Q&A: Sector specialisation, customer relationships, digitalisation and a data-driven performance culture⏤ dfcu’s Charles Mudiwa spells out his strategy  dfcu Limited, the holding company for dfcu Bank, has just released its H1 2023 results, declaring that profit after tax for the 6 months to June 30 2023 rose 56% to UGX29.3 billion from UGX18.1 billion. This was driven by a 10% rise in the number of customers and 8% in transaction volumes, the bank said, as well as aggressive loan recoveries, leading to a 6% rise in net income from UGX187.4 billion to UGX198.6 billion. Customer deposits rose mildly, by 2% from UGX2.44 trillion to UGX2.49 trillion. However, lending fell by 16.4% from UGX1.4 trillion to UGX1.17 trillion and as a result, assets grew minimally, by just 0.6% from UGX3.29 trillion to UGX3.31 trillion. Earnings per share went up 56% from UGX25.1 to UGX39.2. The company also said it paid UGX55.6 billion tax and had committed UGX1.3 billion in Corporate social investments. In this interview accompanying the published results, Charles Mudiwa, the bank’s new CEO who joined this April 2023 (dfcu Bank is dfcu Limited’s anchor subsidiary), contextualises the H1 2023 as well as paints a picture of his strategy, going forward.

What impacted your business over the period from an operational standpoint? 

The first half of the year has been marked by consistent improvement in the operating environment with inflation and other economic indicators trending positively, impacting on our customer acquisition which has grown tremendously over the period by over 50% for the number of active customers we serve. On the other hand, there was an uptick in cyber-related risks and to that end, we enhanced our risk management capabilities and improved our operating efficiencies to deliver a seamless customer experience.

What were the drivers of your financial performance? 

The business continued to progress on an upward trajectory driven by aggressive collections and recoveries and intensified portfolio management which enabled us to deliver a 33% reduction in the impairment of loans and advances to customers. We also booked new business and grew our non-funded income by 25% with the mass customer acquisition done over the period, which contributed to a 6% increase in net income and a 56% improvement in net profit after tax. 

On the balance sheet side, our liquid assets grew by 20% over the period arising from a 2% increase in customer deposits, an 8% growth in shareholders’ equity and a 16% reduction in loans and advances. Key to note is that whereas loans and advances to customers reduced by 16%, the total number of borrowers we serve grew by 11% over the period as we increased our lending to individuals and businesses across the country. 

Our institutional capabilities enabled the business to thrive and deliver improved performance overall. Strongly committed shareholders, a competent staff team, robust digital capabilities, a loyal customer base and adequate capital ratios, significantly higher than the regulatory minimum were the underpinnings that drove our performance.

We live in a highly digitised world now, how has this been a factor in your business? 

We are a digital and data-driven organization at the core and have invested significantly in technology over the period. We have expanded our footprint of intelligent deposit-taking ATMs to 76 locations. The deposit-taking functionality provides added convenience for customers to make cash deposits into their accounts 24/7. We also recently introduced a strategic partnership with Mastercard and Rabo partnerships aimed at digitizing the agricultural ecosystem in Uganda. This collaboration aims to uplift smallholder farmers and other agricultural value chain actors by enhancing their access to markets and credit, thereby improving their livelihoods. This is in addition to the large suite of digital offerings that we continue to provide to customers across our channels. 

What is the Bank doing to drive economic growth and financial inclusion? 

Through our Agribusiness Development Centre (ADC), we have been able to reach over 10,000 smallholder farmers and farmer groups with tailored capacity-building programs in the areas of organisational strengthening, financial management, access to markets and price risk management, with the purpose of building agribusinesses that have potential to impact the agricultural value chain, in addition to self-reliance and bankability of farmer-based organisations and SMEs. 

Our Women in Business program has seen us reach over 80,000 women through training and mentorship programs complemented with business acceleration for SMEs all geared towards the economic growth of women and we have provided over UGX100 billion in credit to women entrepreneurs over the life of the program to date. 

Additionally, our program for Investment Clubs and SACCOs has enabled us to support over 33,000 groups with a variety of financial products and literacy services coupled with a tailor-made digital application that was further enhanced to ease the administration of groups. The literacy program is also being expanded to refugees as we support development programs in host communities across the country. 

What is your strategy to drive the business forward? 

We have a solid base that anchors us for growth going forward and our strategy is hinged on our purpose which is to “transform lives and businesses in Uganda”. 

We shall play in key sectors of the economy through our business segments in the areas of Corporate and Institutional Banking, and Retail Banking, and shall win in these areas through sector specialisation, customer relationships, being digital and data-driven and most importantly driving a performance culture. It is envisaged that through our strategy, we will deliver greater customer and employee engagement, manage business risks, and ultimately deliver sustained financial performance.