The Diamond Bank Plc audited results for the 2014 financial year has indicated a drop in profit.
The results showed that the group’s profit after tax declined by 10.7 per cent year-on-year from N28.544bn in 2013 to N25.485bn in the year under review.
Diamond Bank also suffered a 12.4 per cent drop in profit before tax as PBT fell from N32.079bn a year earlier to N28.101bn in 2014.
This was despite a 12.57 per cent rise in the group’s interest and similar income to N161.129bn from N143.127bn.
The bank during the year in review increased its loans and advances to customers by 14.8 per cent from N689.168bn to N791.094bn, while its total assets jumped by 27.3 per cent to N1.933tn from N1.518tn.
Analysts at FBN Capital Research said Diamond Bank witnessed a 33 per cent year-on-year and 42 per cent year-on-year decline both PBT and PAT in the fourth quarter of 2014.
This, they said, was in spite of the fact that profit before provisions grew by 14 per cent y/y to N42.0bn.
They observed that loan loss provisions and operating expenses more than offset the growth in revenue. Loan loss provisions grew by 77 per cent y/y to N11.7bn, while operating expenses rose by nine per cent y/y to N25.9bn.
“The negative surprise in loan loss provisions proved significant and overshadowed a better-than-expected result on the non-interest income line,” they said.
The FBN Capital Research Analysts explained that although Diamond Bank’s loan book grew faster than management had guided to, ending the year up 15 per cent compared with guidance of 7.5 per cent, the market was likely to ignore this performance.
“One reason is that FX translation would have helped; second, and more important, the market will focus more on Diamond Bank’s asset quality given the extent of the surprise on the provisions line, they said.