Diamond Bank’s Recent Performances Worry Shareholders, Investors

By Modupe Gbadeyanka

Shareholders and investors at Nigerian stock market are really not happy with the results recently churned out Diamond Bank Plc.

Some of those who spoke with Business Post said they are disappointed with the performance of the mid-level financial institution lately.

For example, Diamond Bank, in its financial statements for the period ended December 31, 2017, declared a loss before tax of N11.6 billion compared with the profit before tax of N3.4 billion it achieved two years ago.

Also, the firm recorded a loss after tax of N9 billion during the period under review against the profit after tax of N3.5 billion in 2016.

During the period under review, fee and commission income dropped to N37.1 billion from N41.4 billion in 2016, while it slightly pruned down its fee and commission expense to N8.5 billion last year from N8.8 billion two years ago.

This left the net fee and commission income closing at N28.6 billion in 2017 against N32.6 billion in 2016.

Also, the net operating income went down to N77.3 billion last year from N86.9 billion a year earlier with the total expenses during the year under review at N88.9 billion against N83.6 billion in 2016.

For its balance sheet, the total assets of Diamond Bank as at December 2017 stood at N1.7 trillion against N2.1 trillion in 2016, while the total liabilities reduced to N1.5 trillion from N1.8 trillion.

On Monday, July 30, 2018, the bank released its financial scorecard for the first six months of this year and the performance was not too different from the previous ones, leaving shareholders to worry about the health status of the bank.

For example, in H1 2018, the lender’s profit after tax went down by N6.2 billion or 77.6 percent to N1.8 billion from N8 billion, while the profit before tax declined by 69.3 percent from N9.5 billion to N2.9 billion.

Also, its interest and similar went down to N75 billion from N76.5 billion, while the interest and similar expenses shot up to N28.5 billion from N22.5 billion.

In the period under review, the net interest income dropped by 14 percent to N46.5 billion from N54.1 billion, while the impairment charge for credit losses closed at N18.4 billion as at June 30, 2018 against N18.9 billion as at June 30, 2017.

Also, the net interest income after impairment charge for credit losses stood at N28.1 billion versus N35.1 billion, with the fee and commission income at N19.2 billion in contrast to N19.2 billion.

Under the operating expenses, the lender posted N11.6 billion against N12.5 billion, representing 6.9 percent reduction, while the depreciation and amortization stood at N4.1 billion versus N4 billion, while the operating lease expenses closed at N507.9 million compared with N484.7 million, with the total expenses rising by 1.7 percent to N44.3 billion from N43.5 billion.

A look at the balance sheet by Business Post showed that the total assets dropped by 23.2 percent to N1.6 trillion from N2.1 trillion, while the total liabilities reduced to N1.4 trillion from N1.8 trillion with the shareholders’ fund shedding 7 percent to N221.5 billion from N238.2 billion.

The earnings per share (EPS) depreciated by 77.6 percent in the period under review to 8 kobo from 35 kobo, while the return on assets closed at 0.11 percent from 0.39 percent with the return on equity ending at 0.81 percent from 3.37 percent

However, the gross earnings grew by 0.62 percent to N98.5 billion in H1 2018 from N97.9 billion in H1 2017.

“Diamond Bank’s results lately are not encouraging. We don’t know what is wrong with the bank,” an investor in the nation’s bourse told Business Post on Tuesday.

But the Chief Executive Officer of Diamond Bank, Mr Uzoma Dozie, assured that all was well with the financial institution.

While commenting on the H1 2018 results of the company, Mr Dozie said, “At a macro level the Nigerian economy continued to record improvements because of stable, higher than anticipated oil prices.

“We have witnessed 15 months of expansion reflected in monthly PMI data, but investor sentiment has remained mixed caused in part by the election season factor.

“We have capitalised on the positive macro environment to sustain interest income in the short run with positive prospects for growth and have made progress in growing non-interest income.

“Importantly, we have continued to build awareness of Diamond Bank in the wider financial ecosystem to develop new frontiers in retail banking.

“Amongst this activity were the Beauty Souk and TechFest events, targeted at entrepreneurs and emerging businesses in the fashion and technology sectors respectively.

“Our partnership with Lagos Business School’s Enterprise Development Center to support young entrepreneurs continued with the seventh season of the Building Entrepreneurs Today program.

“In addition to retail banking, we are investing more resources in our mid-market business banking services to seize the opportunities emerging in that segment. In the second half of 2018, these investments will lead to improved profitability overall.

“Despite a tough six months being reported, the outlook for 2018 remains bright for the bank as we continue to focus on a return to strong profitability and improvement in other KPIs.”

Business Post reports that Diamond Bank shares lost 14 kobo or 10 percent on Tuesday to settle at N1.26k per share.