Diamond Bank forewarns investors of declining profit

For shareholders of Diamond Bank Plc, they should have less hopes of any impressive performance by their bank as the board of directors of the bank has warned that it suffered decline in profit in the 2015 business year.

In a profit warning made available to the investing public at the weekend, the bank stated that its profit might drop as impaired loans weighed on the bottom-line and balance sheet of the bank.

The bank stated that preliminary review of its accounts had shown that its profit for the immediate past year ended December 31, 2015 might be lower than expected and below the figures realized during the year ended December 31, 2014.

Diamond Bank blamed continuing deterioration in Nigeria’s macro-economic conditions and the global crude oil crisis for the slowdown in performance noting that it had to recognise higher than expected impairment charges on loans made to the energy and commercial business sectors.

“In light of these deteriorating conditions, and subsequent review of Diamond Bank Plc’s management accounts for the financial year ended December 31, 2015, preliminary indications are that earnings will be lower than in 2014,” Diamond Bank stated.

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The bank is expected to release the detailed financial statements for the 2015 business year on or before March 31, 2016.

Diamond Bank assured that it had in recent years deployed considerable resources in building a dependable risk management framework, and the quality of its loan portfolio in general, remains high.

The bank however reassured that it remains determined to deliver on its stated strategy of creating Nigeria’s leading technology-led retail bank, noting that in 2016 the business has made significant changes to its operating structure that will result in reductions in operating costs.

According to the bank, further investment has been made to improve customer relationships and revenue in the core business segments. These actions are aimed at delivering improved earnings and lower operating costs from 2016 onward.

“Overall, despite the headwinds and the fact that 2016 presents a tough operating environment for the industry, we remain optimistic on the fundamentals underpinning our long term retail-led business strategy,” Diamond bank stated.

Third quarter report of Diamond Bank for the period ended September 30, 2015 showed that gross earnings rose from N151.6 billion recorded in third quarter 2014 to N156.5 billion in third quarter 2015, representing an increase of 3.2 per cent. Net interest income increased to N85.2 billion against N82.6 billion in comparable period of 2014. Profit before tax however dropped from N23.7 billion to N18.6 billion while profit after tax also declined from N20.19 billion to N18 billion.

 

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