Lewis Njoka @LewisNjoka
Diamond Trust Bank (DTB) has issued a profit warning for the current financial year, saying it expects earnings to be substantially lower compared to the previous one.
The bank said its performance for the year was affected by the Covid-19 containment measures which hurt trade flows and created uncertainty in various sectors.
It said effects on export, hospitality, real estate, aviation, tourism and agribusiness sub-sectors, forced it to increase loan loss provisions, hence, reduced earnings.
“This is primarily due to an increase in impairment provisions in light of the Covid-19 pandemic as well as an increase in restructured and delayed loan repayments as the Covid-19 impact on customers intensified during the year,” said DTB in a statement.
Companies are required by law to issue a profit warning if their earnings are likely to drop by 25 per cent or more compared to the previous year.
Despite the projected dip in profits DTB exuded confidence, saying its balance sheet remains robust and resilient with a strong capital base and healthy liquidity position.
DTB joins over 14 other companies that have issued profit warnings so far, most of them citing Coronavirus-related challenges.
These include Britam, Absa, East African Breweries Ltd, Kenya Power, Nation Media Group, Unga Group, NCBA Bank, I&M Holdings and Standard Chartered Bank among others.
This spells double pain for investors who will suffer dividend cuts even as most shares continue to depreciate.