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Tag: Diamond

  • Diamond targets N50.4b for Capital Adequacy Ratio

    Diamond Bank Plc is planning to raise N50.4 billion  to improve its Capital Adequacy Ratio (CAR) and boost its growth.

    The bank, which has released details of its rights issue on the Nigerian Stock Exchange (NSE) and its website, will issue 8,685,145,863 ordinary shares of 50 kobo each at N5.80/share. Qualification date for the rights issue was June 13.

    CAR, also known as Capital to Risk (Weighted) Assets Ratio (CRAR), is the ratio of a bank’s capital to its risk. The Central Bank of Nigeria (CBN) tracks a bank’s CAR to ensure that it can absorb a reasonable amount of loss and complies with statutory capital requirements.

    On the bank’s capital raising, Renaissance Capital (RenCap), an investment and research firm, said the rights issue was expected to open today and close on August 26.

    “We view this as a step in the right direction by Diamond, the fastest-growing Nigerian bank over the past three years, and recommend qualifying investors should take up their rights. The bank grew total assets by 155 per cent between 2010 and 2013. Delivering such impressive growth, despite its capital constraints and recording two consecutive years of 23 per cent Return on Equity 2012 and 2013. We find this remarkable,” it said in a report titled:”Diamond Bank – Time for the rights”.

    RenCap said the lender needed capital to support the next phase of its strategic growth plan, adding that the bank could achieve a loan growth of 20 per cent this year. The feat, it said, could be maintained over the next two years to 2016, with deposit growth coming in higher at 25 to 30 per cent over the period.

    Diamond Bank was in breach of CAR benchmark set by the CBN in the first quarter of 2012, a RenCap report titled: “Diamond Bank Plc – At last, in comes the capital”, said.

    The minimum CAR for banks with international operations was raised to 15 per cent from 10 per cent by the CBN. Diamond Bank  operates in Republics of Benin, Togo, Cote D’Ivoire, Senegal and the United Kingdom.

    The lender’s CAR was 12 per cent, which was below 15 per cent benchmark stipulated by the CBN Monetary, Credit, Foreign Trade and Exchange Policy Guidelines.

    The bank consequently increased the size of its planned tier two capital-raising programme to $750 million from $200 million to fill the CAR gap.

  • Diamond bank promotes 450 staff

    Diamond bank promotes 450 staff

    Diamond Bank PLC has promoted more than 450 of its staff across various grade levels.

    According to the bank’s Head of Corporate Communications Division, Mrs. Ayona Trimnell, the recent promotion is part of the annual performance review exercise to continuously recognize and reward members of staff who have excelled in the workplace.

    “ At Diamond, we have always maintained that the Bank’s performance is linked to the quality of the staff it retains. As such, in the last few days, more than 450 members of staff who have excelled have been promoted.

     

    “For us to continue to perform excellently like we did in 2013, we have to recruit and retain the best people in the industry. That is why, every year, we recruit the best talent in the industry, and also assess our staff on the

    basis of key performance indicators (KPIs) and deliverables,” Trimnell stated.

     

    This recent promotion exercise marks a double celebration for staff of the

    Bank as it recently declared an unprecedented profit after tax of N28.5billion for the last financial year ended.

     

    Diamond Bank has consistently emerged as one of the largest employer of talent in the Nigerian Banking industry with well over 2,224 new recruits in the last financial year, of which 1,181 are fresh graduates from reputable Universities around the country.

  • Diamond Bank engages entrepreneurs on capacity building

    Diamond Bank Plc at the weekend, held its 36th BusinessXpress Enterprise Series for Small and Medium Scale Enterprises (SMEs) during which it advised participants on how to grow their businesses.

    The Head of SME, Chima Nnadozie, said the lender understood that banking is not just about offering customers financial services alone, but seeing how it could add value to their businesses.

    Nnadozie, who was represented by Segment Manager, MSME Proposition Segment Manager, Cheta Agbo, said: “In as much as they need money to grow their businesses, they also need knowledge to drive the business. So we are trying to provide a platform in such a way that as we grow a business, we are offering multiple things that support their growth.”

    He said Nigeria has 18 million SMEs contributing about 50 per cent to the Gross Domestic Product (GDP), which he described as massive. He said banks need to extend their contributions to the SMEs sector, adding that Diamond Bank is committed to providing the support that SMEs need to move their businesses to the next level.

    He disclosed that the bank is supporting the SMEs with the realisation that the wealth of a nation is directly connected to the level of entrepreneurship in that nation.

    “We are supporting the growth of SMEs because we recognise that the future of this nation lies in the hands of entrepreneurs, so any energy expended in building that sector cannot be wasted. It is something that is going to benefit the economy in years to come,” Nnadozie said.

    He noted that the business express seminar is a complete package of everything a bank could provide to a small business to enable it grow.

    The facilitator, Olugbenga Mark-George, of Mark-George Consultants, said the purpose of the seminar which is being hosted across the country, was to support owners of SMEs grow their businesses through capacity building.

  • Diamond, Sterling, Stanbic, Wema to raise N209b capital

    Diamond, Sterling, Stanbic, Wema to raise N209b capital

    Four banks have unveiled plans to raise fresh funds to drive their operations and remain competitive.

    The lenders are Sterling Bank, Diamond Bank, Wema Bank and Stanbic IBTC Holding Company. They will be raising N209.2 billion in the coming months.

    Sterling Bank told its shareholders that it was planning to raise additional capital this quarter.

    Specifically, the bank will raise tier 1 capital through a rights issue of N12 billion and a private placement of N19.2 billion.

    The bank’s Group Managing Director, Mr Yemi Adeola, said the fund was necessary to implement medium to long term strategic objectives.

    Adeola, who spoke at the bank’s Annual General Meeting (AGM) in Lagos, said the process of raising the fund began in the first quarter of the year. He added that the lender would continue to drive growth strategies domestically, focusing on building long-term relationships and creating sustainable value for customers.

    Stanbic IBTC Holding Co, the Nigerian unit of South Africa’s Standard Bank Group, plans to raise N22.5 billion ($150 million) in new capital this year, its Chief Executive Officer Sola David-Borha had said.

    She said the bank plans to use the Tier 2 capital for investments in infrastructure and lending. “Loans and advances are planned to grow by 15 per cent by end of 2013, from six per cent in 2012,” she said.

    Stanbic’s net income for the three months through March rose to N3.6 billion from N2.5 billion a year earlier, it said. Revenue climbed to N26.6 billion from N20.4 billion. The lender is seeking to boost its deposit base by 25 per cent this year, David-Borha said.

    Diamond Bank will be raising N118 billion ($750 million) from an undisclosed source to expand its operations while Wema will secure N35 billion through special placing and listing of additional shares for same purpose. Already, Wema has therefore held a completion board meeting to issue 23,333,333,334 Ordinary shares of 50k each at N1.50 per share.

    Diamond Bank’s Chief Financial Officer (CFO) Abdulrahman Yinusa said the lender will raise the money through a share sale or debt offering this year. The bank’s shareholders have already approved the proposal.

    Wema Bank’s management also said it got regulatory approval to raise N35 billion through special placing and listing of additional shares. The fund raising comes a year after the lender raised its annual loan-growth target to 40 per cent from 20 per cent.

    In a statement, Wema said a regulatory approval from the Nigerian Stock Exchange (NSE) and Securities & Exchange Commission (SEC) had been secured. It said with this development, it is expected that the bank would complete the process of raising the required capital before April 30, 2013.

    Managing Director, Wema Bank, Segun Oloketuyi, said the lender was delighted at the development. He said it signifies a milestone in the entire process which began last December.

    “The completion of the placement process will further enable Wema Bank compete more effectively in the banking industry and also enhance the quality of products and services being offered to an increasing customer base. We will remain focused on efficient service delivery whilst scaling our business organically and strategically for superior returns to all stakeholders,” he said.

    Oloketuyi also expressed his appreciation to regulators who have supported the ongoing transformation process in the bank and also praised the painstaking efforts of all parties to the offer in ensuring strict compliance and adherence to all regulatory requirements by the bank that has made the approvals possible.

    The bank expects to use the funds realised from the special placing to grow its business, invest in information technology infrastructure and expand its operations.

    On seeking a National Banking Licence to enable it to expand its scope of physical operations beyond the geographical boundaries, Oloketuyi said the process of exploring available options to securing a National Banking Licence from the Central Bank will commence on completion of the special placing.

    In December last year, Wema Bank announced plans to raise capital by way of a special placing with commitment from investors already secured to the tune of the N35billion offer size. From all indications and with already high interest and demand, the placing will be fully subscribed.

    Analysts said the banks are returning to profitability after Central Bank of Nigeria (CBN) Governor Lamido Sanusi fired the CEOs of eight of the country’s 24 banks in 2009 and gave them a N620 billion ($3.9 billion) bailout, after lending to equity speculators and fuel importers pushed the industry to near collapse.

  • Diamond Bank: Regaining form

    Diamond Bank Plc recorded a well-rounded performance in 2012 as the bank rode on the back of improved assets quality and substantial growths in incomes and underlying businesses to replace its negative bottom-line with N27.5 billion profit. Audited report and accounts of Diamond Bank for the year ended December 31, 2012 underlined remarkable turnaround in the intrinsic profit-making capacity of the bank and its expanding market share. With 35 per cent increase in gross earnings, improved cost efficiency and better credit risk management further underpinned major recovery for the bottom-line, turning away from net loss of N13.7 billion in 2011 with net profit of N22.11 billion in 2012.

    Hitherto negative profitability indices turned positive, underlining the improvements in the underlying fundamentals of the bank. While relatively higher cost of funds slightly impinged margins, improved employee productivity and midline operating cost management boosted the overall profit outlook.

    The balance sheet of the bank improved in both quantitative and qualitative terms. Total balance sheet size grew by 48 per cent and crossed the N1 trillion mark to N1.2 trillion. This was primarily driven by 51 per cent increase in customers’ deposits, which nudged N910 billion. The bank surpassed the industry’s 5.0 per cent asset quality target ratio as its proportion of non-performing loans dropped by 32 per cent in spite of 43 per cent increase in gross loans and advances. The liquidity position of the bank remained steady just as the retention of net earnings nudged shareholders’ funds by 27 per cent to about N109 billion.

    However, the bank’s expansive growth outpaced capital base and slightly undermined the capital adequacy. The bank has recognized the imperative for additional capital to support its fast-paced business growth. Besides the retention of net earnings, the bank has secured shareholders’ approval to raise $750 million, about N117 billion, in new capital issues.

     

    Capital adequacy

    Diamond Bank’s group balance sheet rose from N796.23 billion in 2011 to N1.178 trillion in 2012. Fixed assets increased by 13.4 per cent from N39.663 billion to N44.980 billion while earnings assets rose by 50 per cent from N756.57 billion to N1.133 trillion. This further untied more funds for earnings growth. The proportion of fixed assets to equity funds improved from 46 per cent in 2011 to 41 per cent in 2012. Total customer deposit jumped from N603 billion to N910 billion, pushing the liabilities base up by 50 per cent from N710.3 billion to N1.07 trillion. Group paid up capital remained unchanged at N7.238 billion, but shareholders’ funds rose by 27 per cent from N85.98 billion to N108.9 billion.

    With the aggressive business growth in 2012 outpacing capital outlay, the underlying capital adequacy dropped marginally during the year. The proportion of equity funds to total assets slipped from about 11 per cent in 2011 to 9.2 per cent in 2012. Equity funds/loans and advances ratio stood at 18.6 per cent in 2012 as against 22.2 per cent in 2011.

     

    Assets quality

    Diamond Bank showed appreciable improvement in assets quality during the year with significant decline in non-performing loans as against appreciable increase in gross loans and advances. The bank’s non-performing loans/gross loans ratio of 4.4 per cent surpassed industry target of 5.0 per cent and represented remarkable improvement on 9.2 per cent recorded in 2011. Total loans and advances rose from N427.53 billion in 2011 to N611.88 billion in 2012. Conversely, non-performing loans dropped from N39.39 billion to N26.68 billion. Net loans and advances had stood at N585.2 billion as against N388.14 billion in previous year, representing an increase of 51 per cent. Possible threats from non-performing loans to the bank reduced considerably with classified loans/equity funds ratio of 24.5 per cent in 2012 compared with 45.8 per cent in 2012.

     

    Profitability

    Diamond Bank staged major turnaround in 2012, with both outward and underlying profit and loss measures showing impressive growths. As against average pre-tax loss of 17.5 per cent on every unit of business in 2011, the bank made average pre-tax profit of 19.8 per cent in 2012. This cumulated in replacement of pre-tax loss of N17.97 billion in 2011 with pre-tax profit of N27.5 billion in 2012.

    Gross earnings increased by a third to N138.85 billion in 2012 as against N102.72 billion in 2011. The top-line was driven largely by substantial growth in core banking operations. Interest income rose by 35 per cent from N83.36 billion to N112.35 billion. Fee and commission income rose by 37 per cent from N19.36 billion to N26.5 billion. With 84 per cent increase in interest expense from N12.50 billion to N23.03 billion, net interest income rose by 26 per cent to N89.32 billion as against N70.86 billion. This also reflected in lower net interest margin, which dropped from 85 per cent to about 80 per cent. Operating expenses moderated at N42.59 billion in 2012 as against N39.74 billion in 2011. Appreciable midline cost management further boosted the bottom-line and helped the bank to break away from recent losing streak with equally impressive profit in 2012. After taxes, net profit stood at N22.11 billion in 2012 in contrast with net loss of N13.72 billion in 2011.

    Further analysis showed basic earnings per share of N1.53 2012 compared with loss per share of 95 kobo in 2011. The bank however decided to retain net earnings to support its capital base. The underlying value creation for shareholders meanwhile was evident in returns on equity and assets. Return on total assets turned around from -2.3 per cent to 2.3 per cent while return on equity improved from -16 per cent to 20.3 per cent.

    Intrinsic profitability analysis showed a generally positive outlook. The proportion of operating expenses to gross revenue improved from 39 per cent in 2011 to 31 per cent in 2012. Non-interest income slightly improved contribution to the top-line at 19 per cent in 2012 as against 18.8 per cent in 2011. Average contribution of each employee to pre-tax profit improved from –N6.5 million to N8.3 million, just as average staff cost per employee trended upward from N6 million to N7.8 million. The proportion of staff costs to gross earnings however increased from 16 per cent in 2011 to 19 per cent in 2012.

     

    Liquidity

    The liquidity position of the bank emerged stronger with larger cash and bank balances coverage for total liabilities. The proportion of cash and bank balances to total liabilities improved from 20.6 per cent to 25.4 per cent. Loans and advances/total assets ratio was steadied 50 per cent in 2012 as against 49 per cent in 2011 while loans and advances/ total deposits ratio closed 2012 at 64.3 per cent compared with 64.4 per cent in 2011.

     

    Governance & structures

    Diamond Bank was incorporated as a private limited liability company in 1991. It transformed into a public limited liability company and listed its shares on the Nigerian Stock Exchange (NSE) in 2005.

     

    Analyst’s opinion

    Diamond Bank shows a commendable growth trajectory that reassures on the resilience of the bank’s growth strategy. With the decision to focus on core commercial banking, and as such divest from non-core banking businesses, the bank appears to be in better stead to consolidate profitability. While it needs to open up lending to strengthen profitability, its cautious risks assessment and aggressive business growth strategy would provide relative stability as it ventures out to explore greater risk-return potential. Additional capital would support the bank’s growth potential.