Diamond Bank Plc, one of the tier two bank has sustained its low earnings performance as shown in its unaudited third quarter financial for the period ended September 30, 2016. Key highlight of the accounts shows that profit for the period went down by 78 percent from N15,967 billion in 2015 to N3,511 billion at the end of September 30, 2016.
Profit before tax also dropped sharply by 79.1 percent to N3.892 billion, which is far below N18.595 billion that was recorded same period in 2015. Gross earning was down marginally by 3 percent to N151.109 billion in the period under consideration, as against N156.543 billion that was posted in 2015. Earnings per shares dropped by 77.9 percent to 15 kobo against 68 kobo that was reported in 2015.
However, the management of Diamond Bank was able to reduce their operating expenses by 3 percent from N74.377 million in 2015 to N71.886 million for the nine months of 2016. According to market analyst, the main reason for this poor set of results appears to be asset quality deterioration.
Loan loss provisions grew by 230 percent year on year and by over 100 percent quarter on quarter to N21 billion. This single result overshadowed a 17 percent year on year growth in profit before provisions of N40 billion. Of the two revenue lines, net interest income grew 7 percent to N28 billion while non-interest income grew much faster, by 51 percent year on year to N11 billion.
In addition, analyst focus and concern are more on the level of the bank provisioning, because Diamond Bank had guided to a cost of risk estimate of around 5 percent for the year. It is likely to breach that figure now since the nine month figure equates to a what a full year 5 percent cost of risk figure will imply, unless the bank is able to find recoveries in the fourth quarter.