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Diamond
Bank Plc yesterday released its 2009 common year results, revealing a
loss before tax of N12.4 billion for the period, owing to large one-off
provisions, compared to profit before tax of N17.3 billion for the
comparable prior year period (December 2008).

Emeka
Onwuka, Managing Director of Diamond Bank, while commenting on the
results in a report made available to NEXT, said the period under
review has been challenging for the entire Nigerian banking sector.

“Diamond
Bank’s results before exceptional provisions have proved resilient in
the face of these challenging conditions, with the group continuing to
grow deposits at a sensible rate and with operating income holding up
well. However, our profits have been impacted by large one-off
provisions which we have provided for in accordance with the CBN’s
guidelines for the period,” he said.

Loss before Tax

While
the bank’s loss before tax was N12.4 billion, its after tax losses were
put at N8.2 billion during the period in review. Provision for losses
was valued at N24.7 billion, far above the N1 billion provisioned in
December 2008.

A
gross earning of N67.7 billion was also below 2008 records of N67.8
billion. But its net interest during the period rose by one per cent
from N25.6 billion to N25.8 billion year on year.

Also
commenting on the results, Uzoma Dozie, Executive Director, Corporate
Banking, said the drop in profitability was the significant rise in
provisions. “The challenge ahead is to reduce our NPL concentration and
to grow our risk assets in a slower growth environment than before,
while complying with our new risk management framework.

Access Bank too

Similarly,
Access Bank’s year end common results for December 31, 2009 showed a
loss before tax of N3.5 billion, even as it issued a bonus of one for
every 10 shares held.

Aigboje
Aig-Imoukhuede, the bank’s Chief Executive Officer, in a report made
available to NEXT, said the bank’s nine-month financial year “coincided
with a tumultuous period for the Nigerian banking sector, accounting
for the bank’s performance. Our earnings were impacted by the necessity
for large exceptional provisions which we were unable to absorb fully
in the nine-month period.

“Notwithstanding
the resulting net loss, we closed the year in a very strong financial
position, with levels of capital and liquidity far higher than required
by both local and global standards. We have made tremendous progress in
reducing our levels of classified loans and are confident that our
strengthened risk management framework will ensure earning resilience
to any future stress factors,” he added.

Gross earnings stood at N66.1 billion with exceptional provisions of N21.5 billion and recoveries at N14 billion.

Obeahon
Ohiweri, Executive Director, Commercial Banking, said the growth in the
bank’s gross earnings, combined with a reduction in its operating
expenses meant it delivered positive operating profitability in a year
marked by rising cost of funds and heightened credit risk.

“Our
one bank strategy helped us gain market share across geographies and as
our new branches began to gain momentum in 2009, collections of lower
cost deposits accelerated. We are also delighted that our efforts to
recover non-performing loans (NPLs) produced a significant improvement
in asset quality in the last quarter of 2009.”

Going forward

Ebenezer
Olufowose, Access Bank’s Executive Director, Investment Banking, noted
that despite the underwriting losses, “Going forward, we intend to
focus on the emerging opportunities in project and debt finance markets.

Victor
Etoukwu, General Manager, Retail Banking, said the bank will make
significant marketing investment in its savings products and card
services that should emerge as leaders in its extensive product range.

Diamond
Bank’s Mr. Onwuka, however, believes that all hope is not lost on the
bank. “We have taken substantive measures to improve our risk
management and this is borne out by a substantial reduction in our
provisions post year-end, and a return to profitability which is
reflected in our Quarter One (Q1) results.