HOW SOON CAN NIGERIA'S DIAMOND BANK SHINE AGAIN?

Financial year 2017 was certainly not good at all for Diamond Bank Plc but diamonds are said to shine for ever, will the shine come back soon?

Well first quarter figures to March this year do not provide conclusive answers, indeed, if 2017 trend holds again this year, then the worst is yet to come.

In the first quarter of 2017, according to figures from Diamond Bank, the bank made a profit before tax from continued operations of N5049.9m. Yet it ended the year with N11,546.95m loss.

In more graphic terms, for every N100 gross income in 2017 first quarter the bank gained N10.2 but nine months after, things went so downhill that it ended the full year with loss of N6.09 on every N100 gross earning.

Now that first quarter figures for 2018 point to only N1252.9m profit or N2.59 on every N100 gross income, is higher loss on the cards for the year?

Already, unlike in full year 2017, Diamond bank battled with reduced interest income (down 1.32% to N38.13bn) amidst 38.5% leap in related interest expenses to N14.73bn. This does not look good at all.

Also not looking good was 32.6% increase in fee and commission expenses to N2186.9m even though fee and commission declined by lower 8.67% to N9066.8m as against 10.5% full year decline in 2017.

Not encouraging too was 10.9% increase in lease expense to N239.7m in the first quarter compared to 2017 0.84% decline.

But good to hear were 106.3% jump in Other operating income to N197.6m compared to 2017 91.3% rise; 35.6% increase in Net Trading income to N1047.9m as against 68.6% drop in full 2017 and 18% decline in impairment provision in the quarter to N8206.1m as against only 0.32% decline in full 2017.

But, from the look of things, the pull upwards for Diamond Bank in terms of profitability is yet to be strong enough to counter downward pressure. 

Hence all things being equal, getting out of the loss league in 2018 may not be on the cards unless it is able to somehow check growth in interest expense and still stimulate interest income; hold down fee and commission expenses and curtail lease cost while boosting some more Other income and net trading income.

Quite a task really but to make the Diamond shine again is certainly a task that can still be done.

DIAMOND BANK PLC: Nm 1st quarter
                                2018.            2017
Gross earnings  48,446.9.    49,442.4
Interest income 38,134.6.    38,646.4
Interest expense14,734.2.   10,640.9
Impairment.          8206.1.    10,004.5
Fee & Comm.       9066.8.       9927.6
Fee & Comm exp 2186.9.       1648.7
Net trading inc.    1047.9.         772.6
Other income         197.6.           95.8
Personnel cost    5864.2.       6385.3
Lease expenses.    239.7.        216.1
Other op expense13,854.0.  13,525.7
Profit before tax    1252.9.     5049.9
Profit margin %.        2.59.        10.2

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