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Diamond Bank declares N22.7 billion earnings

Category: Daily & Weekly Market Updates

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Diamond Bank declares N22.7 billion earnings

August 01, 2006/ businessday




Gross earning of Diamond Bank plc has grown to N22.7 billion for the year ended April 30, 2006. This represents a growth of 42.8 percent from N15.9 billion earned in 2005.

Profit before taxation (PBT) rose to N5.4 billion for the year against N3.5 billion made the previous year. The profit after tax (PAT) for the year under review grew by 56 percent to N3.9 billion against N2.5 billion recorded in 2005.

The significant growth in the bank’s performance is a reflection of improvement in business development and efficiency of operations, in spite of the shrinking interest margin environment and consolidation/integration costs incurred during the year.

Other details of the audited results for the year under review indicate significant improvements in all the performance indices.

The aggressive retail banking approach with which Diamond Bank operated in the market during the past year paid off favourably as the sector contributed to the 85.8 percent rise in total deposits from N80 billion in 2005 to N148.6 billion in 2006.

The bank grew its loan portfolio considerably by 74 percent from N51.2 billion in 2005 to N89.1 billion in the year under review, a reflection of its continued and increasing support to the real sector.

Aspects of the results which also reflected improved performance include total assets, which grew from N130.7 billion in 2005 to N227.8 billion in 2006 as well as shareholders’ funds which now stands at N35.0 billion from N20.7 billion in 2005.

Notwithstanding the sterling performance, the Central Bank of Nigeria (CBN) did not approve the payment of dividends for the year in line with the provision of the Banks and Other Financial Institutions Act, 1991 (BOFIA). The statutory provision precludes banks having goodwill in their books from paying dividends until the goodwill has been completely written-off.

This case is not peculiar to Diamond Bank as the regulatory requirement equally applies to a number of other banks that were involved in either mergers or acquisitions during the consolidation period. It would be recalled that Diamond Bank acquired the former Lion Bank of Nigeria Plc during the consolidation period.

The Executive Director/Chief Financial Officer of the Bank, Ohis Ohiwerei, has however affirmed the bank’s capacity to write-off all outstanding goodwill in its books within the current financial year such that shareholders will be adequately compensated for the foregone dividends.

Diamond Bank is improving its positioning in the various market segments, especially in the retail end of the market.

The bank has brought innovation into retail banking with the establishment of Diamond \"Minis\" which are directed at bringing the bank’s services closer to the customer.

In keeping with that tradition, the bank is coming up with more innovative retail banking framework, products and services that will make it a pacesetter in that end of the market.

According to Ohiwerei, Diamond Bank is also expanding into the non-bank financial services sub-sector including investment management, pension funds custody (PFC), mortgage finance, and insurance through the establishment of subsidiaries. Existing subsidiaries in this regard include Diamond Securities Limited and Diamond PFC Limited, while Diamond Mortgages will soon commence operation. The bank is also finalising the acquisition of an insurance company.

These strategies will enable the bank grow and diversify its income base in this era of shrinking interest margins. With a more balanced business mix, the Bank has positioned itself to leverage on its universal banking license by exploiting the non-financial services opportunities emerging from the implementation of government’s economic reform agenda.

It is expected that the bank’s enhanced positioning in the core banking and non-bank financial services sector will impact positively on growth of revenue and profit in the new financial year.

Diamond Bank currently operates 87 business offices spread across all the geographical zones of the country and is about expanding the network to over 100 branches. With an enlarged balance sheet and enhanced product offering, the bank is set to fully exploit the business opportunities in all the geographical zones.

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