Information reaching Nairametrics suggest Diamond Bank Plc is currently embarking on a massive downsizing of its staff. Staff from the bank are on the edge as letters have started rolling out. About 150 to 200 employees are probably on the hook to leave. Diamond Bank was a couple a years ago the highest paying bank when they last increased their salaries.
Weak earnings
Diamond Bank recently released its 2014 FY results showing profits dropped 11% to N25.4 billion. The result raised red flags regarding the operations of the bank leading many to expect cost cutting and some corporate restructuring. Diamond Bank’s cost to income ratio is over 65% by our estimates compared to the likes of Zenith at 56% and GTB at under 45%. Personnel expenses for Diamond Bank was N27.4 billion compared to N23.7billion a year earlier.
Too many employees
Diamond Bank in its 2014 reports said it had 5,233 employees a 19.8% jump from 2013 when it had 4,366 employees. About 45% of its staff (2,345) earn between N2.8million and N3.5million per annum whilst 514 people earn over N9million and above.
Contrast to GTB a bigger and more efficient bank had about 4,923 employees a 5.9% increase from the 4,645 it had a year earlier. 1,361 staff from GTB (27% and the most category) earn between N720,001 and N1.4million whilst only 198 people earn above N11.8million.
FIFO
We also understand the bank embarked on a staff transition program where they expect to reduce their payroll cost by easing out employees on the higher income spectrum by replacing them with younger and less expensive employees. This was probably why they employed many fresh grad a few years back. This reason also aligns with our projection that between 150 to 200 staff will be let go for now and could come mainly from the middle tier and top earners.
Tough road ahead
From the above it is apparent the new MD, Uzoma Dozie has its work cut out and will have to commence the process of restructuring as soon as possible. Â The former MD Alex Otti introduced a lot of exciting ideas one of which led the bank to being one of the best retail and small business lenders around. However, this is not without its own risk with the bank writing off over N122 billion since 2011 by our estimates and earnings failing to post any string of consistent gains.
Disclosure – The author(s) of this article own shares in Diamond Bank for long term purposes. The author of this article wrote it themselves, and did not write this article on behalf of Diamond Bank, its associates or representatives. The article is purely their opinion.
