Diamond Bank Plc has joined First Bank of Nigeria Holdings (FBN Holdings) to warn its investors of decline profit for the finance year ended December 2015.
The condition given by financial institution include hike in impairment charges on loan and increased operating expenses.
Diamond Bank had reported 33 per cent growth in impairment charges to N19.5 billion in nine-month ended September, 2015 as against N14.69 billion in nine-month 2014.
Also, profit after tax dropped by 21 per cent from N20.18 billion to N15.97 billion for the period under review.
To mitigate further decline in profit, the lender vowed to deliver on its stated strategy of creating technology-led retail banking and reducing its operating expenses in order to strengthen its profit.
Diamond Bank statement posted on Nigerian Stock Exchange (NSE) website stated that: “The continuing deterioration in Nigeria’s macro-economic conditions has resulted in Diamond Bank Plc recognizing higher than expected impairment charges on loans made to the Energy and Commercial Business sectors.
“In the light of these deteriorating conditions, and subsequent review of Diamond Bank Plc’s management accounts for the financial year ended December 31, 2015, preliminary indications are that earnings will be lower than in 2014.”
The bank reiterated that in recent years it has deployed considerable resources in building a dependable risk management framework, and the quality of its loan portfolio in general, remains high.
The management of Diamond Bank explained further that, “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.
“These actions aim to 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,” it added.
Chief Executive Officer of the Bank, Uzoma Dozie, had highlighted the transformation the Bank was going through and remained positive that reliance on innovation, technology and lifestyle priorities would 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.
He explained further that our customer friendly products and services are showing positive results.
“By taking this approach we stand to benefit from further innovation, technology and lifestyle changes that will drive banking in the future. Our business has remained resilient despite challenges in the operating environment, and as the fastest growing retail bank in Nigeria, we have the resources and governance structures to enable us ride the current headwinds and take advantage of opportunities that may arise in the future,” Dozie said.
Meanwhile, the management of FBN Holdings had re-examined its loan portfolio in the oil & gas sector that led to increase impairment charges and it is expected to downsize its profit for the financial year ended 2015.
The company’s secretary, Tijjpani Borodo added that, “This is a prudent measure being taken while the Bank has commenced active remedical action in the specific impaired accounts, “it explained.