29 Apr 2010 13:20
Diamond Bank Plc
Audited Results for the 8 months ended 31 December 2009
DIAMOND BANK PLC REPORTS RESULTS FOR THE 8-MONTH PERIOD ENDED 31 DECEMBER 2009, SHOWING RESILIENT NET INTEREST INCOME AND CONTINUED DEPOSIT GROWTH
LAGOS, NIGERIA - 29 APRIL 2010 - Diamond Bank Plc, (Bloomberg: DIAMONDB NL/ Reuters: DIAMONB.LG) ("Diamond Bank" or the "Group"), the provider of comprehensive banking and other financial services to corporate and individual customers across Nigeria and Africa announces its results for the 8 months ended 31 December 2009.
Speaking from headquarters in Lagos, Emeka Onwuka, Managing Director of Diamond Bank commented: "The period under review has been challenging for the entire Nigerian banking sector. Diamond Bank's results before exceptional provisions have proved resilient in the face of these challenging conditions with the Group continuing to grow deposits at a sensible rate and with operating income holding up well. However, our profits have been impacted by large one-off provisions which we have provided for in accordance with the CBN's guidelines for the period.
We have taken substantive measures to improve our risk management and this is borne out by a substantial reduction in our provisions post year-end and a return to profitability which is reflected in our Q1 results. Despite the challenges of the previous year we have maintained our shareholders' funds at N106 billion, with continued strong liquidity and capital adequacy ratios of 37.6% and 19.5%, respectively. We are confident we will continue on our path of profitable growth for this financial year and going forward."
Financial Highlights
Profit & Loss - sustained net interest and operating income
·; Gross earnings of N67.7 billion for the 8 month period ended 31 December 2009 (N67.8 billion 8 month period ended 31 Dec 2008)
·; Net interest income of N25.8 billion for the period, an increase of 1% versus the comparable prior year period (N25.6 billion Dec 2008)
·; Operating income of N42.5 billion (N45.5 billion Dec 2008)
·; Provision for losses of N24.7 billion, due to increase in one-off large provisions which have been accounted for (N1 billion Dec 2008)
·; Loss before tax of N12.4 billion for the period, due to large one-off provision, compared to profit before tax of N17.3 billion for the comparable prior year period. Loss after tax for the period was N8.2 billion.
Balance Sheet - continued steady growth in customer deposits
·; Total Assets up 9% to N650.8 billion (N594.5 billion Dec 2008)
·; Loans to customers down by 8% to N329.8 billion (N360.3 billion Dec 2008)
·; Customer deposits up 33% to N482.1 billion (N363.3 billion Dec 2008)
Key Ratios - key ratios well above CBN minimum reflecting strong balance sheet
·; Annualized ROAE of -11.1%
·; Risk adjusted capital ratio of 19.5% (all tier 1)
·; NPL ratio of 18.2% due to one-off provisioning effect
·; Cost/income ratio of 70.9%
·; Loan to deposit ratio of 77.5%
·; Liquidity ratio of 37.6% (CBN Statutory minimum of 25%)
Strategic Business Units - Highlights
Retail Banking
- The division produced a profit before tax of N4.9 billion for the 8 month period ending 31 December 2009. This was down from N9.8 billion for the comparable prior year period."During the period the retail unit's deposits increased by 22%" said Gary Marsh, head of the Retail Banking Unit. "The Group was able to continue to attract deposits due to its strong distribution network and deliberate focus on attracting a larger percentage of demand deposits, rather than more expensive term deposits. This resulted in the unit's average weighted cost of funds falling from 6% to under 4%. With the launch of our new Business Express account in December 2009 the really exciting part of retail deposit collections is still to come in 2010. By scrapping commissions on transactions for small business accounts and replacing them with a fixed fee structure we expect to see SME customers concentrate their deposits with Diamond Bank in the year ahead. This coupled with recently launched consumer finance products in vehicle asset finance, personal loans and mortgages, bolsters our outlook for 2010 in spite of the slower than anticipated pace of economic recovery."
Corporate Banking
- Corproate Banking produced a loss before tax of N14.3 billion for the 8 month period ending 31 December 2009. This compared to N6.9 billion for the comparable prior year period. Commenting on the results from Diamond Bank's headquarters in Victoria Island, Uzoma Dozie, ED Corporate Banking said: "The main reason for the drop in profitability was the significant rise in provisions. The challenge ahead is to reduce our NPL concentration and to grow our risk assets in a slower growth environment than before while complying with our new risk management framework. We expect to see increased revenues in 2010 by taking advantage of opportunities to provide specialized solutions to our corporate customers. These help them to minimize their cash management costs and optimize their collection processes ensuring they enhance their credit worthiness and can take advantage of opportunities as the economy starts to recover. In addition we will continue to leverage our investment last year in new IT systems to benefit from added sources of fee income coming from cash management and electronic payment services. Lastly we will continue to offer low cost funding solutions through our strong ties with development finance institutions. Based on these initiatives we are well poised to gain market share as economic activity recovers and to achieve our performance targets in 2010.
Investment Banking
- Investment Banking produced a loss before tax of N2.1 billion for the 8 month period ending 31 December 2009. This compared to a loss before tax of N39 million for the comparable prior year period. "The result is reflective of the significant asset write downs in our Diamond Securities subsidiary and the near absence of advisory mandates in 2009 following the economic downturn. The outlook for 2010 is however positive as we are seeing a strong deal pipeline in the structured/project finance space and the closure of some dated-key transactions in the wake of the resuscitation of credit and funding appetite in the local financial market."
Operational Highlights
- Introduction of new and more stringent risk management guidelines, notably the bank has set itself a single obligor limit of 4% of shareholders' funds, well under the 20% limit set by the CBN.
- Project Sparkle gaining momentum on reducing operating expenses with significant savings anticipated in the coming quarters. The objective is to optimize business internally and externally. There are 5 objectives, covering: financial planning which is focusing on the cost to income ratio as a key expense monitoring parameter, sales optimization which is targeted at increasing sales by at least 10%, operations optimization which is aiming at improving both productivity and centralizing operations, risk management which will set out clear risk metrics to enable the bank to match risk appetite with strategy and, lastly, IT architecture and governance which will deliver a state of the art IT infrastructure.
(For the detailed Profit and Loss Account, Balance Sheet, Cashflow statement and notes to the accounts, please visit our website - www.diamondbank.com)
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Conference Call for Results
Diamond Bank Plc (Bloomberg: DIAMONDB NL / Reuters DIAMONB.LG) will be hosting a teleconference call for analysts and investors on Monday 10th May at 2 pm London and Lagos (9am New York / 3pm Johannesburg & Cape Town) with its senior management to discuss Diamond Bank Plc's 8-months results for the year ended 31 December 2009 and first quarter results for the three months ended 31 March 2010. There will also be an opportunity at the end of the call for management to take questions from investors and analysts.
The teleconference call facility can be accessed by dialing:
+44 (0)20 7806 1951 in the UK
+1 212 444 0412 in the US
And then entering the following access code:
4694038
Participants should register for the call at least five minutes before the start of the presentation.
The presentation will be posted to Diamond Bank's website on the morning of 10th May at www.diamondbank.com
For those who are unable to listen to the live call, a replay facility will be available until 24th May 2010 by dialing +44 (0)20 7111 1244 (UK) and +1 347 366 9565 (US) and entering access code 4694038#
- ENDS -
For further information please contact:
Chiugo Ndubisi cndubisi@diamondbank.com +234 (1) 448 9832
Africa Practice / Financial Dynamics
London:
Ed Gascoigne-Pees ed.gascoigne-pees@fd.com +44 (0)20 7269 7132
Kat Bloom kat.bloom@fd.com +44 (0)20 7269 7223
Lagos:
Nick Chambers nchambers@africapractice.com +234 703 232 3089
Tim Newbold tnewbold@africapractice.com +234 805 494 9866
Notes to editors:
About Diamond Bank plc
Diamond Bank Plc began as a private limited liability company on March 21, 1991 (the company was incorporated on December 20, 1990). Ten years later, in February 2001, it became a universal bank. In January 2005, following a highly successful Private Placement share offer which substantially raised the Bank's equity base, Diamond Bank became a public limited company. In May 2005, the Bank was listed on The Nigerian Stock Exchange.
Today, Diamond Bank is one of the leading banks in Nigeria* - respected for its excellent service delivery, driven by innovation and operating on the most advanced banking technology platform in the market. Diamond Bank has over the years leveraged on its underlying resilience to grow its asset base and to successfully retain its key business relationships.
We have retained excellent banking relationships with a number of well-known international banks, allowing us to provide a bouquet of world class banking services to suit the business needs of our clients. These international banking partners include Citibank; HSBC Bank; ANZ Banking Group; ING BHF Bank AG; Standard Chartered Bank; Belgolaise Bank S.A; Deutsche Bank; Commerzbank; and Nordea Bank Plc.
* Diamond Bank's A- rating by Fitch Ratings and A+ rating by GCR, reflects the bank's sustainable liquidity, sound and professional practices and good standing as a high investment grade institution.
More information can be found at www.diamondbankplc.com