Diamond Bank Plc has joined the chorus of banks that have issued profit warnings for their 2015 Full Year results. The bank issued the warnings in a press release in the website of the Nigerian Stock Exchange late Friday and after the market had closed.
The bank in the press release claimed that it expected “impairment charges on loans made to the Energy and Commercial Business sectors.” Therefore profits for this year was expected to be lower than in 2014.
Diamond Bank by our records had already recorded impairment charges of about N19.4 billion in the first 9 months of the year. The bank reported impairment charges of N26.3 billion in 2013 and another N23.2 billion in 2012. Analyst believes the bank’s risk taking is yet to reflect positively on profits slicing as much as 45% of operating profits every year.
Share price was down 1.9% to N1.52 and has lost 33.9% year to date.
See full excerpts of press release below;
The continuing deterioration in Nigeria’s macro-economic conditions has resulted in Diamond Bank Plc (Bloomberg: DIAMONDBNK) recognising 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. Detailed financial statements for the year ended December 31, 2015 are expected to be released on or before March 31, 2016.
Diamond Bank wishes to reiterate that in recent years it has deployed considerable resources in building a dependable risk management framework, and the quality of its loan portfolio in general, remains high.
Mitigating action
The Bank remains determined to deliver on its stated strategy of creating Nigeria’s leading technology-led retail bank. Already, in 2016 the business has made significant changes to its operating structure that will result in reductions in operating costs. Further investment has been made to improve customer relationships and revenue in our core business segments. These actions aim to deliver 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.