DIAMOND Bank Plc grew its deposits by 13 per cent to N464.806 billion for the half-year (H1) ended June 30, 2011, giving further boost to investor confidence. Its deposit base was N412.031 billion for the first half of 2010.
The performance, financial analysts said, showed the growing confidence investors have in Diamond Bank, given its efficient service delivery culture.
The results released recently also showed that the bank significantly increased its financing activities in the nation’s economy as its loans and advances grew from N307.135 billion in 2010 to N348.679 billion in 2011.
A further analysis of the figures indicated that Diamond Bank ended the H1 with an operating income of N39.233 billion, up from N34.891 billion in 2010.
However, a deliberate policy of the management of the bank to clean up its books and prepare for more profitability in the years ahead led to a provision of N10.9 billion for non-performing loans (NPLs) in H1 of 2011. This led to a decrease in the profit after tax to N1.203 billion compared with N4.585 billion in the corresponding period of 2010.
The bank had cut down its NPLs to N40.6 billion from N60.3 billion a year ago, through the sale of N21 billion worth of NPLs to Asset Management Corporation (AMCON). The bank also planned to sell additional N20 billion NPLs in the third quarter of 2011 to AMCON, against which it expects to receive N10 billion.
Financial analysts said shareholders of the bank should expect an impressive performance going forward, as the clean-up exercise would impact its profitability positively. They believe that the bank’s earnings generation profile has not been impaired in any way.
Diamond Bank booked N5.9 billion in write backs for fully provisioned NPLs in the H1, which made its NPL ratio fall to 10.8 per cent from 17.7 per cent in H1 2010, while NPL coverage also fell markedly to 50.4 in H1 2011 from 90.3 per cent in the previous year.
Besides, the capital adequacy ratio (CAR) of the bank would be boosted by about N14.3 billion expected from the disposal of its non-banking subsidiaries.
Having opted for pure-play commercial banking license (with international outlook), the bank has been selling of its various subsidiaries. For instance, Diamond Bank has is insurance subsidiary, ADIC Insurance Limited to NSIA Group, while Diamond Mortgages has been reintegrated into the bank,
Similarly, Diamond Securities Limited and Diamond Registrars Limited have been sold to Kaizen Ventures. Also, the operating licence of Diamond Capital Limited has been sold to Kaizen Ventures, while underlying assets of the investment banking subsidiary will be stripped and sold on an individual basis.
Analysts at Afrinvest West Africa Limited, an invest bank, recently said that Diamond Bank’s business remains strong operationally with particular emphasis on its retail business, which holds the key to unlocking significant growth opportunity over the medium term for Nigerian banks.
Commenting on the results H1 2011 results, Group Managing Director and Chief Executive Officer of the bank, Mr. Alex Otti said, “the bank’s operational focus in the second half of 2011 will be directed towards its areas of core competence, ensuring that the bank continues its endeavours in the retail banking sector, prioritising customer experience and operational efficiency as two key deliverables to distinguish Diamond Bank from Nigeria’s other retail banks.”
Otti had recently told shareholders that the bank was poised to consistently deliver market-beating customer retail banking experience, engage in superior deployment of resources including capital, and utilise technological capabilities as an effective business enabler in all its ramifications.
Looking ahead, the Otti said, “we are determined to accomplish greater market penetration and customer service delivery milestones leveraging on our mission of building a unique international bank. While transiting from universal banking into an international commercial bank business model, which I believe, would strengthen our resilience and power required to effectively withstand the challenges of the times and emerge a leader in the industry. Our eyes are really on a very bright future.”
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