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This presentation contains or incorporates by reference forward-looking statements regarding the belief or current expectations of Diamond Bank, the Directors and other members of its senior management about the Groups businesses and the transactions described in this presentation. Generally, words such as could, will, expect, intend, anticipate, believe, plan, seek or similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the Company and/or its Group and are difficult to predict, that may cause actual results to differ materially from any future results or developments expressed or implied from the forward-looking statements. Such risks and uncertainties include, but are not limited to, regulatory developments, competitive conditions, technological developments and general economic conditions. The Bank assumes no responsibility to update any of the forward looking statements contained in this presentation. Any forward-looking statement contained in this presentation based on past or current trends and/or activities of Diamond Bank should not be taken as a representation that such trends or activities will continue in the future. No statement in this presentation is intended to be a profit forecast or to imply that the earnings of the Company for the current year or future years will necessarily match or exceed the historical or published earnings of the Company. Each forward-looking statement speaks only as of the date of the particular statement. Diamond Bank expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Diamond Banks expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Outline
Opening Statement and Strategy (by Dr. Alex Otti, GMD) FY 2011 YTD Financial Performance Business Segments Performance Q1 2012 Financial Performance
(by Abdulrahman Yinusa, CFO)
Operating Environment
Global economic growth entered 2011 on a relatively buoyant note. However this growth was short-lived as a barrage of social, economic and political issues weakened global economic activities. According to IMF, world output growth which had been strong in 2010 (5.2%) decreased in 2011 (3.8%) Economic fundamentals in the domestic environment remained strong despite growing concerns about security. FGN through the Economic Management Team formally kick-started the Sovereign Wealth Fund, replacing the Excess Crude Account The new economic blueprint 2012-2015 Medium Term Fiscal Framework (MTFF), which centers on fiscal consolidation, job creation and repair of critical infrastructure was launched in Q4 2011 Central to fiscal and monetary strategy in 2012 include the removal of petroleum subsidies, port concessioning, accelerating power sector reforms and strengthening of the banking sector through nationalization, M & As and AMCON buy out of bad debts In a bid to maintain price and exchange rate stability the CBN also employed a number of monetary policy adjustments: Increased MPR six times in 2011 from 6.25% at year start to 12% by year end Acceded to a marginal devaluation of the naira from N150/$1 +/-3% to (N155/$1) +/-3%
4
Retail Banking
Deliver growth on both sides of the balance sheet of up to 50% Increase Retail share of all-bank income towards 50%
Operational Effectiveness
Revised expense management for effective tracking and monitoring
Customer experience
Complaint Management Service Customer Hotline (phones placed in branches and ATM machines bank wide for customer feedback
Risk management
Ensure capacity building of the Enterprise Risk Management System by building competences in all risk areas of the bank.
(NBn)
35.0 / 40.0
15.0/20.0
-16.3
~ (20.0)
2011 PBT
2012 est
15.0 / 20.0
ROE
Comments
2009 2010 2011 2012 est >10.0% 1.2% 2013 est
Consistently improving profit as from Q1 2012 and beyond Achieve double digit ROE of above 10% in 2012 Tier 2 capital to be injected in Q2 to support business growth Cost of risk of not more than 5% in 2012 ROE to reach high teens in 2013
-11.1%
-11.2% 6
Impact on P&L
Operating Profit Provision for Losses Profit/(Loss) Before Tax Loss Before Tax
Group (NBn)
27.8 (44.1) (16.3) (11.3)
Comments
Net impact from existing NPLs Worst-than expected impact of AMCON sale: AMCON adopted stricter measure in the valuation of loan collateral received from banks during the year, a total of N48bn was sold to AMCON which resulted to a net loss of N34bn to profit and loss AMCON purchase of NPLs from banks remains the main option available to the bank to recover delinquent loans Clean-up of legacy loans Adequate provisions and write-off were made for delinquent legacy loans. All fully provided loans were written off in 2011 except director related loans Exceptional Items (Divestment from subsidiaries) Unfavorable market conditions affected the realization of value of assets sale
7
Following the divestment from non-banking subsidiaries, Diamond Bank Group is now made up of the following subsidiaries:
Diamond Bank Nigeria ( 223 branches) Diamond Bank Du Benin (18 branches) Diamond Bank Togo (1 branch) Diamond Bank Senegal (1 branch) Diamond Bank Cote dIvoire (1 branch)
(11,888)
8 8
Use of 3 credit Bureau reports to obtain credit history information on prospective borrowers
Effective Board Risk Management committee with an independent director and international risk manager as chairman Aggressive recovery drive including the use of external solicitors on identified and classified risk assets
9
Outline
Opening Statement and Strategy (by Dr. Alex Otti, GMD) FY 2011 YTD Financial Performance Business Segments Performance Q1 2012 Financial Performance
(by Abdulrahman Yinusa, CFO)
10
Key Highlights
A robust Business Growth
Group balance sheet size increased by 20% or N167bn to N991bn in Dec 2011 from N824bn achieved in December 2010. Total assets increased by 35% to N804bn in Dec. 2011 from N595bn in Dec. 2010 Risk assets (net) increased by 27% or N85bn to N397bn in Dec 2011 Deposits increased by 46% or N190bn to N602bn in Dec 2011 with approximately 80% being low cost funds
Revenue Mix
Net Interest Margin (NIM) remains strong currently around 9%; remains the best in the industry
11
Comments
Group earnings up 6% to N96 billion (YoY) and up 16% QoQ Net interest income up 11% to N56 billion YoY Other Income up 14% to N28 billion YoY and up 26% QoQ Operating profit remains strong in spite of challenges of 2011 Operating expenses increased by 19% to N56 billion (YoY) driven by the impact of severance and AMCON charge (0.3% of total assets) introduced by CBN in 2011
Gross Earnings Interest Income Interest Expense Net Interest Income Other Income Operating Income Operating Expenses Operating Profit Provision For Losses Exceptional items Profit / (Loss) Before Tax Profit / (Loss) After Tax
96.3 67.9 (12.3) 55.6 27.8 83.4 (55.6) 27.8 (44.1) 0.0 (16.3)
91.0 66.2 (16.3) 49.9 24.3 74.2 (46.6) 27.6 (22.8) 0.0 4.8
28.0 19.7 (4.0) 15.7 7.7 23.4 (15.4) 8.0 (23.9) 0.0 (15.9)
(11.3)
1.3
(10.6)
(1.9)
12
Comments
Group balance sheet size up 20% to N991 billion (YoY) and 5% QoQ Growth in balance sheet size was mainly due to increase of 46% or N190 billion in deposit volume 78% of deposits are low priced funds against 73% YoY About N168 billion or 89% out of the N190 billion growth in deposits relates to low cost deposits Group risk asset volume (net) up 27% to N397 billion (YoY), and up 3% QoQ despite NPL and performing asset sales to AMCON
Liquid Assets
241.0
145.7
65.4
241.0
202.2
19.2
Risk Assets
Other Assets Investments Fixed Assets Total Assets Deposits Other Liabilities Borrowings Equity Total Liabilities Off Balance Sheet Balance Sheet Size
397.4
19.7 107.0 38.6 803.7 601.7 53.9 54.8 93.3 803.7 187.6 991.3
312.2
27.3
397.4
19.7 107.0 38.6 803.7 601.7 53.9 54.8 93.3 803.7 187.6 991.3
386.4
21.4 77.4 37.7 725.1 529.3 58.0 26.4 111.4 725.1 217.1 942.2
2.8
(7.9) 38.2 2.4 10.8 13.7 (7.1) 107.6 (16.2) 10.8 (13.6) 5.2
23.5 (16.2) 77.2 36.2 594.8 412.0 47.4 28.3 38.6 6.6 35.1 46.0 13.7 93.6
13
Comments
The increase of Cash reserve Ratio (CRR) to 8% by the Central Bank of Nigeria (CBN) affected NIM in Q4. However, NIM is still maintained at a relatively high level compared to peers. Low cost deposits continued to yield desired improvement in the NIM. Group cost-to-income ratio deteriorated due to impact of opening of 3 new country subsidiaries in Q2 2011, in addition to various exceptional items - severance payments, cost of AMCON fund, etc. Target of <60% cost-to-income ratio remains Tier-2 funding target of $200m. Some multilateral credit agencies are at various stages of negotiations/approvals and utilization is expected to begin to crystalise in Q2, to increase CAR position further. 14
39 36 Dec. 2010 Jun. 2011 Sep. 2011 Deposits Dec. 2011 Loans & Advances
Total Assets Liquid Assets Risk Assets Other Assets Investments Fixed Assets
Comments
Balance sheet size up 20% to N991 billion Dec. 2011 (Dec 2010 N824 billion). The growth was largely due to increase in deposits by 46% to N602 billion from N412 billion (Dec. 2010) and up 14% QoQ Risk assets (net) up 27% to N397 billion from N312 billion (Dec. 2010) and up 3% QoQ from N386 billion (Sept. 2010)
54
47
55 28
93 107
Total Liabilities
Deposits
Other Liabilities
Borrowings
Equity
15
Group Lending
Gross Loan Breakdown Dec 2011 (Dec 2010) Dec-11
N419Bn (N345Bn)
10% 12%
7% 6% 5% 5% General Comm 25% (21%) Oil & Gas 19% (18%) Manufacturing 12% (16%)
Real Est & Const 10% (11%)
12% 14%
9% 9% 5%
General Comm 23% Oil & Gas 17% Manufacturing 14% Real Est & Const 12% Power & Energy 9% General 9% 3% 2% 1% 1% 1% Finance & Insur 5% ICT 3% Transport 3% Government 2% Agriculture 1% Prof., Sc. & Tech. 1% Support Servs 1%
19%
5%
3%
25%
16
Comments
About 64% of loan portfolio falls within 12 months while 36% are medium to long term loans
69.6%
Dec. 2010
Jun. 2011
Sep. 2011
Dec. 2011 17
NPL by Category
N51.1Bn 40% N47.7Bn 12% 39% Communication 9% Consumer Credit 6% Manufacturing 3% Dec. 2010 Power 2% Others 4% Substandard Doubtful Lost Sep. 2011 33% 49% 27% 15% Dec. 2011 N39.4Bn 85%
N39.4Bn
Comments
Over 50% of the total NPLs were in the General Commerce and oil & Gas Sectors.
N51.1Bn
Communication 3%
Mortgage 3% Others 5% 18
Coverage Ratio
Dec. 2010
Jun. 2011
Sep. 2011
Dec. 2011
Mar. 2012
Dec. 2010
Jun. 2011
Sep. 2011
Dec. 2011
Mar. 2012
Comments
Total sale of NPL to AMCON stood at N48bn in 2011 (Phase 1: N21bn and Phase 2: N27bn) A further sale of a performing asset of N19bn to AMCON at a discount of N1bn to reduce concentration risk NPL Ratio to be brought to <5% by end of 2012 Coverage ratio expected to be >80% by end of 2012 Cost of risk will be reduced in 2012 to below 5%
Cost of Risk
11.6% 7.1% 6.4% 6.1% 4.7%
Dec. 2010
Jun. 2011
Sep. 2011
Dec. 2011
Mar. 2012 19
Performing Asset
Batch/Month (NBn) Geometric Power (Dec 2011) Sold to AMCON 19.2 Realized from AMCON 18.2 Discount (1.0)
Total
67.2
32.2
(35.0)
20
Power & Energy 29% Oil & Gas 24% Manufacturing 23% Transport 8% 2005: 64% 2007: 19% 2008: 7% 2004: 4% 2006: 3%
General Comm 7%
ICT 4% Agriculture 2% Education 1% Construction 1% Finance & Insur. 1%
2003: 2%
2001: 1%
Comments
Total sold to AMCON is N67.2 billion (NPLs N48 billion and Performing Assets N19.2 billion) Loss on sales to AMCON N35.0 billion (NPLs N34 billion and discount on performing assets N1 billion)
21
10%
10%
10%
10%
Dec. 2010
Jun. 2011
Sep. 2011
Dec. 2011
Actual CAR
Liquidity
41.5%
44.2% 38.0% 30% 30% 30% 46.3%
Comments
Strong liquidity at 46%, Long term Tier-2 funding from multilateral credit agencies expected begin to come in in Q2. Target $200m
25%
Balance sheet funded largely from deposits. Deposit liabilities accounted for more than 75% of total assets / liabilities
Jun. 2011
Sep. 2011
Dec. 2011
CAR expected to increase to over 15% following Tier-2 capital injection from multilateral agencies by end of Q2 22
Outline
Opening Statement and Strategy (by Dr. Alex Otti, GMD) FY 2011 YTD Financial Performance Business Segments Performance Q1 2012 Financial Performance
(by Abdulrahman Yinusa, CFO)
23
Corporate Banking
Deriving value from focusing on corporate customers with monthly turnovers over N1 billion
Business Banking
Deriving value from focusing on enlarged middle-market customer with turnovers from N40 million N1 billion Meeting customer expectations through various value -adding product offerings & service delivery channels Delivering convenience as differentiating strategy Critical target markets: Tertiary Institutions State governments Companies with large monthly business turnover(Not Multinationals)
Re-structured in terms of geographical focus and target market segments Developing and managing business relationships with multinationals and local large corporations Clear understanding of clients business operations and requirements Organised in 5 groups: Energy Institutional banking Infrastructure & transport Public Sector(Collection) Structured finance & Advisory
Business Banking
Grow diversified & profitable assets, increase deposits, fee based business & international trade finance whilst delivering client solutions and providing beneficial business relationships with small, medium and fairly large-scale business enterprises, as well as high net-worth and medium income individuals.
155.6
N601.7bn
N397.4bn
135.4
Corporate Banking
229.6 The Corporate banking is positioned to operate with agility, delivering innovative and quality solutions, increase share of wallet, target high-profile and high value clients, Supporting the Demand & Supply Chains of Corporates as well as Providing a Onestop Solution for Businesses
65.0 41.4
Subsidiaries
DBB Group and DPFC Limited
25
Time deposits
90%
51%
MSME
Comments
Retail Banking offers consumers the broadest range of services through multiple channels Service Delivery Channels: 223 Branches, 265 ATMs, Full transactional Internet Banking, Mobile Banking, 1200 POS and 24/7 fully functional enterprise class IP call center (Diamond Dial) + 1200 Direct Sales Agents Alternative Customer Acquisition Channels: VISA Credit Cards (Circa 30,000 card holders), Privilege Banking, MSME etc. 26
51%
49%
150
Jun. 2010
Sep. 2010
Dec. 2010
Jun. 2011
Sep. 2011
Dec. 2011
Jun. 2010
Sep. 2010
Dec. 2010
Jun. 2011
Sep. 2011
Dec. 2011
Comments
N65.0bn
4.8 33.3
N18.1bn
3.8
N27.2bn N42.2bn
3.9 10.0 2.7 2.9 7.7 Dec. 2010 4.4 17.3 5.5 2.9 12.1 Jun. 2011
N63.2bn
5.3 30.5
5.6
1.6 2.2 4.9 Sep. 2010
Personal Loan
Mortgages
MSME
Credit Card
27
Outline
Opening Statement and Strategy (by Dr. Alex Otti, GMD) FY 2011 YTD Financial Performance Business Segments Performance Q1 2012 Financial Performance
(by Abdulrahman Yinusa, CFO)
28
Group
Q1 2011 N' billion 20.3 12.3 5.9 18.2 (11.9) 6.3 (4.5) 1.8 1.1 YoY % 51.2 47.2 35.6 43.4 12.6 101.6 15.6 316.7 345.5
Bank
Q1 2012 N' billion 28.7 17.2 7.4 24.6 (12.1) 12.5 (5.1) 7.4 4.8
Bank
Q1 2011 N' billion 19.3 12.0 5.2 17.2 (10.8) 6.4 (4.5) 1.9 1.2 YoY % 48.7 43.3 42.3 43.0 12.0 95.3 13.3 289.5 300.0
Comments
Group and Bank gross earnings up 51% and 49% respectively (YoY) Group and Bank net interest income up 47% and 43% respectively (YoY) Group operating profit up 102% and bank operating profit up 95% (YoY) PBT for Group and Bank up 317% and 290% respectively Cost of risk for Group and Bank are 4.7% and 5.1% respectively Improved operating performance is sustainable into the future after risk assets clean-up of 2011
29
Group
Q1 2011 N' billion 170.2 YoY
Bank
%
42.8 Q1 2012 N' billion 216.6
Bank
Q1 2011 N' billion 142.8 YoY
%
51.7
Comments
Crossed N1 Trillion Mark in Total Assets plus Contingents Group and Bank risk asset volume up 35% to N440 billion, 24% to N399 billion (YoY), up 11% and 12% (QoQ) respectively Group and Bank deposit up 43% and 42% (YoY), up 6% and 7% (QoQ) respectively Group and Bank balance sheet size up 25% and 28% (YoY), and up 10% (QoQ) for both respectively
Risk Assets
Other Assets Investments Fixed Assets Total Assets Deposits Other Liabilities Borrowings Equity Total Liabilities Off Balance Sheet Balance Sheet Size
440.3
17.7 119.1 38.2 858.3 640.1 72.0 53.1 93.1 858.3 232.2 1,090.5
327.0
31.3 71.6 36.7 636.8 448.5 53.5 27.7 107.1 636.8 238.0 874.8
34.6
(43.5) 66.3 4.1 34.8 42.7 34.6 91.7 (13.1) 34.8 (2.4) 24.7
399.1
13.1 114.5 34.6 777.9 583.1 49.2 53.1 92.5 777.9 165.0 942.9
323.1
14.9 71.6 34.3 586.7 410.7 31.4 27.7 116.9 586.7 150.7 737.4
23.5
(12.1) 59.5 0.9 32.6 42.0 56.7 91.7 (20.9) 32.6 9.5 27.9
30
Bank
Q4 2011 9.1% 9.8% 2.1% Q3 2011 9.0% 11.4% 2.0%
NIM
NPL Cost of funds Coverage Capital Adequacy
9.5%
8.0% 2.7% 75.0% 12.4%
10.0%
8.2% 2.6% 74.1% 13.3%
53.7%
13.9%
57.6%
16.6%
51.5%
14.9%
57.2%
17.9%
Liquidity
Cost to Income Ratio Comments
46.1%
51.5%
46.3%
66.6%
44.2%
67.0%
45.9%
49.0%
46.3%
64.3%
44.2%
63.4%
Increase in NIM in Q1 2012 to 10.0% for the Bank and 9.5% for the Group despite increase in cash reserve requirement (CRR) to 8% and increase in cost of funds within the quarter. Capital adequacy ratio of 12.4% above the CBN benchmark of 10%. Tier 2 capital of $70 million from multilateral agencies to be injected in Q2 2012.
31
31
Bank
Q1 2012 N billion 424.9 34.9 25.9 8.2% 74.1% Q4 2011 N billion 375.0 36.9 19.0 9.8% 51.5%
Comments
Improved NPL ratio of 8% in Q1 2012 due to increase in risk assets & drop in NPL volume/ recoveries Target NPL ratio of < 5.0% by December 2012 Improving Coverage Ratio to 75% in Q1 2012 from 52% at 2011 Year end. Target Coverage Ratio by December 2012 is Minimum of 80%
32
Outline
Opening Statement and Strategy (by Dr. Alex Otti, GMD) FY 2011 YTD Financial Performance Business Segments Performance Q1 2012 Financial Performance
(by Abdulrahman Yinusa, CFO)
33
Q&A
35