Investor Relations FAQs
What is the impact of NGN devaluation on risk weightings (equity is in NGN but some assets are in US Dollars) and the capital adequacy ratio?
Our assets in FX are not that significant to cause major change in the CAR position of the bank due to the naira devaluation.
Why have you had to increase impairment charges and will there be more?
The Nigerian energy sector faced particularly challenging headwinds over the course of 2015, which impacted the ability of some businesses with significant exposure to this sector to repay loans. As a result, and following a prudent review, we decided to increase impairment charges.
We have also taken further measures by tightening 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.
Looking at items in the Energy portfolio, what number of accounts, or ratio of Oil and Gas accounts were affected by this need to take additional provision and would you say that the energy portfolio has deteriorated significantly?
In all, we took provisions on about 5 Oil & Gas facilities in our total portfolio. This, however, is not an indication that the portfolio has deteriorated beyond what it was last year. On the contrary, we see that oil prices continue to inch up and we expect this trend to continue for the remaining months of the year.
What positives can we take from your 2015 full year and first quarter 2016 results?
2015 was a significant year as it witnessed the successful roll out of Diamond Bank’s technology-let retail strategy. Importantly, there are clear signs that it is working owing to the ability to achieve and scale operational efficiencies.
For example, we acquired 5,920,190 new retail customers in 2015, passed the landmark of 1 million customers acquired for Diamond Bank mobile app in February 2016. In 2015 also, we brought operating costs down by 0.5% compared to 2014. As a result, Diamond Bank has an excellent platform from which to achieve growth, profitability and shareholder returns in the year ahead.
When will we start seeing a turnaround in the fortunes of the bank and evidence of this in its financials?
There are clear signs that the new strategy and initiatives to reduce costs are proving successful and are reflected in certain financial indicators. For example, operating costs for 2015 are 0.5% lower than 2014 and we acquired 5,920,190 new retail customers in 2015. Whilst there is still further progress to be made, such as the completion of our organizational restructuring to improve operations, and services for clients, we are confident that the business has an excellent platform for the future.
What has the Organizational restructuring entailed and why have you done it?
Following an internal review, we started an organizational restructuring so that we are organized in a way that enables us to be more customer focused. More resources will be thrown in to service growth areas and this will also ensure we are more effective in delivering our retail strategy.
What does the retail strategy mean for your business and corporate customers?
Our retail strategy is built upon the use of greater technology and digital infrastructure, which is also of benefit to our business and corporate customers. For instance, through digitisation and the provision of efficient and seamless infrastructure, namely for payments and finance, we have removed friction from the value chain of our corporate clients. Ultimately, all of our customers are important to us and we will continue provide the best service possible to all of them.
What are the bank’s key ratios and expectations for the full year 2016?
|KEY RATIOS||Q1 2016 (%)||FY 2016 (%)|
|Return on Equity||10.6||7.5|
|Cost to Income Ratio||60.6||60.0|
|Cost of Risk||4.2||5.0|
|Cost of Funds||3.0||3.0|
|Net Interest Margin||5.8||6.0|
|Non Performing Loans||7.1||5.0|
Diamond Y’ello – how exactly does this work and is it an exclusive arrangement with MTN? If yes, for how long? If not, what basically differentiates it from what is already on the market?
The Diamond Y’ello product represents a partnership between Diamond bank and MTN Nigeria delivering a robust platform with diverse features synergized into one product, We wanted exclusivity but the regulators (CBN) said otherwise, Notwithstanding we still have the first movers advantage being this is the first of its kind. The product enables the bank to access the MTN customer base, which exceeds 50 million subscribers with the ease of opening account just by dialling a code. The initiative is to capture the under-banked population with a goal of reducing the cost of marketing and the strain of obtaining KYC requirements from them.
Being the first and only bank to key into this kind of initiative, we experienced some hitches with the regulators. However, the product still stands as the only one of its kind in the industry.