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Diamond Bank makes N25bn provision for bad loans

By Michael Eboh

Diamond Bank Plc  has announced a N24.62 billion provision for bad loans, including loans emanating from margin activities, in its 2009 financial year.

According to a statement on its year end, April 30, 2009 financial statement, the provision for the loans accounted for a dip in its profit after tax by 59.67 per cent.

Specifically, the bank’s gross earnings appreciated significantly by 80.32 per cent, from N60.44 billion recorded in its 2008 financial year, to N108.98 billion in the year under review, while its profit after tax stood at N5.17 billion, dropping by 59.67 per cent
The bank is proposing a dividend of N0.09 per share.

The bank blamed the harsh operating environment for the dip in its bottom line, noting, however, that its resilience helped in no small measure in weathering the storm, as it was able to absorb the loan loss provision, as required by the Central Bank of Nigeria (CBN), through its strong income generating capabilities.

The bank also posted  gross earnings of N23.99 billion in its first quarter ended, July 31, 2009, unaudited  financial statement, compared with a gross earnings of N21.8 billion in the comparable of 2008, while its profit after tax stood at N1.62 billion compared with N4.71 billion in 2008.
It also made a provision for bad loans in its first quarter result totaling N7.7 billion.

According to the Group Managing Director of the bank, Mr. Emeka Onwuka, its impressive performance, brought about by its focus on effective risk management in its 2009 financial year, was a major contributory factor to its escape of the CBN’s hammer, as it emerged among the five bank that scaled through the apex bank’s audit recently concluded audit programme on 10 banks.

He said, “This is both a critical and uncertain time for the Nigerian banking sector.  Against this backdrop our focus on balance sheet and risk management has enabled us to be among the first five Nigerian banks to successfully complete the CBN’s audit of the banking sector and report our full year results under the new CBN review system.

“We believe that this is a testament to the strength of our bank and the commitment of all our staff.  Our strong balance sheet position enables us to continue to execute our strategy of focusing on growth in the real sector and servicing all our customers with the skill and care to which they have become accustomed.”

He disclosed that the bank’s capital position is robust and the balance sheet well-managed, as the balance sheet ratios adequately support the Bank’s business profile and profitable growth.
He further stated that its capital adequacy ratio and liquidity ratio remain high at 19.4% and 43.7% compared to statutory minimum of 10.0% and 25.0% respectively.

He noted that its  well-placed in today’s environment as its strategy has served it well and positioned it for long-term growth and attractive returns, adding that in the near future, it expects that there will be considerable value at stake for shareholders in decisions that relate to resource utilisation, capital allocation and risk management.
“We will seek to manage the composition of our assets and liabilities, and capital allocation, to ensure that we optimise returns from our universal banking business model. We are confident of a prosperous future because we have consistently aligned our business drivers with our core values of transparency, professionalism, and excellent service delivery,” Onwuka noted.


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