DCB Commercial Bank Plc (DCB.tz) 2021 Abridged Report

1. INTRODUCTION

The Directors submit their report together with the audited financial statements for the year ended 31 December 2021, which disclose the state of affairs of DCB Commercial Bank Plc (‘the Bank’).

2. INCORPORATION

The Bank was incorporated in 2001 under the Companies Ordinance, Cap 212 (later repealed by the Companies Act No 12 of 2002) and is listed at the Dar es Salaam Stock Exchange. The Bank of Tanzania under the Banking and Financial Institutions Act, 2006, licenses the bank.

3. PRINCIPAL ACTIVITIES

The principal activities of the Bank are taking deposits on demand, providing short term and medium-term credit facilities and other banking services allowed under Banking and Financial Institutions Act, 2006.

4. DIVIDENDS

Due to change in regulatory requirement for the bank to pay dividend, the Directors do not propose payment of dividend for the year 2021 (2020: NIL).

5. PERFORMANCE FOR THE YEAR

The Bank has managed to record a profit before tax of TZS 1.06 billion for the year ended 31 December 2021 (2020: Profit before tax – TZS 1.02 billion) which translates to the total comprehensive income after tax of TZS 798 million being a 29% growth compared to 2020 position of TZS 617 million. During the year enormous efforts were done to recover from the effects of Covid-19 pandemic to the industry and economy at large, where the bank’s profitability increased because of aggressively pursuing new business lines and continuing to offer competitive services.

Investment initiatives conducted during the year resulted into a 25% increase in net-interest margins. Net interest income grew year on year to reach TZS 16.15 billion from TZS 12.92 billion in 2020. The increase in net interest income is a result of increase in loans by TZS 19.33 billion to TZS 117.40 billion (YTD 2020: TZS 98.07 billion). Interest from investment in securities grew by TZS 2.91 billion from TZS 2.86 billion in 2020 to TZS 5.77 billion in 2021.

Interest and similar expense increased by 17.7% in 2021 compared to 2020, a stunted growth compared to growth rate in 2019/2020. The cumulative interest and similar expenses by year end stood at TZS 11.46 billion from 2020 level of TZS 9.74 billion; the increase was spurred by deposit growth of 25.9% (TZS 26 billion) year on year from TZS 99.50 billion in 2020 to TZS 125.29 billion in 2021, of which TZS 13.8 billion was Time Deposits. Despite this increase in deposits, the average cost of fund for time deposits decreased to 10.8% from 12.4% in 2020. Efforts to reprice time deposits to match market rates as well as relief from BOT borrowing rates allowed a relief in the interest expenses incurred during the year.

The bank’s non-interest income grew significantly during the year from TZS 4.64 billion in 2020 to TZS 7.18 billion by end of year 2021. With the re-instatement of correspondence banking in June 2021, the bank launched fully fledged trade financing services that include guarantees, letters of credit as well as international transfers. A total of TZS 341 million earned in 2021, a 537% increase compared to TZS 54 million in 2020. As a result of this, the bank’s foreign exchange trade also increased to reach TZS 277 million by the end of 2021 being 84% Growth compared to TZS 152 million in 2020. Facility fees also increased as a direct result of increased loan disbursements during the year.

Customer deposits grew from TZS 99.50 billion in 2020 to TZS 125.29 billion in 2021 – a 25.9% growth, reflecting improved liquidity environment in the banking industry, coupled with the bank’s measures in mobilizing stable and long-term funding options to fuel the predicted balance sheet growth. The bank has continued to strengthen its deposit base by launching new and innovative digital products that are tailored to the customer needs. Loans and Advances to customers increased by TZS 19.33 billion to reach TZS 117.40 billion (YTD 2020: TZS 98.07 billion) reflecting the bank’s initiatives to strengthen the business ties it has with the customers by providing credit related solutions.

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