Banking
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.
By Aduragbemi Omiyale
The Central Bank of Nigeria (CBN) has reaffirmed that the old and new Naira notes will continue to be used for financial transactions in the country beyond December 31, 2024.
There had been rumours that the old and redesigned N200, N500, and N1,000 banknotes would no longer be legal tender from Wednesday, January 1, 2025, because the central bank would phase out the notes in compliance with a Supreme Court judgement of November 29, 2023.
But the apex bank, in a statement signed by its acting Director of Corporate Communications, Mrs Hakama Ali, on Friday, clarified that the apex court’s judgement being cited did not authorise the bank to phase out the banknotes by the end of this year.
According to her, the court allowed the CBN to leave the old and new notes to be used concurrently until it decides to gradually phase out the former.
The central bank’s spokesperson urged members of the public to disregard claims suggesting the old series of these denominations would cease to be valid at the end of this year.
She urged them to continue to accept all Naira notes for daily transactions, encouraging banks to also adopt alternative payment methods such as electronic channels to reduce the pressure on physical cash usage.
“The Central Bank of Nigeria (CBN) has observed the misinformation regarding the validity of the old N1000, N500, and N200 banknotes currently in circulation.
“In line with the bank’s previous clarifications and to offer further assurance, the CBN wishes to reiterate that the subsisting Supreme Court ruling granted on November 29, 2023, permits the concurrent circulation of all versions of the N1000, N500, and N200 denominations of the Naira indefinitely.
“For the avoidance of doubt, all versions of the naira, including the old and new designs of N1000, N500, and N200 denominations, as well as the commemorative and previous designs of the N100 denomination, remain valid and continue to be legal tender without any deadlines,” the statement noted.
By Adedapo Adesanya
Access Bank Plc, the banking subsidiary of Access Holdings Plc, has entered into a binding agreement with South African-based Bidvest Group Limited for the acquisition of 100 per cent equity stake in Bidvest Bank Limited.
The deal for the 24-year-old South African lender is due to be completed in the second half of 2025, upon regulatory approval.
This shows Access Bank’s further expansion plans in line with goals set by its late founder, Mr Herbert Wigwe.
The agreement to acquire 100 percent stake in Bidvest Bank reflects Access Bank’s commitment to strengthening its footprint in South Africa and consolidating on its position as the continent’s gateway to global markets as it seeks to optimise the benefits of recent acquisitions and accelerate its transition towards a greater focus on efficiencies.
Bidvest Bank, founded in 2000 is a niche and profitable South African financial institution providing a diverse range of services, including corporate and business banking solutions and diverse retail banking products.
As of its year ended June 2024, Bidvest Bank reported total assets equivalent of $665million and audited profit before tax of $20million.
Upon conclusion of this acquisition, Bidvest Bank will be merged with the bank’s existing South African subsidiary to create an enlarged platform to anchor the regional growth strategy for the SADC region.
This is coming just as the bank opened a new branch in Malta as part of efforts to focus on international trade finance after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
The Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
By Modupe Gbadeyanka
To strengthen Europe-Africa trade ties, Access Bank has opened a new branch in Malta. It will focus on international trade finance, employing approximately 30 people in its initial phase, with plans for controlled expansion over time.
It was learned that this Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
Access Bank Malta Limited commenced operations after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
Malta, a renowned international financial centre, and a gateway between the two continents, is strategically positioned to play a pivotal role in advancing commerce and fostering economic partnerships.
This strategic expansion into Malta enables The Access Bank UK Limited to leverage growing trade opportunities between Europe and Africa.
It underscores the organisation’s commitment to driving global trade, financial integration, and supporting businesses across these regions.
“By establishing operations in Malta, we will gain a foothold in a market that bridges European and North African economies, moving us one step closer to our goal of becoming Africa’s Gateway to the World.
“It further enhances our bank’s capacity to support clients with innovative solutions tailored to cross-border trade and investment opportunities,” the chief executive of Access Bank, Mr Roosevelt Ogbonna, stated.
“Europe has emerged as Africa’s leading trading partner, driven by initiatives such as the Economic Partnership Agreements between the EU and African regions and the African Continental Free Trade Area (AfCFTA).
“With Europe-Africa economic relations entering a new phase, The Access Bank Malta Limited is ideally positioned to deepen trade and meet the financing and banking needs of our clients in these expanding markets,” the chief executive of Access Bank UK, Mr Jamie Simmonds, commented.
Also speaking, the chief executive of Access Bank Malta, Renald Theuma, said, “Malta is uniquely positioned as a bridge between Europe and Africa, making it an ideal location for our subsidiary. This move allows The Access Bank Malta Limited to engage more closely with customers in Europe and deliver tailored financial solutions that drive growth and connectivity across both continents.”
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