Diamond Bank optimistic as profit drops to N5.03b

Diamond Bank Plc yesterday released its audited report and accounts for the 2016 business year with an assurance that the fundamentals of the bank remain strong despite the tough macroeconomic environment.

Chief Executive Officer, Diamond Bank Plc, Uzoma Dozie, who spoke against the release of the 2016 results yesterday, said the fundamentals of the bank remain very strong as it continues to generate operating profits that are comparable to any of its peers, as evidenced by the 2016 financial results.

He however noted that impairments in the bank’s loan portfolio have continued to impact financial performance, assuring that mitigating the impact of impairments and improving the quality of loans underwritten remain priorities for the bank in 2017.

He assured that the regulatory capital of the bank remains strong while the liquidity of the bank also remains high and is well above the guidance ratio stipulated by the Central Bank of Nigeria (CBN).

“Looking to the year ahead, we believe the macro conditions and other external factors will remain challenging. However, by pursuing our technology-led retail strategy and with our focus on innovation and scalability, the bank is well-placed to benefit in the medium to long-term from the favourable fundamentals in Nigeria, namely a large population, many of which remain unbanked.

This strategy stands to benefit all stakeholders, including our shareholders and customers in the long run,” Dozie said.

Key extracts of the audited report and accounts for the year ended December 31, 2016 showed that gross earnings declined from N217.09 billion in 2015 to N212.41 billion in 2016. Profit before tax also dropped from N7.09 billion to N5.03 billion while profit after tax declined from N5.66 billion in 2015 to N3.50 billion in 2016.

The report showed that the bank posted 53 per cent growth in total comprehensive income to N12.1 billion with non-interest income surging by 6.9 per cent to N53.9 billion, ostensibly stimulated by transactional fees.

Although the ripple effect of the tough operating business environment impacted negatively on corporate performance, Diamond Bank demonstrated its ability to maintain appreciable growth as revenue from non-interest income, especially its mobile banking increased from N0.41 billion in 2015 to N2.6 billion in 2016.

This accounted for 19.2 per cent of N13.4 billion ADC revenue in 2016 with Diamond Mobile Apps usage surging from 6.8 million to 11.0 million, while transaction volume increased from N6.9 billion to N11.5 billion. The bank’s retail customer count currently stands at more than 13 million.

Dozie said the bank’s stable growth and continued success in spite of the harsh economic headwinds, is hinged on implementing retail and digital-led strategies that are primed to promote sustainable growth and profitability in the long term.

According to him, the restructuring of bank’s operating model was a key development completed last year with the emerging model improving customer engagement, value chain approach to business and efficiencies across the bank.

He noted that these measures have helped to improve Diamond Bank’s low-cost deposit base from the retail segment, while also facilitating growth in non-interest income and a reduction in interest expenses.

He said though Diamond Bank has continued to grow its corporate and mid-tier business segments, the bank’s focus remains on retail banking and providing convenient and easy banking to the Micro, Small and Medium-scale Enterprises (MSME) segment, pointing out that the concept of value chain management and the deployment of digital strategies will help provide end-to-end solution and ultimately improve value for the bank and the customers.

“In the months ahead, the bank will continue to deploy new technologies and digital applications to drive financial inclusion and convenient banking amid a decline in the pace of economic activities and weak economic fundamentals. The bank will also continue to deepen its retail strategy to mop up low cost fund, expand its credit creation structure and increase market share in all market segments,” Dozie added.