DIAMONDBNK Q4'15 & Q1'16 Earnings Presentation: The key takeaways

Proshare

Tuesday, May 10, 2016 5:22 PM / Research

The macro-economic challenges remain daunting; with corresponding strict industry regulations. The new policy by Federal Government on full implementation of Treasury Single Account played a significant role on the liquidity challenges within industry. The continued tightening of liquidity posture amid scarcity of FX further reflect difficult business environment in 2015.

There are strong indications that microeconomic challenges that influenced business outlook in 2015 financial year are likely to persist in 2016. The low oil price, FX scarcity and market volatility would continue to adversely impact business.

As a result of difficult operating environment in the 2015 financial year, Diamond Bank Plc delivered unimpressive performance, with significant plunge in profitability posture and challenged top-line performance for 2015 FY. Significant drop in volume of trades and huge impairment charges on risk assets are the key factors. 

In both Q4’15 and Q1’16 periods- the performance outlook remain unchanged, as the bank posted 4% and 3% growth its top-line respectively while its PAT closed with negative growth of 78% and 19% respectively. The sustained weakness in interest income impacted the outlook. 

Though, it was observe non-interest income remain strong and healthy in both periods. This had has translated to unimpressive returns to shareholders fund as ROE in 2015FY closed lower at 2.7% against 14.7% recorded in 2014 FY, similar pattern was recorded for Q1’16 to close at 10.6% against 13.4% posted in Q1’15.

Also, the NPL ratio closed above regulatory threshold of 5%, the bank posted 6.9% and 7.10% in both Q4’15 and Q1’16 periods respectively against 5.1% and 5.0% recorded in Q4’14 and Q1’15 respectively.

However, the operating efficiency and cost management came in stronger, though with a bloated CIR of 61.0% in Q4’15 against 54.6% recorded in 2014 FY. Also, the CIR moderated at 60.6% in Q1’16 against 62.0% posted in Q1’15

Summarily, below are the key takeaways from the 12Months 2015 and 3months 2016 earnings presentation as presented by the management of the bank;


         Implementation of TSA impacts deposit posture

         Corporate banking loans increased by 13% Y-o-Y on the strength of emerging opportunities in relationships with blue chip companies

         Payment gateways impacted deposit growth

         Loan volume gained marginal weight on Q-on-Q, driven by new emerging opportunities in the industry

         The low cost deposit aided the improved and efficient deposit structure

         Prudential provisions to power, Oil and Gas and general commerce sectors contributed to the decline in PAT

         Delayed in payment from Oil and Gas calls for loan structure

         The non-interest income remains strong and healthy

         The bank is expecting recovery on NPL in near term

         Majority of loans to upstream companies would restructured

         The bank is unlikely to be invited for questioning by EFCC

         Exposure to Oando Plc is not significant

Related NEWS

1.       DIAMONDBNK Q1 16 Results - Loan Loss Provisions Still Running High

 

2.      DIAMONDBNK Declares N5.76 billion PAT  in Q1 2016 Result,(SP:N1.42k)

3.      DIAMONDBNK Reports N11.5bn Pre-tax Loss Driven by Increase in Impairment Charges

4.      DIAMONDBNK Declares N5.66 billion PAT  in 2015 Audited Result,(SP:N1.42k)

5.       DIAMONDBNK Notifies on Late Filing of 2015 Audited Financial Statements

6.      DIAMONDBNK Issues Profit Guidance for the Year Ended 31st December 2015

7.       Diamond Bank posts 20.88 decline in PAT as Revenue grows by 2.22 in Q3 15

8.      DIAMONDBNK Declares N12.2 billion PAT in Q2 15 Result SP N3.90k

9.      DIAMONDBNK declares N7.17billion PAT in Q1 15 result SP N4.50k

10.   DIAMONDBNK Proposes 10kobo Dividend per share in 14 Audited result SP N4.18k

11.     Diamond Bank Plc Post Rights Issue Performance Review 
 

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