The decline in Diamond Bank Plc bottom line for the 2016 financial year which started in its first quarter performance, has been sustained in second quarter report for the period ended June 30, 2016.
The bank posted profit after tax of N9.05 billion for the period under consideration which is lower than N12.2 billion that was recorded same period in 2015, showing a decline of 25.5 percent.
Profit before tax was also dropped to N10.5 billion in 2016 when compared with N14.2 billion that was recorded same period in 2015.
Earnings per share witnessed a sharp drop from 52 kobo in 2015 to 39 kobo in the second quarter of 2016. Although, despite the drop in profit, the bank was able to improve on its credit creation by 28.6 percent as loans and advances to customers grew from N763.6 billion in 2015 to N982.3 billion in 2016.
While its retail customers grew to over 13 million with 7 million of these opening accounts in the last two years. Shareholders are still not comfortable with the current result, bearing in mind that no dividend was paid in 2015 financial year.
The introduction of the Treasury Single Accounts (TSA) impacted negatively on the bank loan and deposit growth in 2015, which made loans and advances to customers to go down by 3.47 percent while deposit from customers fell by 18 percent.
Market watchers have observed that the rate at which banks earnings are dented by loss loan expenses or huge write offs is worrisome and must be curbed to avoid a financial crisis. However, analysis of the bank unaudited first quarter report for the period ended March 31, shows that profit after tax dropped from N7.17 billion in 2015 to N5.76 billion in 2016.
Interest and similar incomes declined to N35.71 billion in contrast to N40.49 billion in 2015. The bank, during first quarter of 2016 reported an impairment charge of N8.81 billion compared to N6.47 billion in 2015. This Mr Uzoma Dozie, Managing Director / Chief Executive Officer of the bank attributed to the economic challenges witnessed in 2015 that still rear its face in first quarter of 2016.
On March 11, 2016 Diamond Bank sent a profit warning to the market concerning its 2015 full year account that the continuing deterioration in Nigeria macro-economic condition has resulted in the bank recognizing higher than expected impairments charges on loans made to the energy and commercial business sectors.
The bank pointed out in the warning to existing and prospective investors that in light of these deteriorating conditions, and subsequent review of the bank management accounts for the financial year ended December 31, 2015, preliminary indications are that earnings will be lower than in 2014.
While assuring investors that in recent years it has deployed considerable resources in building a dependable risk management framework as the quality of its loan portfolio in general remain high.
Adding that the bank remain determined to deliver on its stated strategy of creating Nigeria leading technology led retail bank aimed at delivering improved earnings and lower operating costs. Already according to the bank, in 2016 the business has made significant changes to its operating structure that will result in reductions in operating costs.
Further investment had also been made to improve customer relationships and revenue in core business segments. Despite the economic challenges, the bank managements are optimistic and resilient throughout second half of 2016, according to Uzoma Dozie, the bank strong liquidity and capital adequacy ratios plus its digital transformation have rightly positioned it to meet customer obligations.
Diamond Bank selling at N1.51 kobo began as a private limited liability company on March 21, 1991 and was incorporated on December 20, 1990. And became a universal bank in February 2001. Listed the floor of Nigerian Stock Exchange on May 27, 2005 during the Central Bank of Nigeria banking consolidation.