DFCU share price defies odds

Traders at the Uganda Securities Exchange. DFCU Ltd’s share price at the bourse defied an online campaign against the bank and held steady at $0.22 since September. PHOTO | DAILY MONITOR | NMG 

In Summary

• Investors are counting on stronger future earnings to spur heavy activity on the counter despite online negative reports.
• The negative online campaign is seen as part of a falling out in the industry after the collapse of Crane Bank in 2016
• Its share price stood at Ush890 ($0.23) at the beginning of this year.

By BERNARD BUSUULWA
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DFCU Ltd’s share price at the Uganda Securities Exchange has defied an online campaign against the bank and held steady at Ush849 ($0.22) since September.

Its share price stood at Ush890 ($0.23) at the beginning of this year. Whereas local stockbrokers and fund managers are quick to dismiss the negative online reports about DFCU Bank’s health, investors are counting on stronger future earnings to spur heavy activity on the counter.

The negative online campaign is seen as part of a falling out in the industry after the collapse of Crane Bank in 2016 and eventual sale of some of its assets and liabilities by the Bank of Uganda.

While parallel court cases are ongoing in the High Court’s commercial division, an intense campaign to show that the bank was facing both a financial and management crisis recently forced a protest and threat of a court action against certain online publications and Rajiv Ruparellia, a director and son of Crane Bank founder Sudhir Ruparrelia.

Crane Bank was sold to DFCU Bank in January 2017 by Uganda’s central bank for Ush200 billion ($52.6 million) following an unsuccessful four-month statutory takeover that cost the taxpayer more than Ush400 billion ($105 million) in liquidity injections.

DFCU bank executives appeared reluctant to tackle hard questions surrounding the future of the listed lender following its acquisition of Crane Bank and this has fuelled speculation about its short-term performance, observers say.

Zacheus Mushaija, a research analyst at Crested Capital Ltd, a stockbrokerage company, said there is a lot of ignorance surrounding the DFCU counter avoid negative online reports about its financial health.

“Both supply and demand are equally low on that counter these days and that probably explains the stable closing price recorded in recent weeks,” he said.