IFC to loan DTB $50m for onward lending

 

Diamond Trust Bank has joined a growing list of lenders set to receive funding from the International Finance Corporation (IFC). File  

Diamond Trust Bank has joined a growing list of lenders set to receive funding from the International Finance Corporation (IFC). File  

By David Mugwe, The EastAfrican

Diamond Trust Bank has joined a growing list of lenders set to receive funding from the International Finance Corporation (IFC).

The lending arm of the World Bank has disclosed that it is working on a $50 million (Ksh4.2 billion) loan to Diamond Trust Bank, barely a month after it disclosed that it was working on a $150 million (Ksh12.8 billion) loan to KCB Group and another $10 million (Ush26.67 billion) loan to KCB Uganda.

“The total project cost and proposed IFC investment is $50 million. IFC will provide a financial package consisting of a subordinated loan of $40 million that qualifies for Tier II capital and to be made available in two tranches; and a risk sharing facility of US$ 10 million equivalent,” notes disclosure documents from IFC.

DTB has subsidiaries in Tanzania, Uganda and Burundi and last year it raised Ksh1.8 billion ($21.2 million) through the sale of 24.45 million shares in a rights issue that attracted Ksh3.4 billion ($39.5 million).

IFC’s disclosure documents say that the loans will be utilised to strengthen Diamond Trust's capital base and help to expand its lending activities to the small and medium sized enterprises (SME).

The disclosure notes show that the money will also assist with funding to lend to the lower end of the small and medium size segment, thereby promoting financial inclusion to the very small enterprises which will include but not limited to those owned by women entrepreneurs.

“These two lower-ends of the SME segment are currently underserved in terms of access to finance,” note the disclosure documents.

Housing Finance received $20 million (Ksh1.68 billion) from IFC to support green housing projects and property development in last month through a loan which was approved in August and which is expected to help the lender increase access to affordable housing.

DTB’s profit after tax for the period ended December 2012 grew by 36.55 per cent to Ksh3.62 billion ($42.2 million) from Ksh2.65 billion ($31.23 million) for the period ended December 2011.

(Read: Kenya’s DTB posts $42.2m in net profits, raises dividend)

The growth in profits was driven by a 35.49 per cent increase in net interest income which stood at Ksh9.12 billion ($106.15 million) compared to Ksh6.73 billion ($79.17 million) at the end of the previous year.

Its loan book grew by 23.02 per cent to Ksh87.07 billion ($1.02 billion) for the period ended December 2012 from Ksh71.29 billion ($838.12 million) for the period ended December 2011 while non-interest income grew by 11.76 per cent to Ksh3.11 billion ($36.24 million) from Ksh2.78 billion ($32.76 million) respectively.

At at the close of trading on Monday, DTB’s stock which closed at Ksh146 ($1.70) had gained 26.96 per cent since this year began after closing 2012 at Ksh115 ($1.34).