Despite the harsh regulatory headwinds that impacted business operations in 2015, Diamond Bank Plc maintained turgid resilience against the tide focusing on the implementation of strategic set goals with strong growth in customer base and equity.
Analysts and industry watchers had, due to unfavourable macro environment and challenging regulation of the industry, predicted negative PAT, or flat revenue at best, but Diamond Bank maintained its resilience and status as the fastest growing retail bank, capturing a large population of the unbanked and making them digitally active. The Bank grew its customer base by over 300 per cent, acquiring a total of 5,920,190 new retail customers in 2015, and through the successful implementation of technology-led retail strategy for enhanced service delivery, grew its Diamond Mobile App customers to over a million, making it the first in the financial services sub-sector.
The Bank earlier issued profit guidance after prudent provisioning of N55.2 billion impairment charge and the installation of mitigating actions that would address the impact of current economic headwinds to deliver improved earnings and lower operating costs, thus, setting forth a clear and realisable business roadmap that would promote stronger and sustainable growth in 2016 and the years ahead.
Although the ripple effects of the Central Bank of Nigeria’s regulation and the Federal Government, especially the change in Cash Reserve Ration (CRR) to 31% and later 25% as well as implementation of the Treasury Single Account continued to be felt at the Bank and the industry generally, these partly caused a decline in customer deposits by 17 per cent and consequently led to a drop in total assets to N1.7 trillion from N1.9 trillion year on year.
The Bank, in a move to build a healthier balance sheet that will assure sustainable value to shareholders has in the current business year, embarked on organizational restructuring to improve operations and services and the restructuring of its balance sheet to let go highly priced fixed deposits in favour of low cost deposits, which has very low investment risk and predictable favourable returns.
In his comments, the CEO of the Bank, Uzoma Dozie, highlighted the transformation the Bank was going through and remained positive that reliance on innovation, technology and lifestyle priorities will drive banking in the future and Diamond is well positioned to take advantage of this. He expressed optimism about the growth and value to shareholders and restated his commitment to overseeing full implementation of the Bank’s digital-led retail strategy.
“Importantly, there are clear signs that the new strategy and initiatives to reduce costs are proving successful and are reflected in certain financial indicators. Fundamentally, by taking various mitigating actions and implementing the retail-led digital strategy, Diamond Bank has an excellent platform from which to achieve growth, profitability and shareholder returns in the year ahead. New retail accounts opened has grown more than fivefold and with a network of over 24,000 agents as at December 2015, active account ratio continues to improve. These creates a measure of confidence going into the future,” said Dozie.
Although its PBT shrunk to N7.1 billion with N5.656 PAT while the curve of interest income sloped by 2 per cent to N157.9 billion, but the Bank improved on its operating cost and interest expense by recording a reduction of 0.5 per cent and 6 per cent respectively in 2015 compared to N65,341,524 and N51,553,435 in 2014.
According to the CEO, a number of mitigating actions are being taken to address and drastically reduce these challenges, thereby putting Diamond Bank in a better position to achieve better results and strong earnings for the shareholders in the current business year.
He said: “2015 was undoubtedly a challenging year for us owing to a mixture of external factors not limited to regulatory headwinds and a difficult macroeconomic environment. Whilst this led to additional impairment charges following a prudent review, we have further tightened the criteria for loan originations in order to better align our loan portfolio with the macroeconomic conditions. As a result, we are confident that the overall quality of our loan book remains high.