Friday, July 29, 2016 5:17pm/ Diamond Bank Plc
Half Year Highlights
· Profit before tax of N10.5 billion from operations in first half of 2016.
· Non-interest income increased by 33.4% to N26.5 billion, reflecting successful efforts targeted at improving this income line.
· Impairment charge of N19.0 billion, representing a year-on-year increase of 45.6%, and a continuation of the bank’s prudent approach to provisioning.
· Operating costs and interest expense are down by 10.7% and 27.5% respectively compared to H1 2015, reflecting success of the cost control initiative and low cost deposit strategy.
· Total comprehensive income rose by 13.3% year on year to N16.3 billion.
· Fitch Ratings affirms Diamond Bank’s B rating with stable outlook.
· Despite economic headwinds, Diamond Bank’s strategy is delivering a platform for growth with prospects for improved earnings and lower operating costs for the rest of 2016.
· Organizational restructuring that commenced in Q1 2016 begins to deliver results in terms of specialization, service delivery and cost containment.
· Continued focus on digital and IT infrastructure providing scale and efficiencies.
· Over 12 million retail customers on our books with 7 million of these opening accounts in the last 2 years.
· Diamond Mobile Apps usage continues to accelerate as transaction count increased from 1.6 million to 5.1 million while volume increased from N1.26 billion to N5.5 billion year on year.
Commenting on the results, the Chief Executive Officer, Mr. Uzoma Dozie said: “With the domestic economy contracting, the Nigerian banking industry has faced a number of challenges over the last six months. Nevertheless, in the first half of 2016, we have remained resilient in weathering these headwinds and there are real bright spots in our income streams, as well as noteworthy cost reduction, which gives us confidence going into the second half of the year.
Due to actions taken and an ongoing prudent approach, our regulatory capital remains strong. Liquidity of the bank also remains high and is well above the guidance ratio stipulated by CBN.
We believe the macro conditions and other external factors will remain challenging. Moreover, naira devaluation, rising inflation and an interplay of other macro-economic conditions may lead to elevated levels of impairment charges in 2016. However, our very conservative approach to managing our loan book protects its quality in the long run.”
In first half of 2016 Diamond Bank continued to progress with the roll out of its technology-led retail strategy, which included reconfiguring its operating model. In Q1, the focus was on the market facing business units and this has since shifted to the support functions within the organization. Digital platforms have also helped cost reduction.
The last six months were marked by dynamic changes in the wider economy that continue to have an impact on the banking sector. These range from devaluation of the naira, foreign exchange scarcity, difficult operating environment for companies, and backlog of unpaid salaries and wages for employees.
To address these challenges, Diamond Bank has continued its focus on cost reduction, resulting in a 10.7% fall in operating expenses, and a 3.8% drop in employee benefit expenses in the first half of the year. The Bank has also improved cross selling across the retail, business and corporate segments.
As a result, Diamond Bank is better positioned for second half of 2016 and thereafter.
Mr. Dozie also said:
“In the last few months, evidence has shown that the new strategy and initiatives to curtail costs are proving successful and are reflected in the bank’s financial indicators. This is reassuring. Year on year, costs came in lower and as we conclude the organizational restructure, we expect to harvest more savings from operational and employee expenses. The primary benefits of this however are the resources that we have freed up to provide improved services to customers. Having done this, we are optimistic that the bank is in the right markets and has the wherewithal to excel and create value for shareholders in the long run.”
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