Bloomberg News

Diamond Bank 2011 Profit May Drop on ‘Clean-Up’ Year, CFO Says

June 22, 2011

June 22 (Bloomberg) -- Diamond Bank Plc, Nigeria’s ninth- largest lender by market value, may have reduced 2011 earnings as it cuts bad debt in a “clean-up year” for the lender, said Chief Financial Officer Abdulrahman Yinusa.

The bank is aiming to lower its ratio of non-performing loans to 5 percent “and below” from 14.8 percent a year earlier after selling some to the state-owned company set up to buy debt, Yinusa said in an interview in London yesterday.

“We believe 2011 is a clean-up year,” Yinusa said. “Then we will see returns.”

Shares of Nigerian lenders plunged after a debt crisis in 2008 and 2009 resulting from loans to domestic stock speculators. Central Bank of Nigeria Governor Lamido Sanusi fired the chief executives of eight of the country’s 24 lenders, bailed out the industry with 620 billion naira ($4 billion) and set up Asset Management Corp. of Nigeria to buy bad debts from lenders. Diamond Bank was not bailed out.

The lender will reach “normal performance” after about 30 billion naira of credit-related writedowns and disposals of subsidiaries this year, and the Lagos-based bank will generate around 15 percent to 20 percent return on earnings, he said.

The bank reported 2010 net income through December of 1.3 billion naira compared with a loss of 16.8 billion naira the previous year, after reducing its non-performing loan ratio to 14.8 percent from 18.3 percent in 2009.

--Editors: Linda Shen, Peter Branton

To contact the reporter on this story: Chris Kay in London at

To contact the editor responsible for this story: Gavin Serkin at

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