These are difficult and challenging times for Diamond Bank Plc as major operational indices slide as at the end of 2014 financial year and first quarter of 2015.

The downward looking indices include Capital Adequacy Ratio (CAR), Net Interest Margin (NIM), Profitability, Gross Earnings and Net Margin, while the bank harvested hikes in Cost to Income Ratio (CIR), Cost of Funds (CoF), Operating Expenses and Impairment Charges.

According to the bank’s financial performance in the year ended December 31, 2014, the Capital Adequacy Ratio (CAR) declined to 17.5% from 18.5% in 2013, mainly due to aggressive growth in loan portfolio as against proportionate growth in capital resources.

Also, Cost of Funds (CoF) rose to 3.7% in 2014 and 3.5% in Q1:2015 from 3.1% in 2013 while the 2014 credit impairment charges rose by 13.2% to N26.4 billion from N23.3 billion in 2013.

In the same period under review, the bank’s Cost to Income Ratio (CIR) rose to 63.3% for 2014 from 59.4% in financial year 2013 (but went up to 62.0% in the first quarter of 2015. Nevertheless, it is still below the 67.8% average rate for Tier-2 banks.

Also, the 2014 Profit Before Tax (PBT) and Profit After Tax (PAT) equally declined by 12.4% and 10.7% respectively, and also in first quarter of 2015 -PBT (-9.5%) and PAT (-15.1%) joined the ranks of declining indices.

According to Afrinvest Research, “a further analysis of the operating expenses shows that substantial increase in AMCON Resolution Fund (+149.5%), professional fees (+37.4%) and personnel expenses (+13.3%) accounted for the rise in Cost to Income Ratio (CIR) in financial year 2014.

Although Diamond’s Loan to Deposit ratio of 69.6% is low relative to the Tier-2 average of 75.3%and against the regulatory benchmark of 80.0%, we do not expect a significant growth in risk asset in 2015 based on management guidance.”

On the positive angle, Diamond Bank’s total deposits rose by 23.9% to N1.6 trillion in 2014 compared to N1.3 trillion in 2013.

“This represents 90.6% of total liabilities which also grew 24.9% in the same period. Consequently, ROAA and ROAE eased to 1.5% and 14.5% in 2014 from 2.2% and 23.7% in 2013 respectively, relative to Tier-2 banks average ROAA: 2.1%and ROAE: 16.9%.”