Trust Bank Profit Drops 20% as Soaring Costs Erode First-Half Earnings

Trust Bank Plc posted a sharp decline in first-half profitability despite resilient growth in its core banking business, as a steep rise in operating expenses offset gains in interest income, fees and trading revenue.

The lender reported a 20.4% year-on-year fall in net profit to D204.88 million for the six months ended June 2026, down from D257.39 million in the same period last year. Profit before tax also declined by 20.4% to D280.66 million, underscoring mounting pressure on earnings.

The weaker bottom line came even as operating income rose 7.4% to D741.22 million, driven by stronger net interest income and improved non-interest revenue. Net interest income climbed 7.23% to D577.43 million, benefiting from a significant reduction in funding costs after interest expenses fell nearly 28%.

Income from Treasury bills and government bonds increased 14.69%, while earnings from interbank placements also strengthened, helping to cushion weaker returns from commercial lending.

Non-interest income remained supportive, with net fee and commission income rising 5.06% and trading income surging 33.04%, reflecting broader diversification of revenue streams.

However, the gains were eclipsed by a 36.44% surge in operating expenses to D460.56 million. Personnel costs, depreciation and amortisation, and other operating expenses all recorded double-digit increases, significantly reducing the bank’s operating efficiency and profit conversion.

Trust Bank also set aside substantially more provisions against potential loan losses, with impairment allowances rising 72.9% to D136.68 million, signalling increased caution over credit quality as its lending portfolio expanded.

Despite softer earnings, the bank maintained balance-sheet growth. Total assets increased 1.43% to D15.0 billion, while loans and advances rose 2.8% to D4.55 billion. Shareholders’ equity strengthened by 10.11% to D1.97 billion, supported by higher statutory and credit risk reserves.

Funding trends, however, presented a mixed picture. Customer deposits remained broadly unchanged at D12.82 billion, with strong growth in savings deposits offset by declines in current and fixed deposits.

Cash flow weakened considerably during the period, with the bank recording a D1.47 billion net cash outflow from operating activities, compared with a D2.78 billion inflow a year earlier. The deterioration reflected increased investment in financial assets and continued expansion of the loan book.

Looking ahead, Trust Bank’s performance in the second half of 2026 is likely to hinge on its ability to contain operating costs while preserving asset quality. Although its core income streams remain resilient and its capital base has strengthened, rising expenses, higher impairment charges and sluggish deposit growth present key challenges to restoring earnings momentum.