MD, Alex Otti
From a negative position in 2011, (having declared a loss of N13.7 billion), Diamond Bank Plc, in 2012 has been able to put smiles on its shareholders’ faces with an impressive profit after tax of N22.1 billion in 2012, reports Festus Akanbi
The Nigerian banking industry has returned to strong performance in the wake of the reforms embarked upon by the Central Bank of Nigeria (CBN) post-consolidation. The development has seen banks posting positive returns as well as recommending improved returns on investment to their shareholders.
One of such banks is Diamond Bank Nigeria Plc, which posted significant improvement in performance in 2012 compared to its 2011 showing.
Analysis of its 2012 results showed remarkable upward movement in all performance indicators. For instance, the bank grew profit before tax and profit after tax astronomically by N27.5 billion and N22.1 billion respectively from loss position of N18.0 billion and N13.7 billion in 2011, representing a growth of 250 per cent.
Diamond Bank gross income increased by 35 per cent to N138.8 billion for the period ended, compared to N102.7 billion for the period ended December 31, 2011.
The group’s total asset base hit the one trillion marks for the first time in the history as total asset stood at N1.2 trillion up by over 47 per cent from 2011 position of N796.2 billion. Similarly, customer deposits inched towards the trillion naira mark, increasing by 51 per cent to N910.2 billion compared to N603 billion in the previous year.
The bank’s commitment to the development of the real sector remained unabated as it increased its loans and advances by over 51 per cent from 2011 position of N388.1 billion to N585.2 billion at a time most peers were slowing down on lending.
The group net interest income after impairment charge for credit losses grew from a loss position of N15.5 billion in 2011 to N72.3 billion during the period under review.
Also, its net fee and commission income grew by 24.6 per cent to N25.2 billion in the financial year ended compared to N19 billion in the corresponding period of 2011. Besides this, operating expenses rose by 17.5 per cent during the period under review to N68.5 billion from N56.5 billion recorded in corresponding period in 2011 while total deposit from customers stood at N910.2 billion as at December 31, 2012, which represents 33 per cent growth over the 2011 figure of N603 billion. Return on Average Equity (ROAE) grew from negative returns of 14.3 per cent in 2011 to 22. 7 per cent while revenue per staff climbed to N47.6 million in 2012 from N38.3 million in 2011.
This much was achieved owing to prudent cost management across the bank, which the group adopted during the period under review, thereby reflecting in the cost to income ratio that remained stable at 60.6 per cent in 2012. Despite the significant improvement in performance, the bank is not resting on its oars.
Group Managing Director of the bank, Dr. Alex Otti, said in order to sustain the growth and profitability the bank would in 2013 continue its pursuit of growth in size and at the same time ensures that the growth profits its customers and shareholders. He said this informed the bank’s 5-year strategic plan encapsulated in “Reclaiming the Diamond,” which outlined the industry positioning, financial ratios and perception indices that are most important to it.
He said from the results of 2012 operations, “I will say that we are well on our way to meeting the internally set targets within stipulated timeframe.”
Otti pointed out that the growth and profitability would be possible if you have a bank with adequate capital to do business. Consequently, shareholders of the bank at the AGM in Lagos recently endorsed the directors’ quest to raise additional capital of about to $750 million (N118 billion) to meet its capital requirements.
The capital raising is to be undertaken by way of rights issue or an offer of subscription with or without a preferential allotment either locally or internationally and upon such terms and conditions the directors may deem fit in the interest of the bank for the purposes of enhancing the bank’s working capital and financing business development initiatives.
The shareholders further approved that in the event of over subscription, excess monies arising from the offer be absorbed to the extent required by the bank.
They also passed as a special resolution that the authorized share capital of the company be increased from N10 billion to N15 billion by the creation of additional 10 billion ordinary shares of 50 kobo each, ranking pari-passu in all respects with existing ordinary shares of the company.
Otti also said the bank is taking its commitments to sustainable banking and access to finance seriously, remarking that the bank has just become a signatory to the sustainable banking principles and have started to embed this in its decision making.
The GMD noted that this has become imperative because at Diamond Bank they believed that along with their clients, they should do business in a responsible way that assures that future generations are not at a disadvantage.
“We also believe that in the markets we serve every qualified person that desires it should have access to financial services. Already a lot of innovative offerings by the bank to ensure this access are in pilot phases and will reach the market soon,” Otti said.
He said the bank recently concluded the acquisition of a United Kingdom Bank, adding that the intent of this acquisition is to support the bank’s desire to have a closely integrated value chain.
The UK acquisition will support the bank’s trade finance and treasury business as well as increase its capacity for business and enable it assume greater control over the speed and quality of service it offers to its existing customers and those that will come on board as the bank continue its regional expansion across West Africa.
Diamond Bank is not only strong operationally but it is also a good corporate citizen. In 1999, the bank had a major policy rethink in the area of corporate social responsibility to strengthen direct involvement in its primary operational environment in such a way that the resultant impact is maximized for society’s most need.
This initiative is majorly driven by the need to directly and positively touch the lives of its stakeholders, with special emphasis on the indigent section of the society.
Diamond Bank has constructed an Accident & Emergency Centre and renovation of the Primary Health Care Centre in the Obafemi /Owode Local Government Area, Mowe, Ogun State.
This initiative forms an integral part of Diamond Bank’s long term corporate social responsibility mission. In the wake of the prediction by experts that Road Traffic Accidents will be the third leading worldwide cause of death and injury by 2020, the bank realizes the need for concerted efforts for more effective and significant results in the reduction of this scourge.
Other CSR’s initiative include the Annual Eye Expedition, Madonna School for handicapped children, teacher re-training with incentives, Diamond Kiddies free educational holiday to the United Kingdom, Resource Centre at The Niger Delta University, Supporting Different Government Poverty Alleviation Programmes, annual golf sponsorship, polo championship, West Africa Universities Games and investment in education and youth development among other charitable activities.
In the area of education, the bank has donated brand new Toyota Coaster buses to Nnamdi Azikiwe University, Awka, the University of Jos, University of Nigeria Nsukka, the University of Lagos, Rivers State University, Port Harcourt, Katsina State University and the Niger Delta University, Bayelsa State among others.
The bank has also donated patrol vehicles to some states in the federation. It recently donated five patrol vehicles to Abia state as part of measures to sustain the security situation in that state.
Diamond Bank is also a key sponsor of the Daniel Ogechi Akujobi Memorial Foundation (DOAM) as well as the Kanu Heart Foundation. DOAM is a charitable humanitarian and non-governmental organisation established in 2006, in memory of Master Daniel Ogechi Akujobi (1992-2005) who died from injuries he sustained in a fatal vehicle accident on his way back to school along the Lagos-Ibadan expressway, Ogun State Nigeria. He was the only son of his parents. She said this year was the third year of the tournament, which started in 2011. The foundation has offered scholarship to a number of vulnerable but intelligent children in primary, secondary and tertiary institutions.
It has also undertaken various life improving programmes including de-worming of children, mentorship, educational, nutritional and psycho-social support for more than 8,000 children and youths in the country.
It is engaged in the enhancement of primary healthcare centres in rural areas and supports in the building and equipment of Accident & Emergency Response Centres along major highways in the federation to save the lives of accident and trauma victims.