Kampala, Uganda — dfcu Bank’s earnings have come under renewed pressure after the lender projected a Sh26.3 billion loss before tax for the first half of 2026, despite registering strong growth in deposits, lending and total assets.
The projected loss represents a dramatic turnaround from the Sh39.7 billion profit recorded in the first six months of 2025, as rising operating expenses and higher provisions against potential loan losses eroded earnings.
The bank expects to close the period with a net loss of Sh15.8 billion after accounting for a Sh10.5 billion income tax credit.
The figures, contained in the lender’s unaudited financial results for the six months ended June 30, point to a mixed performance, with business volumes expanding even as profitability weakened.
dfcu’s operating expenses increased by nearly Sh80 billion during the period, rising from Sh150.4 billion in June 2025 to Sh230 billion.
The increase represents one of the main factors behind the deterioration in the bank’s bottom line and could intensify pressure on management to improve efficiency and contain expenditure.
At the same time, the bank increased provisions against credit risk as its loan portfolio expanded.
dfcu recorded Sh11.8 billion in impairment allowances on loans and advances, reflecting provisions made against potential defaults and other credit risks.
Despite the losses, the bank recorded considerable growth in its core banking business.
Customer loans and advances increased by 21 per cent to Sh1.44 trillion from Sh1.19 trillion in the corresponding period last year.
The growth indicates continued demand for credit from businesses and households, although the accompanying increase in impairment provisions highlights the need for the bank to maintain strict credit-risk controls as lending expands.
Customer deposits also grew strongly, rising by Sh410 billion from Sh2.46 trillion in June 2025 to Sh2.87 trillion by the end of June 2026.
The increase in deposits provides the lender with a stronger funding base and gives it additional capacity to support lending and other banking activities.
Despite the earnings setback, dfcu maintained a relatively strong balance sheet.
Total assets increased to Sh3.94 trillion, while liquid assets stood at Sh2.18 trillion, including Sh662.7 billion in cash and cash equivalents.
Shareholders’ equity reached Sh755.4 billion, while the bank reported a capital adequacy ratio of 27 per cent.
The capital position remains well above the regulatory minimum, providing the lender with a sizeable buffer as it navigates the current profitability challenges.
dfcu Bank chief executive officer Charles Mudiwa said the lender remained financially resilient and capable of supporting customers and economic activity.
“The bank remains well-capitalised and liquid enough to continue supporting customers and financing economic activity,” Mr Mudiwa said.
The half-year performance places renewed attention on dfcu’s ability to translate balance-sheet expansion into sustainable profits.
The growth in deposits, loans and assets points to continued expansion of the bank’s operations. However, the sharp rise in expenses means that increased business volumes have yet to generate sufficient earnings to offset the higher cost base.
Management will therefore face pressure to rein in operating expenditure, improve efficiency and carefully manage credit quality in the second half of the year.
The results also come at a time when Uganda’s banking industry is facing higher operating costs while investing in digital banking, technology and customer services.
For dfcu, restoring profitability while preserving its capital and liquidity buffers will be central to its financial strategy as it seeks to sustain growth without exposing the balance sheet to excessive credit and operational risks.