Diamond Bank Plc has become Nigeria’s third bank to issue a profit warning as the Nigeria economy continues to suffer from a lack of policy direction in the midst of a steep decline in crude oil prices which earns 80% of government revenues.
Diamond Bank today March 11, 2016 said it will set aside a higher amount of its earnings as provisions for a possible increase in bad loans given out in 2015. The loans expected to go bad are those given to oil companies and commercial business owners who are now finding it difficult to repay their loans because of the drop in crude oil prices and the problem with getting dollars to bring in new goods and raw materials.
The management of Diamond informed the stock exchange that after examining its books, it has come to the conclusion that its earnings and profits for 2015 will significantly be lower than what it announced in 2014. The bank says it will make is financial results public before March 31, 2016.
However, in the statement issued to the Exchange, the bank also assured its shareholders that it has deployed considerable resources in building a dependable risk management framework, and the quality of its loan portfolio in general, remains high.
“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” according to the statement from the bank.
The bank assured that recent strategic actions will 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.”
Two other banks, FCMB and First Bank had earlier issued profit warnings that their 2015 earnings and profits will be significantly lower than 2014. Diamond Bank’s share price closed today at N1.52 per share down 3 kobo. The bank’s share price is down 33% since the beginning of the year.
