Proshare Logo
   Market Date: 02-09-2014   
Agriculture All One Min News Archives Bonds Cap Mkt Sentiments Capital Market CASHLESS NIGERIA Commodities Corporate Earnings Daily & Weekly Market Updates Enterpreneurship ETFs Forex Frauds & Scandals General Global Market Insurance Investors NewsBeat Islamic Finance Mergers & Aquisitions Money Market Mortgage Mutual Funds Nigeria Economy Oil Sector Opinions and Analysis Pensions People Personal Finance Politics Power Products & Services Professionals Property Public Offers Private Placements Regulators REITs Stock PICKS Taxation Telcos Travel & Tours Unlisted OTC MARKET World of Business

Fitch Affirm Diamond Bank

Category: Investors NewsBeat


  Read (2875)
Fitch Affirm Diamond Bank

  

Today, Fitch Ratings maintained the ratings of Diamond Bank Plc (Diamond) at Long-term foreign currency Issuer Default (IDR) \'B\' with a Stable Outlook, Short-term foreign currency IDR '. The agency also affirmed the bank's National ratings at Long-term 
 
 
According to Fitch, the ratings indicate Diamond\'s rapid credit growth, loan book concentration and Nigeria's difficult operating environment. The ratings also take into account Diamond\'s strong earnings growth, an expanding retail footprint and adequate capital. 
 
 
In the FY to April 2008, the bank's operating profit improved 113.2% to N16.2bn on the back of strong growth in net interest and non-interest income. The trend of strong earnings growth continued into H108/09 when the bank recorded an 83.1% growth in gross earnings to N49.9bn while post-tax profit for the period increased by 66.5% to N10.5bn.
 
 
 
Strong levels of loan growth (126.2%) and write-offs caused Diamond's non-performing loan (NPL) ratio to improve to 4% at FY08 (FY07: 6.75%). On an absolute basis, Fitch notes that Diamond\'s NPLs increased by a rapid 166% yoy in FY08 after discounting the impact of write-offs. Management indicated that write-offs in FY08 consisted of a combination of legacy loans relating to the acquisition of Lion Bank in 2005 and other NPLs. The agency considers the bank\'s coverage ratio of 91.1% at FYE08 (FY07: 86.1%) to be low since a significant proportion of loans is unseasoned. Fitch anticipates that the recent trend of rapid credit growth could lead to deteriorating asset quality, especially in light of Diamond\'s core focus in the riskier commercial/SME and retail sectors. 
 
 
The strong levels of credit growth have caused liquidity indicators to tighten. Diamond raised US$500mn of new capital through a Global Depository Receipts Offering in FY08. However, rapid growth in risk-weighted assets in FY08 mostly offset the growth in the capital base. Diamond reported a Tier 1 capital ratio of 20.5% at FY08 (FY07: 18.6%). Fitch considered Diamond\'s levels of Tier 1 capital to be adequate.

 

Based on our evaluation, Diamond trades of 2009 multiples of 4.9x earnings and 0.7x book value and 2009 dividend yield of 10.4%. We equally estimate the bank's FY09 gross earnings and post-tax profit to be N99.5bn and N19.2bn respectively.
 
 
 

Tola Odukoya, Investment Research, UBA Global Markets Ltd.| UBA House (11th Floor), 57, Marina, Lagos, Nigeria, adetola.odukoya@ubagroup.com



Tags: , 



Comment With Your Facebook or Yahoo! ID


Latest news


News on Investors NewsBeat

About Us

Who We Are
Our Team & Partners
Corporate Governance
Advertise with Us
Subscribe / Unsubscribe
Site Map
News Feed - RSS
Newsletter
Contact Us
Message from CEO
Resources

News & Features
The Analyst / Market Data
Investor Relations Portal
The Regulator
Economy & Politics
WebTV
Training Portal
Events Calendar
NewsStands - Online Reputation

Products and Services

Research & Market Intelligence
Analyst Services
Offers & Rights Support Service
Investor Relations Services
Alert & Subscription Services
Share Support Services
Proshare Consult
Event & Seminar Coverage
Market Directory
File a Complaint
News & Analysis

#1minNews
News from TheANALYST
Video News from WebTV
Money Market Updates
Opinions & Analysis
Nigerian Economy
Market Data
The Regulator
Newsletters
Discussion Forum
Policy

Subscriber Agreement
Privacy Policy
Data Policy
Disclaimer
Copyright Policy
Trademarks
Comments in Site
Advertising Code
Conflict of Interest
Content Partnership
3rd Parties

Online Trading and Execution
Training
Legal Support Services
Web/Technology Services
File a Complaint