Earnings Analysis: Diamond Bank’s N 11.2 billion Loss in 2011

Diamond Bank recently reported an N 11.2 billion loss reflecting a difficult operating environment in 2011. The loss was primarily due to the fact that the company had to increase it provisions for losses by 93% to N 44 billion from N 22 billion in the previous financial year.

Notwithstanding the extraordinary items on the financial statement, the company actually had a good performance over the year. Gross Earnings were up 6% to N 94 billion whilst Net Interest Income was up 11.5% to N 55 billion in 2011.

The company also reported a N 5 billion tax write-back which helped improve its net income reported.

•  Total Assets were up 11% quarter on quarter to N803.7 billion and up 35% year on year  (N725.1 billion Sept 2011 and 594.8 billion Dec 2010)
• Customer deposits up 14% quarter on quarter to N601.7 billion and up 46% year on year (N529.3 billion Sept 2011 and N412.0 billion Dec 2010)
• Loans to customers (net) up 3% quarter on quarter to N397.4 billion and up 27% year on year (N386.4 billion Sept 2011 and N312.2 billion Dec 2010)

Dr. Alex Otti, Managing Director of Diamond Bank commented: “Diamond Bank has made significant progress in cleaning up the risk assets portfolio during 2011 and is a far stronger institution today than it was this time last year. The new management team which took office under my leadership in March 2011 has consistently delivered on its promise to cautiously provide for NPLs and manage the impact of divestment from our non-banking subsidiaries while growing the retail banking franchise and positioning us to resume loan growth in the corporate space.
We have restructured the bank’s earnings drivers in favour of non interest bearing income and risk asset generation in the top mid tier corporate space and the retail consumer space. We will continue to capitalise on our head start in the retail space by gaining more market share in 2012 servicing a rising number of Nigeria’s unbanked population. Risk management is and will remain central to this strategy ensuring our operating profitability is converted into rising and sustainable returns to our shareholders going forward.”