Diamond bank annual report 2015

ANNUAL REPORT 2015
Our Vision
providing unequalled customer
Our Core values
BEYOND BANKING
We continually develop and deliver not just new
and better ways of doing banking but new ways
of redefi ning the banking relationships altogether.
.
of Nigeria’s banking industry by utilising electronic
delivery channels, we are also strengthening our
customer relationships through
This is how we go
Diamond Bank
beyond banking.
digital transformation
G o
vern an
ce Fin
fo rm
atio n
Diamond Bank Plc (“Diamond Bank”) is Nigeria's fastest growing retail bank. Through innovation and technology, Diamond Bank enhances customer experiences and drives financial inclusion in what we call 'Beyond Banking'.
Since the Bank was incorporated in December 1990, Diamond Bank has challenged the market environment by introducing new products, innovative technology and setting new benchmarks through international standards.
Today, Diamond Bank is best placed to respond to changing lifestyles and is leading the digital transformation in response to these societal shifts. For example, Diamond Mobile is Africa's leading banking app and the first with touch ID.
Delivering an enhanced customer experience is fundamental to the Diamond Bank proposition. We aim to support our customers via our tailored services, such as Diamond Woman, so that they can manage their lives seamlessly whether on-the- go or in branch – in other words, we want to go 'Beyond Banking'.
Overall, our people remain the key differentiating factor in providing this unique customer experience across all markets where we operate and we are fully committed to consistently attracting only the best
people to maintain our competitive edge.
Diamond Bank has a retail- led strategy, meaning it is well placed to benefit from Nigeria's attractive fundamental macroeconomic trends, particularly in the retail market.
The Bank also has a strong Corporate Banking offering that is helping to fuel growth across Nigeria through supporting businesses,
stredefining the country's 21 century economy.
The Bank serves over 150,000 businesses of varying size across diverse sectors including Corporate clients as well as MSME (Micro Small and Medium- Scale Enterprises), for which it provides value-adding banking solutions.
With a primary listing on the Nigerian Stock Exchange and GDRs on the London Stock Exchange, Diamond Bank's footprint extends beyond Nigeria, with a strong presence in the Republic of Benin and international branches in Senegal, Togo and Ivory Coast – making it the first Nigerian bank to operate in Francophone West Africa. The Bank launched its first non-African subsidiary – Diamond Bank, UK –in 2013. As of January 2016, the Bank operated 271 branches across Nigeria and 317 across the Group.Diamond Bank has frequently been the partner of choice for leading
CORPORATE PROFILE ABOUT US
international organisations such as the International Finance Corporation (IFC) and the UK's Department for International Development (DfID), in order to deliver programmes targeting MSMEs and to promote financial inclusion.
The Carlyle Group, the global alternative asset manager, became a significant shareholder in November 2014 following its $147m investment in the Bank. This was a major milestone for Diamond Bank and a sign of confidence in the Bank's strategy and market opportunity.
OUR STRUCTURE
The Bank is structured in a way that places customers at the heart of everything it does. The three core business units are:
Retail Banking: This provides innovative products and solutions for the retail mass market, mass affluent customers and MSME; Business Banking: This caters for the banking needs of the middle market customers; Corporate Banking: Provides services to multinationals and large corporations in such sectors as Oil and Gas, Power, Maritime, Manufacturing, Aviation, Telecommunication; and
OUR CORE VALUES
Integrity: We are honest and truthful. This explains our moral obligations as a Bank
Diamond Bank Annual Report 2015 06
to our customers, stakeholders and employees. Competence: We are equipped with clusters of related abilities, commitments, knowledge and skills that enable us effectively exceed our customers' expectations.
Leadership: We are a leading financial institution that takes the leadership role in the industry in providing the information, knowledge and methods that enable us serve our customers better. Accountability: We account for our activities, deliver on our promises, accept our responsibilities and are transparent in all our dealing in line with global best practices.
Passion: We are professionals dedicated and relentlessly devoted to the pursuit of excellence by providing value-adding solutions.
KEY MILESTONES
1991: Diamond Bank founded as a Private Limited Liability Company
2001: Diamond Bank becomes a Universal Bank
2005: Diamond Bank PLC becomes a Public Limited Company
2005: Diamond Bank PLC listed on the Nigerian Stock Exchange
2005: Diamond Bank PLC acquires the former Lion Bank of Nigeria PLC
2007: Voted Most Improved Bank of the Year in the Thisday Annual Awards
2008: 1st African company / Bank quoted on the Professional Securities Market of the London Stock Exchange
2009: Rated A- by Fitch, A+ by Agusto and A by GCR reflecting the Bank's sustainable liquidity, sound and professional practices and good standing as a high Investment grade institution.
2010: Appointed as primary lending institution for the disbursement of NIMASA Cabotage Vessel Finance Fund (CVFF)
2011: Appointed as a partner bank by the Nigeria Content Development Monitoring Board(NCDMB)
2011: Named Best Credit Card Bank in the 11th Card, ATM & Mobile Expo Africa 2011
2012: Named Best Credit Card Bank in the 12th Card, ATM & Mobile Expo Africa 2012
2012: Named Best Online Bank in Nigeria
2012: Named Best Oil and Gas Investment Company 2012, Africa awarded by London-based World Finance Magazine
2013: Named Best Oil and Gas Investment Company 2013, Africa awarded by London-based World Finance Magazine
2013: The Bank's first non- African subsidiary –Diamond Bank UK Ltd -was launched.
2014: The Bank raised N50bn in a highly successful rights issue exercise.
2015: Uzoma Dozie, current CEO, completes his first full year in charge of the Bank and implements retail-led strategy
2016: The Bank successfully restructured to better support its retail strategy and to enhance its client proposition
BEYOND BANKING
Through innovation and technology, we enhance customer
experiences and drive financial inclusion in what we call 'Beyond
Banking.’
Bank has challenged the market environment by introducing
new products, innovative technology and setting new
benchmarks through international standards.
Today, Diamond Bank is best placed to respond to changing
lifestyles and is leading the digital transformation in response to
these societal shifts. For example, Diamond Mobile app is Africa's
leading banking app and the first with the Touch ID feature.
07 Annual Report 2015Diamond Bank
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Diamond Y’ello with over N1 billion
transaction volume each week
through partnership
Nigeria
financial access and bridge
multiple internally displaced
viable concentration mix of
female and northern inclusion.
the underbanked
Number 1 local currency
combining both financial and
telecommunication services targeted at
open a Bank Account from the
convenience of their mobile devices.
Targeted at both the youth and mas
market segments of the MTN
subscriber base, the proposition will
deepen the portfolio of financial
services offered to MTN customers
thereby increasing low cost deposits
and revenue to the Bank.
CASE STUDY
In today’s fast-paced world, customers want ease of
access to products and services; not just in banking
but in lifestyle choices too. In a bid to deliver the best
customer experience in the industry, we are deepening
our innovations in electronic banking to promote
a seamless transition to a cashless economy. By
focusing on mobile applications, we are creating more
innovative technology-enabled solutions that can
further enrich the lives of our customers now and in
the future.
75 MILLION Total transaction count of over
75 million this year
CASE STUDY
carry out various financial transactions.
Characterised by its ease of use, it has
empowered customers to move their
banking transactions from the branch
to the comfort of their home and
offices. It provides a cost effective
means of transaction for both the
customer and the Bank.
with exciting new features such as
event search function and payment
features for online shopping, flight
bookings, purchase of movie tickets
among others. We also became the
first bank to launch touch identity
recognition.
10
Windows operating systems
full banking services
accounts
this year
grown from 5 in 2012 to 17 in 2015
CHALLENGING THE
MARKET ENVIRONMENT
BEYOND BANKING
that we help and support our customers and wider
stakeholders to ensure they have access to the
products and services they need in order to develop
their own businesses and create enduring wealth
that will benefi t the wider communities in which
they operate. We support over 250,000 businesses
of diff erent scales and sectors and we believe that
thriving small and medium enterprises are the
engines for sustainable economic growth in our
nation. We therefore continue to be supportive of
entrepreneurship that can create jobs for millions of
Nigerians even at the grassroots.
12
TODAY PROGRAM)
Diamond Bank has partnered with the Enterprise Development Centre (EDC) to train over 200 micro entrepreneurs in our BET program.
The programme, which is our flagship
CSR initiative, is currently in its 5th
season and is targeted at empowering
emerging micro entrepreneurs every
with the Enterprise Development
University in training entrepreneurs
50 applicants are selected for the 6-
month training from the pool of
applications. At the end of the training,
the best 5 candidates are given seed
capital of N3million each to grow their
businesses.
diff erent scales and sectors
No 1 partner in capacity
building with EDC
national economy
support to corporate clients and
customers through digital solutions
Lending portfolio of over
N13 billion during 2015
fi rst bank in Sub Saharan Africa to do so
Diamond Bank Annual Report 2015
Our efforts at setting new benchmarks through international standards has earned us vital support in driving our business. This includes our recent nomination by EFInA as the Best Bank in the deepening of financial inclusion in Nigeria. This comes with a pre-approved $1.5million grant. EFInA is funded by the DFID and Bill and Melinda Gates Foundation.
BEYOND BANKING
LEADERS EXPANDING
LISTED DfIDLSE
Des igned to meet t he needs of t he
un(der)banked especially woman in Nigeria.
BETA provides doorstep access to banking
services from mobile sales and services
agents known as BETA Friends in addition to
branches and ATMs.
Zero Opening Balance that requires minimal
documentation to open and offer low fees
and good savings interest rates. It is a proof of
Diamond's bold and innovative approach to
extend banking and financial inclusion
services across the bottom of the pyramid.
To address customers demand and deepen
access and usage, the proposition has been
improved to introduce new products such as
commitment sav ings, micro lend ing,
transfers, payment services and self-services
(USSD feature).
Deepening Africa).
CASE STUDY
DIAMOND BETA
economic growth
market of the London Stock Exchange
in 2008; first bank in Africa to do so
Listed on Nigerian Stock
fi nancial inclusion program by UK’s DfID
RETAIL PRODUCTS & SERVICES
CORPORATE PRODUCTS & SERVICES
BUSINESS PRODUCTS & SERVICES
This provides innovative products and solutions for the retail mass market, mass affluent customers and MSME.
15 Diamond Bank Annual Report 2015
AT A GLANCE
Who we are Diamond Bank is the fastest growing retail bank in Nigeria–respected for its excellent service delivery. We are driven by innovation and technology and operate on the most advanced banking technology platforms in the market.
What we do We offer a full range of banking products and services in retail, corporate and business banking.
This caters for the banking needs of the middle market customers.
Provides services to multinationals and large corporations in such sectors as Oil and Gas, Power, Maritime, Manufacturing, Aviation, Telecommunication.
TREBLED IN SIZE IN 3 YEARS
SERVING 7 MILLION CUSTOMERS 3 DIVISIONS RETAIL BUSINESS CORPORATE
FASTEST GROWING RETAIL BANK IN NIGERIA
NO 1 LOCAL CURRENCY CREDIT CARD PROVIDER
271 BRANCHES IN NIGERIA
NOTICE OF ANNUAL
General Meeting of DIAMOND BANK PLC will be held
on Friday, the 27 day of May 2016 at The
Intercontinental Hotel, Plot 52, Kofo Abayomi Street,
Victoria Island, Lagos, at 10:00 a.m. prompt to
transact the following business:
Nkechi Nwosu Company Secretary
Diamond Bank Annual Report 2015 Diamond Bank Annual Report 2015 01
S tra
te g
ic re
p o
rt G
o v
e rn
a n
c e
F in
a n
c ia
2. To elect/re-elect Directors
3. To authorize the Directors to fix the Remuneration of the Auditors
4. To elect Members of the Audit Committee
thDated this 27 day of April 2016
BY ORDER OF THE BOARD
NKECHI NWOSU Company Secretary FRC/2013/NBA/00000001571
Notes 1. Proxy
A member of the Company entitled to attend and vote at any Annual General Meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company. For the appointment to be valid, a completed and duly stamped proxy form must be deposited at the office of the Registrar of the Company, Centurion Registrars Limited, 33c, Cameron Road, Ikoyi, Lagos State, not less than 48 hours before the time fixed for the meeting.
2. Closure of Register of Members
For the purpose of attendance at the Annual General Meeting, the Register of Members will be closed from May 19, 2016 to May 20, 2016 (both days inclusive) to enable the Registrar update the Register.
3. Re-election of Director over 70 years
Special Notice is hereby given that Chief John D. Edozien, who is over 70 years of age will be proposed for re-election as Director pursuant to
Section 256 of the Companies and Allied Matters Act, 1990.
4. Election of Directors
i. In accordance with the provisions of the Articles of Association of the Company, Dr. Olubola Hassan, Dr. Chris Ogbechie and Ms. Genevieve Sangudi retire by rotation and being eligible, offer themselves for re- election.
ii. The ratification of the appointment of Mr. Damian Dolland as a Non-Executive Director, whose appointment had been approved by the Central Bank of Nigeria.
5. Audit Committee
In accordance with Section 359 (5) of the Companies and Allied Matters Act, 1990, any shareholder may nominate another shareholder for appointment to the Audit Committee. Such nomination should be in writing and must reach the Company Secretary not less than twenty one (21) days before the Annual General Meeting.
The Central Bank of Nigeria's Code of Corporate Governance has indicated that some members of the Audit Committee should be knowledgeable in internal control processes. We would therefore request that nominations be accompanied by a copy of the nominee's curriculum vitae.
6. Shareholders Right
In accordance with the provisions of Rule 19.12, of The Rule Book of The Exchange, 2015, Part II, Issuers' Rules. Shareholders' are entitled to ask questions not only at the meeting but also in writing prior to the meeting; and the written questions must be submitted to the Issuer not later than May 20, 2016.
7. Website
A copy of this notice and other information relating to the meeting can be found on our website www.diamondbank.com
AGENDA Ordinary Business 1. To receive the Report of Directors, the Audited Financial Statements for the period ended December 31, 2015, and the Reports of the Board Appraiser, Auditors and Audit Committee thereon.
CHAIRMAN’S STATEMENT
mixed feelings as the macro-economic
challenges in the global economy hugely
impacted on the domestic business
environment eliciting regulatory
Dr. Chris Ogbechie Chairman
istinguished shareholders,
Deminent ladies and gentlemen, on behalf of the Board of
Directors of our great Bank, I am honoured to welcome you to this 25th Annual General Meeting and rendition of our stewardship for the 2015 financial
year. The 2015 financial year was one of mixed feelings as the macroeconomic challenges in the global economy hugely impacted on the domestic business environment eliciting regulatory responses that were designed to protect the interest of the financial system, even though some of these remained greatly unsavoury to banks' profitability.
However, we weathered the storm by ensuring efficient alignment of resources in line with policy demands of the operating environment, coupled with consistent improvement on our ability to deliver superior value to all stakeholders. We took tough decisions to ensure that the Bank's fundamentals remain strong and sustainable. Furthermore, we have significantly transformed customers experience at every touch point with special emphasis on remaining the “Retail Bank of Choice”.
It is on this premise that I present the Annual Report and Financial Statements of our great Bank for the year-ended December 31, 2015 to you. Our resilience ensured that our fundamentals remained strong with profitability and liquidity at acceptable levels. Nevertheless, the Bank had to make significant provisions for loan impairments as macroeconomic headwinds impacted our risk assets considerably during the year.
Global Macroeconomic Environment According to the World Bank, the global economy grew by 2.4% in 2015, a 0.2% decline from the 2.6% recorded in 2014. This sub-optimal growth was driven largely by the advanced economies which grew by 1.6% year-on-year as weaker performance in the UK and Russia suppressed output especially in the Euro Area. In the US, the long
anticipated rate adjustment came through in December 2015 when the US Federal Reserve Bank hiked interest rate from the range of 0% - 0.25% to 0.25% - 0.5%, resulting to significant capital inflow reversals from emerging markets, including Nigeria. Emerging economies grew by 4.3% year-on-year in 2015, a 0.6% decline relative to 2014 expansion. The slump in commodity prices negatively impacted income, trade and general economic activities in emerging markets during the year, as economic growth in China declined to a 6-year low of 6.9% in 2015. The drag in emerging market economies translated to lower government revenues, investment and weak sentiments during the year.
Domestic Business Environment The Nigerian economy recorded a disappointing 2.8% year-on-year growth in 2015, from 6.22% in 2014. Persistent drop in crude oil prices shrank government revenue significantly, worsened foreign reserves by 15.7% year-on-year and instigated a 17% devaluation of the naira at the official market. Negative sentiments prevailed in the capital market as the Nigerian All- Share Index (ASI) dipped by 17.4% in 2015. Foreign portfolio inflow also dipped by 76% in 2015 as N83.4billion net outflows were recorded.
Inflation peaked at 9.6% year-on-year in December 2015 having been on a gradual ascent since November 2014, breaking out of the CBN's target band of 6% to 9%. The Naira remain challenged through 2015 due to low FX earnings amidst persistently high demand pressures. Rate was maintained at N197/1USD at the official window, while the Naira depreciated to as low as N258/USD at the parallel market. This presented significant headwinds to FX related businesses with filter-through effect on banks' top-line during the year.
Nigerian Banking Industry The domestic banking industry in 2015 was characterized by series of regulatory pronouncements. Most significant of these were:
Ÿ Harmonization of the Cash Reserve Ratio (CRR) to 31%, and subsequent reduction to 20% in November 2015.
Ÿ Exclusion of 41 items from the official FX window.
Ÿ The ban on direct foreign currency cash deposits into domiciliary accounts.
Ÿ Full Implementation of the Treasury Single Account (TSA)
The CBN kept its tight grip on the banking sector in 2015 to ensure that the financial system remain stable, responsive and sustainable. The full implementation of the Treasury Single Account (TSA) drained approximately N1 trillion from banks' deposits, while the reduction of Commission on Turnover (COT) to N1 per mille impacted on non- interest income. Deterioration of the industry's Oil & Gas and Energy sector's risk assets equally caused income loses and credit impairments across board. Nevertheless, our retail-centric business model ensured that we harnessed opportunities embedded in these challenges to deliver on our promise of sustainable growth.
Financial Performance Despite the macroeconomic headwinds and regulatory constraints highlighted above, your Bank recorded gross earnings of N217 billion during the year, representing 4.2% year-on-year growth. Fees and Commission income rose by 8.3% year-on-year, an indication of increased customer transaction activities, strong FX trading activities and improving traction of revenue diversification strategy of the Bank. Interest expense on the other hand reduced by 6.0% year-on-year as the Bank improved significantly on liability pricing efficiency. Consequently, the Bank achieved a Net Interest Income of N109billion for the year.
Notably, the Bank's impairment charge (both specific and collective) of N55.1billion in 2015 was unavoidably higher than budgeted as we took steps to clean up our non-performing risk assets in the Energy and Commercial Business sectors which were mostly
WE ARE COMMITTED TO HIGH A STANDARD OF CORPORATE GOVERNANCE
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Board focus for 2016 The year 2016 is strategic for the Bank as we position towards emerging as a clear leader in select market segments, while remaining sustainably efficient and profitable. The following seven key areas will form the nucleus of the Board's focus in 2016:
Sustain low cost deposit Ÿ leadership Improve the quality of our loan Ÿ portfolio to achieve one of the lowest NPLs in the industry Grow Non-Interest Income Ÿ significantly Drive low cost business model Ÿ by crashing operating expenses and improving on efficiency and productivity Develop high performance Ÿ culture in the Bank with “can- do” attitude across board Go for superior customer Ÿ engagement and service Deepen sustainability principles. Ÿ
affected by the macro headwinds. Also, the significant reduction in trade related revenues of our key clients exacerbated by shortage of foreign currency especially in H2 2015 made it difficult for some of them to meet their obligations. Suffice it to say that the deterioration in Nigeria's macroeconomic fundamentals significantly impacted customers' businesses across these sectors in 2015. Consequently, despite the impressive gross earnings in 2015, the increase in impairment charges above budget estimates impeded potentially stronger growth in profitability as the Bank recorded a depressed Profit Before Tax (PBT) and Profit After Tax (PAT) of N7.1 billion and N5.6billion respectively for the period ended December 31, 2015.
Nevertheless, the operational ratios show that the Bank is on the path of sustainable growth. Low cost deposit ratio went up to 77.6% from 66.9%, Liquidity Ratio increased from 41.70% to 52.8%, Cost to Income Ratio reduced from 64.60% to 61.0% as we deepened our cost management techniques in spite of rising inflation. Capital Adequacy Ratio remained strong at 17.6% as we continued to build healthy headroom to take advantage of opportunities in identified key growth sectors.
Ladies and Gentlemen, your Bank is positioned to improve on the performance of the 2015 financial year and ensure superior value-add to all stakeholders in the 2016 financial year.
We have revamped our risk management framework to further improve the quality of our loan portfolio. We remain determined to putting a clamp on operating costs with significant investment towards improving efficiency and customer experience going forward. Further, we have enshrined sustainability as a business driver across the length and breadth of the Bank.
Appointment of a New CFO Our succession management system
proved its effectiveness during the year with the appointment of Mr. Chiugo Ndubisi as the Acting Chief Financial Officer, replacing Mr. Yinusa Abdulrahman who had to pursue other interests. Chiugo joined the Planning and Financial Control Group of Diamond Bank in 1996 as an Executive Trainee and served as the Financial Controller between 2004 and 2009. He rose to the post of the Divisional Head, Financial Management in 2009 - a role he performed laudably until his appointment as the Acting CFO in 2015.
Chiugo Ndubisi holds a First Class honours degree in Engineering from the University of Nigeria Nsukka and an MBA from the University of Lagos. He is a fellow of the Institute of Chartered Accountants of Nigeria (FCA), and an Associate member of both the Chartered Institute of Bankers and the Chartered Institute of Taxation of Nigeria. He has attended various local and International courses including the Advanced Management Programme (AMP) of Wharton Business School (University of Pennsylvania), the Senior Management Programme (SMP) of the Lagos Business School and the HSBC International Bankers' Programme.
We are confident of his ability to consistently add value to the Management team, given his in-depth knowledge of strategic financial management, compliance and stakeholder relations.
Board of Directors During the 2015 financial year, three (3) members left the Board to pursue other interests after serving the Bank meritoriously. They are: Ÿ Mr. Abdulrahman Yinusa who was
an Executive Director/Chief Financial Officer (CFO). His resignation took effect from August 2015,
Ÿ Mrs. Ifueko Omoigui Okauru, an Independent Director whose resignation took effect from October 2015, and
Ÿ Mr. Thomas Barry, who functioned as a Non-Executive Director. He resigned from the Board in February
2015.
Your Bank equally on-boarded three members into the Board of Directors in Non-Executive capacities. They are:
Ms. Genevieve Sangudi Ms Sangudi is currently the Managing Director and Head of West Africa's operations of Carlyle Group, which has over $200billion of assets under its management. She had also worked as part of the senior management team of Emerging Capital Partners and Procter & Gamble. She is a graduate of the Macalester College, and has two masters' degrees in Business Administration and International Affairs both from the Columbia Business School and Columbia University of International and Public Affairs, respectively. The Central Bank of Nigeria approved her appointment to
22
the Board on June 30, 2015.
Mr. Sunil Kaul- Non-Executive Director Mr. Kaul is presently the Managing Director, Carlyle Asian Partners, Singapore, where he is responsible for sourcing, executing and managing financial services transactions across Asia. He is a member of Board of Directors and Risk & Executive Committees of Ta Chong Bank, Taiwan. He is also a member of the Board of Directors of India Infoline Limited. Mr. Sunil holds a B.Tech. in Electronics and an MBA from Indian Institute of Management, Bangalore. He comes with a wealth of experience and career spanning not less than 30 years having worked in various capacities in Citigroup. He was the President, Citibank, Japan, Chairman, Citi Cards, Japan and Citi Consumer Finance, Tokyo. The Central Bank of Nigeria approved his appointment to the Board on June 30, 2015.
Mr. Damian Dolland Mr. Damian Dolland is presently the founder and Director of Darisami International Consultancy based in Port Louis Mauritius where he is involved in financial advisory and investments focused on Sub-Sharan Africa and the Caribbean. He had worked as Executive Director, Investment Banking Division of Morgan Stanley, and as Managing Director, and Head of Investment Banking: Sub-Saharan Africa, J.P. Morgan. Mr Dolland holds a B.SE (Hons) in Biomedical & Electrical Engineering with Distinction and Cum Laude; Minor in Chemistry from Duke University, Durham, North Carolina. His career spans over 19 years in the Investment sector.
We are convinced that these appointments are in the best interest of Diamond Bank as these esteemed individuals bring their wealth of experience to bear on the decision making process of the Board. Join me
and other Members of the Board to welcome them and wish them well in the task ahead.
Our People Distinguished Shareholders, Diamond Bank still boasts of the best people in the industry despite the difficult operating environment – a team of professional and creative minds focused on providing innovative customer- centric solutions. Over the years, our people who are our best assets have continued to sustain the Bank.
To position our entire workforce for future challenges, your Bank embarked upon a holistic job evaluation exercise code named “Project Clarity”. The exercise is a systematic and objective process to determine the relative importance, value and complexity of jobs in the Bank using a credible job evaluation tool to ensure predictable performance. We are confident that the laudable “Project Clarity” initiative will bring out the best in our Diamonds as the Bank heads into 2016. Overall, our renowned Diamond Academy will continue to ensure continuous training of all Diamonds in line with best banking practices.
I appreciate my fellow Diamonds for their immense contributions towards the continued success and sustainability of the Bank.
Conclusion The 2016 financial year will no-doubt remain challenging, as the fundamentals that drag economic growth are expected to persist, at least, in the short to medium term. Nonetheless, let me assure you that we will work assiduously to ensure sustainable growth in all aspects of our business with keen focus on cost leadership, operating efficiency and customer engagement. We will work cohesively to deliver innovative solutions along our restructured, retail- centric business model and further entrench the “can-do” attitude across
board in a digital-focused ecosystem to drive profitability and create superior value for all stakeholders.
I commend the immense contribution of the Board members towards the achievement of the corporate objectives of the Bank and look forward to more fruitful engagements in 2016. I also salute all Diamonds for their loyalty, diligence, and unrelenting support in times past while counting on their unflinching commitment in the 2016 financial year towards improving on our achievements as a truly digital, retail Bank of choice in all markets where we operate.
I acknowledge the industry regulators for their sustained efforts at ensuring a stable and fraud-free financial system. I also commend the fiscal authorities for their efforts at ensuring a viable economy for the sustenance of businesses whilst promoting real sector development.
Eminent Shareholders, Ladies and Gentlemen, once again, I thank you for your attention and wish you a rewarding 2016.
Warmest Regards,
Diamond Bank
give us confi dence in our ability
to achieve the strategic objectives
that we have set for ourselves.”
Uzoma Dozie
As an institution, we began the year 2015 on a decisive note:
“to serve our customers more resourcefully at lower cost, at lower risk and with digitally-driven efficiency, while remaining profitable and competitive”.
We are currently on an assured path of transformation towards a digital consumer bank with strong capabilities across Corporate, Business, MSME and Consumer Banking spaces. We are convinced that this realignment will enable us consolidate on the gains of our past performance and proactively respond to future market needs in order to deliver on our strategic objectives over the coming years. Let me briefly highlight some noteworthy events that shaped our operating
environment during the year under review.
The advanced economies showed signs of mild recovery in 2015. The U.S. economy experienced a positive rub- off from improved manufacturing output, rising household consumption and reduced unemployment, whereas the Eurozone was supported by accommodative monetary policies aimed at stimulating exports and consumer spending.
China's economic growth slowed to a 25 year low of 6.9% as the economy transits from export to consumption driven model. This led to heavy repercussions for emerging economies with trade ties to China as the country softens demand for raw materials. Major oil producing countries such as Brazil and Russia slipped into recessions in 2015 and might require deep structural reforms to increase recovery prospects in the near term.
On the domestic front, the slump in crude oil prices resulted to a sharp decline in government revenue and consequently, the nation's foreign reserves. Nigeria recorded a slowdown in domestic output as the GDP growth declined from 5.9% in Q4:2014 to 2.1% in Q4:2015. Furthermore, exchange rate volatilities induced by slowdown in FX inflows mounted severe pressures on the Naira, prompting a 17% devaluation of the local currency to N197/USD1 in February 2015. As the pressure persisted, the CBN sustained a demand-focused FX management strategy to protect the Naira, with implications for both businesses and the banks.
Nevertheless, the Naira continued to slide at the parallel market, triggering a cost push inflationary trend. Headline inflation rate kept an upward trajectory for 11 months in 2015 (peaking at 9.55% in December), and eventually exceeded the Central Bank's upper control limit of 9%.
Economic Growth in 2015 (Year-on-Year) Nigerian Economic Indicators in 2015 (Year-on-Year)
World
Real GDP Growth Rate Official Exchange Rate per US Dollar
Inflation Rate: 12-month average
$63.81
$38.18
CHIEF EXECUTIVE’S REVIEW CONTINUED
These developments culminated in a tough operating environment for banking business with attendant impact on operating costs and asset performance of banks. Consequently, the CBN responded with several policy pronouncements which included:
Ÿ Harmonisation of Cash Reserve Requirement (CRR) at 31% by easing Public sector CRR from 75% and raising CRR for Private funds from 20%
Ÿ Eventual reduction of harmonised CRR from 31% to 25% and further to 20%, to facilitate direct lending to high impact economic sectors
Ÿ Reduction of Monetary Policy Rate from 13% to 11% to reduce borrowing costs and stimulate increased economic activities
Ÿ Reduction of the asymmetric corridor around the MPR from +2/- 2% to +2%/-7% to push liquidity to the real sector
Ÿ Implementation of Treasury Single Account (TSA) which resulted in the movement of approximately N1trillion from the Deposit Money Banks (DMBs) to the CBN.
While these policy moves were aimed at stabilizing the financial system, it opened compelling opportunities for us to grow our business segments especially in the area of MSME financing as our overall liquidity position recorded a significant boost.
These pronouncements towards year end 2015 opened up windows of opportunities to grow our business segments especially in the area of Real sector financing and MSME support as our overall liquidity position was boosted.
Group Financial Performance in 2015 We concentrated our collective efforts towards increasing our operational efficiency by effectively managing our operating costs while seeking innovative means to grow our income lines during the financial year. Noteworthy are the macroeconomic headwinds, particularly the poor economic growth, inflation, dwindling consumer spending and FX shortages, which impacted negatively on the operating environment and the asset quality of banks.
Nevertheless, our business approach yielded some positive results. Our Gross Earnings grew 4.2% to N217.1billion in 2015 from N208.4billion recorded in 2014. This growth was driven by significant boost in Non-Interest Income which grew 14% year-on-year to N50.4billion as income from our electronic payments channels grew significantly in 2015. Further, we successfully managed interest expense to keep Net Interest Income relatively flat at N109.4billion as our robust low- cost deposits strategy continue to deliver results. The growth recorded in Gross Earnings amid a deteriorating economic environment is an affirmation of the resilience of our retail focused strategy, and our customer- centric business approach.
Our cost optimization initiatives introduced during the year delivered a 1.7% decline in operating expenses from N99.3billion in 2014, to N97.5billion. As a result, the Group's cost-to-income ratio improved to 61.0% at the end 2015 financial year from 64.6% recorded in 2014. We were committed to containing the cost of doing business without compromising on our assurance of premium service quality to our teeming customers. As
part of the Bank's strategy to sustainably reposition our risk assets, we took a bold decision to increase our provision for non-performing loans.
Liquidity Ratio (in %)
109.6 109.4
20142013 2015
impairments resulted to the Group's
Profit before Tax (PBT) and Profit after
Tax (PAT) earnings of N7.1billion and
N5.7billion respectively. Nevertheless,
strong: Liquidity ratio of 52.8% (41.7% at
the end of 2014) was well above the
30% statutory minimum and a strong
Capital Adequacy Ratio of 17.6%.
As the macroeconomic environment
became tougher, the Bank's
lending approach, particularly to the Oil
& Gas, transportation and general
and advances to customers declined
3.5% to N763.6billion from N791.0billion
in 2014FY, while our total assets closed
the year at N1.75trillion, 9.3% lower than
the N1.93trillion reported in 2014.
Deposits from our customers closed at
N1.23trillion in 2015, down from
N1.49trillion in 2014 as we focused
mainly on raking in cheap funds so as
to optimize interest margin. Our strong
affinity for generating cheap funds has
made our low cost deposit ratio one of
the highest in the industry at 77.6% of
total deposits, positioning Diamond as
the leading retail franchise in the
Nigerian Financial Services sector. Our
deposits were mobilized across various
segments of the consumer market with
savings accounts contributing 27.8%,
personal current accounts 35.6%,
remaining 22.4% comprised fixed
customers served through a wide
bouquet of products and propositions
and electronic touchpoints, we are set
for exponential and yet, cost-effective
growth over the coming years
Distinguished Shareholders, while we
year under review have placed us on
the right pedestal towards achieving the
strategic objectives for the medium to
long term. We are more than convinced
that we are well positioned for
sustainable growth, as we race towards
being the most efficient retail bank in
Nigeria. We will continue to deliver
sustainable return to our shareholders,
and support economic growth and
development in our niche markets
across West Africa through effective
and innovative financial intermediations.
on unraveling how we intend to do
business going forward; especially in
the fast changing operating
provide an update on key initiatives and
achievements by some of our strategic
business units and support functions.
Review of key business segments
Retail Banking Franchise During the year 2015, we restructured
our Retail Directorate, creating five
distinct divisions that are manned by
senior specialists and focused on
serving key segments of the retail
market. Furthermore, we created the
Financial Inclusion Division to
thus far in BETA Proposition, Agency
Banking and other inclusive banking
products. This is in line with our belief
that retail banking implies providing
lifestyle financial services and
supporting individuals and small
opportunities across the Business &
value chain approach remains a viable
means for creating a working
handshake across all our market
segments. The vendors of our large
corporates, which are often MSMEs,
provide target market for a wide
CHANNELS & CUSTOMER ACCOUNT
WE HAVE ADOPTED A CAUTIOUS LENDING STRATEGY
DIAMOND MOBILE APP
bouquet of our MSME and other Consumer banking services. In addition, our robust payment ecosystem offers us effective means for unraveling useful insights across all our business segments, thereby enabling us to provide effective advisory services to our corporate and business banking clients in order to help them gain competitive advantage in their respective industries while operating their businesses much more efficiently. During the year under review, the Bank played a key role in financing major infrastructure projects in the Nigerian real sector. These were in the form of foreign exchange loan syndications, term loans, project finance and revolving credit facilities. Some of the major deals were: N3.3bn Term Loan for Completion of a tank farm in Calabar, Cross River State; and $70million (N14billion) Term Loan availed for the execution of integrated steel plant project with total capacity of 2million metric tonnes. The Bank also availed N5billion facility as part of the finances to be raised from Development Finance Institutions for construction of the 600,000 barrels per day Oil Refinery and Petrochemical Plant in the Lekki Free Trade Zone. In the telecoms space, we also provided $70Million Bond & Guarantee for the purchase of LTE broadband network equipment to boost broadband services in Nigeria.
We will continue to seek opportunities for bankrolling major projects across key sectors of the Nigerian economy
such as manufacturing, telecommunications, agriculture, general commerce, real estate and other basic infrastructure such as Power.
Business Transformation (Project Office) In line with our aspirations of becoming Nigeria's most customer focused Retail Banking franchise, we successfully initiated the Customer Relationship Management (CRM) Project to transform customer relationship management in year 2015 and beyond. A key benefit of this project is that the CRM tool efficiently manages customer interactions with the Bank throughout the customer lifecycle. This will improve our business relationships with customers, and assist in strengthening customer retention and sales.
In addition, we concluded several phases of Bankworld Enhancement project aimed at deepening our service offerings across our electronic touchpoints. Some of the project initiatives included the launch of Diamond Esusu (e-savers club), a service availed on Diamond Online Internet banking platform that enables groups of customers to collectively own a dedicated account for making savings contributions. Another initiative was the “Magic Cash”, a service provided on the Bank’s ATMs that enables cash withdrawals without the use of a debit card. We will continue to draw on the innovative spirit of our dedicated employees to develop solutions that will be proactive in responding to the needs of our customers and deepening their engagements with us.
Human Capital Management Our human resources still remain our most important asset. We have continually channelled our efforts towards bringing together only the best minds in the industry to create the best value for all stakeholders. In this regard,
we reinforced our ability to attract, develop, retain and reward our best people during the 2015 financial year to enhance capabilities and competencies across the Group. A strategic initiative implemented during the year was “Project Clarity”, which involves the evaluation of job roles across the Group in order to enhance employee effectiveness through identification and elimination of duplicated job roles as well as to drive down costs that may be associated with wasteful activities. Diamond's staff strength stood at 4,245 at the end of the 2015 financial year, down from 4,568 at the end of 2014.
Furthermore, we remained committed towards entrenching a strong learning culture across the enterprise through the deployment of electronic Learning Management System (LMS) portal where best-in- class training is delivered to employees at the convenience of their workstations as well as on mobile devices for anytime access. We will ensure that we are steadfast in training and motivating our employees across board, as well as ensuring that the work environment is conducive to their well-being and productivity
Review Of Subsidiaries The synergy of our business operations across all the subsidiaries within the Group was strongly reinforced during the 2015 financial year with a view to taking advantage of emerging opportunities within and outside geographic boundaries of Nigeria. The organisational structure of the Group was maintained through the year 2015 consisting three distinct business subsidiaries: Diamond Bank S.A (with headquarters in Benin Republic overseeing Diamond Bank Senegal, Diamond Bank Togo and Diamond Bank Cote D'Ivoire), Diamond Bank UK Plc and Diamond Pension Fund Custodian. All our subsidiaries were profitable at the end of the 2015
Beta Proposition-Active Accounts Diamond Y’ello - Active Accounts
Diamond Y’ello - Deposits (N)
239,793 596,752
29
DBUK N0.70bn
financial year.
We expect our subsidiaries in Benin Republic, Cote D'Ivoire, Senegal and Togo to serve as gateway for scaling up our financial service offerings across the West African sub-region. We are passionate about extending our digital banking mantra across West Africa by leveraging the deployment of technology enabled financial solutions towards serving West African markets. In the short to medium term, we will be increasing our ATM deployments, mobile financial solutions including SMS banking and a broad range of innovative products and propositions to deepen financial access and drive up financial inclusion across the sub- region, while contributing to West Africa's social and economic development.
Business Outlook We are well aware that emerging technologies, shifting consumer preferences, tough economic realities as well as sterner regulations will be critical to future survival of traditional banks. We see increasing competition in the years ahead, particularly from technology driven non-banking
institutions. The successful delivery of our business priorities over the next four years will ensure that we are strategically positioned to proactively respond to these events. This will correspondingly enable us retain our position as Nigeria's leading retail franchise and deliver impressive value to our customers and shareholders.
In the years ahead, our efforts will be channelled towards consolidating on our achievements as a leading retail bank, driving financial inclusion and providing enhanced customer experience through innovative solutions and technology based services. We will be proactive in meeting the needs of our teeming customers by creating simpler and more responsive products towards deepening our services across all consumer market segments especially serving households, young adults and women. As Nigeria's largest local currency credit card provider with over seventy five percent of transactions performed by our customers across diverse electronic channels, we are going beyond banking and leading a digital transformation of Nigerian financial services sector while proactively responding to changing lifestyles of consumers.
We will strive to foster sustainable development practices in all our
business dealings. Whether in product design or Corporate Social Responsibility, the primary questions we keep asking ourselves are “How will this affect the average customer”? “Will it improve quality of life”? “Can people be empowered using this product”? “Who benefits from this initiative”? We want to be ubiquitous to our customers, giving them control over where, when and how to consume banking services towards achieving their financial goals. We look forward to maintaining market leadership in our retail business segment by making the most of our omni-channel strategy to meet customer needs. With a growing footprint of more than 300 locations, over one thousand ATMs, eight thousand POS and mPOS devices and seven million mobile communication touchpoints, we are set to harness future opportunities for exponential and yet cost-effective growth of our retail franchise. We are set to grow our customer base to ten million by the end of the 2016 financial year.
Notwithstanding the tough operating environment and high cost of doing business, we strongly believe in fuelling economic growth across all the markets where we operate by supporting small businesses and financing major developmental projects. We will continue to forge
DIAMOND GROUP N7.1bn
WE CAN ACHIEVE TOGETHER
G o
v e
r n
a n
c e
F in
a n
c ia
with Enterprise Development Centre of
Lagos Business School towards
enhancing entrepreneurial skills of
business owners. We will work with
financial system regulators and
development finance institutions both
locally and internationally towards
businesses through SME Development
Fund of the Central Bank as well as
other MSME funds availed by the Bank
of Industry.
all the countries that we operate. We
have restructured our business
deepening respective specialisations.
managers have closer supervision of
their business areas in order to build
stronger customer relationships.
business performance by seeking
will continue to enhance our capacity
for supporting small to medium-sized
businesses and finance major
We are keen on helping businesses,
organizations and governments
sustainable development in Nigeria.
Distinguished shareholders, we are
right track of sustainable growth. We
have put the right structure, systems
and processes to optimize the ingenuity
of our people, the strong partnerships
we have formed with our customers,
and of course the stewardship of the
Bank's management team. Please be
assured that with the aforementioned,
and more importantly your support, we
will achieve the aspirations of our great
Bank, together.
Uzoma Dozie
The Nigerian banking sector The prospect for the Nigerian banking industry remain compelling although with continuous pressure points emanating from the ever dynamic regulatory and fiscal landscape.
31
KEY INDUSTRY DRIVERS
Key locations In 2015, Diamond Bank opened nine branches across Nigeria. This brought our total locations count to 271 and these are inclusive of conventional and mini-branches as well as E-branches/Cash Centres. Below is a diagrammatic representation of our locations count in our three directorates as at 31 December 2015:
00
Lagos and West – 117 South – 87 · North – 67
O okutlo The prospect for the Nigerian banking industry remain compelling although with continuous pressure points emanating from the ever dynamic regulatory and fiscal landscape which are aimed at ensuring that banks remain competitive in the face of global and domestic vulnerabilities. We expect the operating environment in 2016 to remain stringent and banks will be pressed to adjust their operating models to suit rapidly changing consumer preferences, innovative technology, and salient macroeconomic fundamentals that have direct impact on the business environment.
The retail banking space remain a competitive frontier as banks will be forced to jostle for customers' share of mind and by extension, share of wallet in a bid to grow cheap deposits for intermediation purposes and equally earn fee income through efficient deployment and utilisation of payment channels. We expect renewed attention towards Agriculture, MSME, and Personal Credit
segments in coming years, particularly with the recent introduction of Movable Asset Registry platform and government's insistence on preferential intervention in elements of most of these sectors.
Technology will dramatically alter the
way Nigerian banks engage and
interact with customers in the near
future. Emphasis will deviate from
“brick and mortar” outlets to “Omni-
channel” processes where robust
how, when and where to initiate and
consummate banking services.
straightforward and cost-effective
these media will either make or mar
new customer on-boarding.
Banking Industry Historical and Forecast Performance
Source: BMI, Diamond Research
2012 2013 2014 2015e 2016f 2017f 2018f 2019f
Total assets 19.28 22.20 25.43 28.23 31.33 36.03 41.79 48.48(N' tr)
Customer loans 9.78 10.78 12.66 13.93 15.46 17.63 20.27 23.31(N' tr)
Customer deposits 13.13 13.77 17.16 18.53 20.75 23.87 27.45 31.57 (N' tr)
32
Key:
…the Future Remains Promising The domestic business climate remains quite challenging in the face of weakening global macroeconomic vulnerabilities. The 2015 financial year witnessed a decline in economic growth from 5.9% in the last quarter of 2014 to 2.8% in the third quarter of 2015. This was ascribed to weak demand for Nigeria's crude oil (which accounts for over 90% of exports and roughly 75% of the country's consolidated budgetary revenues) amidst price slump in the international oil market, coupled with anxieties and apprehensions about the outcome of the 2015 general elections.
However, the non-oil sector of the
economy holds immense promise for
the future of the Nigerian business
environment. The sector accounts for
over 85% of Nigeria's GDP and driven
by activities in trade, crop production,
and construction and
telecommunications sectors. We
consistently inventing ways to unlock
the inherent potentials of this sector in
a bid to ensure value addition to our
esteemed customers.
urbanization rate of 5% pa and forecast
to attain the 3rd most populous
country in the globe by 2100 with
752million people. This huge yet
untapped youth market present
unlimited business opportunity for
the lifestyle needs of these niche of
people whether through social media,
music or as appropriate.
The economic fundamentals remain
with brooding opportunities for
investment especially in government
identified priority sectors of
creation. We will capitalise on these
and foster stronger ties with our
environment in a sustainable yet
profitable manner.
9
8
7
6
5
4
3
2
1
0
30
25
20
15
10
5
0
Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q4 2015
8.21
6.21
7.51
3.46
2.35
3.05
2.84
We are at the forefront of
digital banking in Nigeria
deploy appropriate
Streamlining the
responsive organisation
Driving financial
Realigning our business and
operating models to ‘future-
proof’ our organisation and
sustainable retail franchise
Diamond Mobile App
34
STRATEGY
Retail Banking
Our strategy in focus We are focused on sustaining our relevance in the evolving market place by practicing customer-focused banking using top- bottom digital structures and processes whilst strengthening our strategic pillars to deliver sustainable and synergistic business outcomes.
Business Banking
Corporate Banking
How we have pursued these goals in 2015 Our diverse portfolio of consumer- oriented banking services ensured that we remained active in the retail banking space with bespoke financial solutions to serve defined customer niche in 2015. We embraced an aggressive on-boarding of our customers on our e-banking platforms with the best and agile technology to ensure effectiveness of our retail strategy. Diamond was named the Best SME Bank West Africa and Best Microfinance Bank West Africa by the famous Banker Magazine in the 2015 West Africa Awards.
Our focus for 2016 What we can improve We are conscious of the need to increase customer on-boarding unto our digital platforms to further entrench our retail banking agenda and maintain our position as the retail bank of choice.
Priorities We understand that the future of sustainable banking in Nigeria is retail, and as such we will continue to grow and consolidate on our achievements and strength in the segment. We seek to leverage existing relationships as a strategy to increase our engagement with MSMEs, identified as the engine that drives industrialization and sustainable economic growth and development.
How we have pursued these goals in 2015 Our business banking segment was strategically restructured and customised to cater to the need of increasingly growing business owners using state of the art digital platforms with seasoned and experienced professionals providing informed business advisory services.
Our focus for 2016 What we can improve We are assiduously working to ensure value creation at every interaction with business owners while improving on the effectiveness of our payment solutions for collections and business transactions.
Priorities Proactive engagements through business seminars, financial advisory and business support to drive value- chain management.
How we have pursued these goals in 2015 Our corporate banking team continued to drive the market, leveraging on our value chain marketing strategy and information leadership. We remained at the centre of all major deals, across various sectors including manufacturing, telecoms, infrastructure finance, power, agriculture, general commerce and mortgage.
Our focus for 2016 What we can improve Adopting a rigorous portfolio strategy backed with informed business engagement to drive bankable synergies with customers at the corporate end of our sustainability curve.
Priorities We are focused on ensuring our
services have direct and ripple effects
on our corporate customers and their
down-liners in a manner that
translates to mutually beneficial and
sustainable business relationship.
35
to ensure that our products and services
contribute to sustainable development
and create enduring wealth.
Sustainability Governance Sustainability at Diamond is governed at the highest level through the Executive Management Team. The Management Team, working with the Sustainability Champions, scrutinizes sustainability performance through an annual Corporate Responsibility Performance Report.
Lower-level day-to-day governance of CSR continues to be delivered through the relevant existing governance structure across business groups.
This model is reflective of our approach to sustainability which transcends a department and has been integrated as a business strategy and implemented across the bank in all our operations.
Environmental And Social Risk Management Approach (ESRMS)
Our Environmental and Social Risk management strategy aims at providing sustainable financing. This approach ensures the Bank provides commercial lending only to clients who take into considerations the environmental & social impacts of their activities, and those who ensure programs are implemented to reduce the impact of these risks.
The Bank's Environmental & Social Risk Management policy is applied to all new financial services offered by the Bank, except personal loans for retail customers
and mortgage for residential purpose.
Effective ESRMS implementation requires qualified staff with an understanding of environmental and social impact risk management and as part of our commitment to sustainability, we focus on raising the awareness of environmental and social risk issues by training employees which aids decision making in credit assessment.
“Our Environmental and Social Risk management strategy aims at providing sustainable financing.”
Diamond Paperless campaign
Diamond Bank constantly seeks ways to minimize its direct environmental impact by implementing green initiatives. This includes everything from reducing energy consumption to using less paper. We value being as efficient as possible in everything we do, from running our ATMs on solar power to shutting down our branches at 7pm daily.
One of the greatest contribution we can make to protect the environment is by significantly cutting paper consumption. This is why we commenced an internal campaign, ZERO by 17 in September 2015, aimed at reducing the amount of paper we use in our operations and processes. This reduction and elimination of paper across the enterprise will result in improved efficiency, cost savings and a reduction in our environmental footprints. Beyond that, this initiative will also help in eliminating wasteful practices and fostering a more sustainable business culture.
Supplier Dialogue
In 2015, we began implementing our responsibility standards for our suppliers. These standards outline our compliance expectations for all suppliers and vendors and are designed to minimize the risks in our supply chain. To further assist our procurement unit in the implementation of these standards, a Supplier handbook has been developed to ensure consistency when implementing these standards. Our vendors are encouraged to comply with these standards and must maintain records to demonstrate conformance to these standards.
Financial Inclusion
A 2014 EFINA report states that 36.9milliion adults, representing 39.5% of adult population, are financially excluded. Only 33.9million adults are banked, representing 36.3% of adult population. Diamond Bank is committed to providing access to financial services by developing products and services that cater to the financially excluded.
BETA Proposition
BETA proposition is Diamond Bank's innovative saving and credit product specially developed to cater to low- income individuals, especially market traders, with little or no access to formal financial services. This Proposition combines the security of a bank with the convenience of traditional informal method by taking the bank to the customer. The ecosystem provides various channels through which customers transact- including the branch, all ATMs, and our sales and service staff- mobile agents called BETA Friends. BETA friends with the aid of a mobile phone, go to customers in markets around Diamond Bank branches to open accounts, collect deposits, and dispense withdrawals using a robust till liquidity management framework.
Diamond Bank sees BETA proposition as its own contribution to creating a financial ecosystem that serves the unbanked profitably.
36
- Agriculture
BETA LIFE for female farmers
Unleashing the entrepreneurial spirit of women is one of the most powerful and enduring ways to help families and communities prosper. Agriculture is a key sector for development in Nigeria. Globally, women make up to 43% of the agricultural labour force in developing countries. In 2015, Diamond Bank provided free technical training and financial grants to women involved in the cassava value chain in selected communities in Oyo and Ondo states. Currently, 200 women are benefitting from the programme and there are plans to further scale up the programme and replicate the model in different states across Nigeria.
CORPORATE SOCIAL RESPONSIBILITY
BET 4 winners with staff of Diamond Bank
A Cassava Farmer in Ile-Oluji, Ondo State
Diamond Bank
Diamond Bank
Diamond Y’ello Account
Launched in 2014, Diamond Y'ello account (DYA) is a product combining both financial and telecommunication benefits as well as a loyalty scheme that account holders (mainly mass market and youth) can conveniently subscribe to from their mobile phones. This is in line with Central Bank Nigeria (CBN) Financial Inclusion Strategy. Diamond Y'ello acquired additional 4.9m new customers in the year 2015, bringing the total customer base of the to 6.2m with a closing deposit portfolio balance of over N484million from our active custome
596,752 as against an active customer base of 36,000 in 2014).
r
Sustainability and our
Our Corporate Social Responsibility strategy has three main pillars: Capacity Development for Entrepreneurs , Young Adult Development and Women's Wealth & Wellbeing and is delivered through various programmes- Building Entrepreneurs Today (BET), Information & Communication Training for young people and BETA life for female farmers' initiatives.
Capacity Development for
Entrepreneurs Today (BET)
At Diamond Bank, we acknowledge that small businesses are a critical part of Nigeria's economic development as they create employment opportunities for a vast number of people as well as contribute significantly to the diversification of the economy.
Building Entrepreneurs Today (BET) programme is one of Diamond Bank's Corporate Social Responsibility initiatives aimed at supporting and empowering micro, small and medium scale businesses.
Since 2010, we have partnered with the Enterprise Development Centre (EDC) of the Pan Atlantic University in training and nurturing micro, small and medium scale businesses. Every year, 50 budding entrepreneurs are selected for capacity
building for a period of six months after which the top five entrepreneurs are awarded Three Million Naira (N3,000,000) grants to take their businesses to the next level.
The 2015 edition of BET was streamlined to focus on three key sectors as they contribute significantly to the economic
viabilit y of
Annual Report 2015
Cross section of benefi ciaries of the ‘’GIRLS IN ICT’’ training programme during the Graduation Ceremon in Oyo State
38
Girls in Information & Communication Technology (Girls in ICT)
At a time where Information and Communication Technology shape our world, women need to be encouraged to take up careers in the field in order to play significant roles in the economy.
In 2013, Diamond Bank collaborated with LEAP AFRICA, a leading nonprofit organization, and provided ICT training for 100 youth at the University of Uyo. The beneficiaries were also trained on other soft skills such as leadership and other skills required for personal and community transformation.
In 2014, we executed a similar programme in Aba, Abia State which was tagged 'Life in Aba'. Through this programme, 100 youth from Aba and its environs benefitted from the programme. This year, we chose to focus on women because statistics show an under- representation of women in ICT. This underutilization of talent only serves to dampen ICT innovation, slow economic development and contribute to women's economic and social marginalization. In order to address this imbalance, Diamond Bank partnered with Women's Technology Empowerment Centre (WTEC), a non-governmental organisation working to empower girls and women socially and economically, using information and communication technologies (ICTs) to train one hundred (100) young girls between the ages of 18-30, most of who were on the threshold of either entering the workforce or starting a small business, on the basics of ICT and how to leverage on ICT to improve the quality of their lives.
By focusing on young girls, we can foster the growth of women and girls in technology and combat the stereotypes about women and girls in science and technology.
Employee Health, Safety and Wellbeing
As a progressive company, helping our employees stay safe, healthy and productive is a priority. In 2015, we organized a series of training for staff on health, safety and wellness. These training were geared towards ensuring that our staff remain focused, energized and productive at work and at home.
Financial Literacy
Programme
Diamond Bank Adopt-a-School Initiative is a financial education programme which aims to help students get a clearer idea about money and personal finance. In 2015, staff volunteered to run a financial skills training at two(2) local secondary schools in Lagos and Osun states using the specially developed curriculum materials developed by Junior Achievement of Nigeria (JAN). A total number of 100 staff participated in this activity.
Cross section of benefi ciaries of the ‘’GIRLS IN ICT’’
training programme during the Graduation Ceremony
in Oyo State
commemorating the World AIDS Day
Staff volunteers at a local secondary school in Ajegunle
Diamond Bank
Our future targets
Our Commitment to the Nigerian Sustainable Banking Principles The Nigerian Sustainable banking principles are a set of nine principles adopted by all the 21 banks on the roadmap to integrating sustainability in the banking sector.
These principles include an over- arching set of guidelines relating to the bank's direct and indirect impact on communities and the environment as a result of their business operations..
Our Business Operations Environmental and Social Footprint
Human Rights
Women's Economic Empowerment
Avoid, minimize or offset the negative impacts of business operations on the environment and local communities in which it operates and, where possible, promote positive impact.
Respect human rights in its business operations
Promote women's economic empowerment through gender inclusive workplace culture in our business operations and seek to provide products and services designed specifically for women through our business activities.
In line with the principle, we will ensure 95% compliance in integrating ESRM into all greenfield and brownfield projects. Organise periodic capacity building sessions for clients and partners in order to ensure competence in reporting, compliance and cooperation during due diligence procedures.
Increase reporting content or materiality to include the percentage of clients, and portfolio screened in E&S risk; the extent of impact mitigated; and the number of projects/clients with E&S action plans and E&S rating improvements over this period.
Attain 50% paperless operations by simulating paper-based transactions into digital formats. Initiate a Community Investment Programme which focuses on ensuring reduced carbon emissions and energy conservation.
Continuous assessment of client projects for Human Right Risks - up to 85%. Ensure training of up to 95% of all Credit officers, Teams and Sustainability Champions on Human Rights to ensure seamless bank-wide implementation.
Establish a dedicated committee for Women Empowerment across the bank in order to drive the vision of this principle and also supervise the concurrent implementation of a mentoring initiative, Women Mentoring Women (WMW), increase by 10% annually, investments made by the bank on Women Empowerment initiatives for both female employees and clients - in addition to those subscribed to Diamond Woman.
Constantly evolve ways to ensure gender- sensitivity in order to increase the upward mobility of female employees into management functions and positions across the bank
40
Reporting
Promote financial inclusion, seeking to provide financial services to individuals and communities that traditionally have had limited or no access to the formal financial sector
Implement robust and transparent environmental and social governance practices in its respective institutions and assess environmental and social governance practices of its customers.
Develop individual institution and sector capacity necessary to identify, assess and manage the environmental and social risks and opportunities associated with our business activities and business operations.
Collaborate across the sector and leverage international partnerships to accelerate its collective progress and move the sector as one, ensuring our approach is consistent with international standards and Nigerian development needs.
Regularly review and report on our progress in meeting these principles at the individual institution and sector level.
Full implementation of a financial literacy framework, as well as the promotion of inclusion through financial literacy curricula in educational institutions – especially those already in partnership with the bank – in line with the 2020 target of the CBN.
Attain full implementation of a Consumer Protection framework, as stipulated by CBN. Innovate and constantly improve on products and services tailored to the middle and low- income as well as disadvantaged groups.
Implement a fully developed child and youth finance strategy as well as financial literacy initiatives across education institutions working through our past and current engagements with those segments (e.g. Diamond Cool Teens Account, Diamond SWAG).
Deepen reporting on NSBP across specific units and department. Appoint Sustainability Champions in every bank branch and regional champion's network to work with the Sustainability Management and Board Committees.
Attain up to 75% training coverage of all Credit Officers, Sustainable Champions and NSBP- relevant departments on NSBP through eLearning Modules, Regional workshops.
Deepen sustainability governance by establishing Regional Sustainability Champions to oversee regions and branch operations bank-wide. Annual sustainability training sessions at Board Retreats and Quarterly sessions for Executive Committee.
Champion industry-wide initiatives on Sustainability and at the same time, support and sponsor sector-wide initiatives led by third party organisations, regulators and other stakeholders.
Produce a Multi-compliant reporting system which allows for comprehensive materiality checks for all major international conventions: United Nations global Compact, Equator Principles, GRI G4, UNEP FI and ISO 26000.
MANAGEMENT TEAM
DIRECTORS REPORT
Highlights of the Group’s operating results for the period under review are as follows:
Strateg ic rep
DIRECTORS REPORT
Highlights of the Group’s operating results for the period under review are as follows:
Direct Shareholding Indirect Shareholding
DIRECTORS REPORT CONTINUED
Direct Shareholding Indirect Shareholding
Strateg ic rep
Diamond Bank Annual Report 2015 48 49 Diamond Bank Annual Report 2015
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fo rm
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Number of Cards
Diamond Bank 53 Annual Report 2015
Strateg ic rep
fo rm
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Strateg ic rep
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INDEPENDENT AUDITOR'S REPORT
Strateg ic rep
INDEPENDENT AUDITOR'S REPORT CONTINUED
CONSOLIDATED AND SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2015
CONSOLIDATED AND SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2015
Strateg ic rep
CONSOLIDATED AND SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2015
CONSOLIDATED AND SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2015
Group Attributable to equity holders of the parent Non Total controlling equity interest
Foreign
Share Share Retained Statutory risk Industry Fair value translation
In thousands of Naira capital premium Earnings reserve reserve reserve reserve reserve Total
Balance at 1 January 2015 11,580,195 134,532,974 35,240,967 22,670,510 - 3,966,628 209,307 606,146 208,806,727 218,040 209,024,767
Profit/loss for the year - - 5,615,590 - - - - - 5,615,590 41,033 5,656,623
Transfer from/(to) retained earnings - - (22,154,833) 575,062 21,579,771 - - - - - -
Foreign currency translation differences - - - - - - - 1,349,238 1,349,238 5,590 1,354,828
Fair value changes on available-for-sale
financial assets - - - - - - 889,276 - 889,276 - 889,276
Total comprehensive income - - (16,539,243) 575,062 21,579,771 - 889,276 1,349,238 7,854,104 46,623 7,900,727
Transactions with equity holders recorded
directly in equity
Balance at 31 December 2015 11,580,195 134,532,974 16,385,685 23,245,572 21,579,771 3,966,628 1,098,583 1,955,384 214,344,792 264,663 214,609,455
Balance at 1 January 2014 7,237,622 89,629,324 17,483,423 19,361,930 - 3,966,628 (65,816) 1,087,073 138,700,184 153,516 138,853,700
Transfer from/(to) retained earnings - - (3,308,580) 3,308,580 - - - - - - -
Foreign currency translation differences - - - - - - - (480,927) (480,927) (11,312) (492,239)
Fair value changes on
Total comprehensive income - - 22,100,117 3,308,580 - - 275,123 (480,927) 25,202,893 64,524 25,267,417
directly in equity
Total contributions and distributions 4,342,573 44,903,650 (4,342,573) - - - - - 44,903,650 - 44,903,650
Balance at 31 December 2014 11,580,195 134,532,974 35,240,967 22,670,510 - 3,966,628 209,307 606,146 208,806,727 218,040 209,024,767
The accompanying notes and significant accounting policies are an integral part of these consolidated and separate
financial statements.
Bank Small Scale
capital premium earnings reserve risk reserve reserve reserve Total
Balance at 1 January 2015 11,580,195 134,532,974 32,845,896 22,422,273 - 3,966,628 312,801 205,660,767
Profit for the year - - 3,833,749 - - - - 3,833,749
Transfer from/(to) retained earnings - - (22,154,833) 575,062 21,579,771 - - -
Fair value movement on available-for-sale
financial assets - - - - - - 897,907 897,907
directly in equity
Dividends - - (2,316,039) - - - - (2,316,039)
Balance at 31 December 2015 11,580,195 134,532,974 12,208,773 22,997,335 21,579,771 3,966,628 1,210,708 208,076,384
Balance at 1 January 2014 7,237,622 89,629,324 18,439,851 19,113,693 - 3,966,628 (83,894) 138,303,224
Transfer from/(to) retained earnings - - (3,308,580) 3,308,580 - - - -
directly in equity
Dividends (4,342,573) (4,342,573)
Balance at 31 December 2014 11,580,195 134,532,974 32,845,896 22,422,273 - 3,966,628 312,801 205,660,767
Group Attributable to equity holders of the parent Non Total controlling equity interest
Foreign
Share Share Retained Statutory risk Industry Fair value translation
In thousands of Naira capital premium Earnings reserve reserve reserve reserve reserve Total
Balance at 1 January 2015 11,580,195 134,532,974 35,240,967 22,670,510 - 3,966,628 209,307 606,146 208,806,727 218,040 209,024,767
Transfer from/(to) retained earnings - - (22,154,833) 575,062 21,579,771 - - - - - -
Foreign currency translation differences - - - - - - - 1,349,238 1,349,238 5,590 1,354,828
Fair value changes on available-for-sale
financial assets - - - - - - 889,276 - 889,276 - 889,276
Total comprehensive income - - (16,539,243) 575,062 21,579,771 - 889,276 1,349,238 7,854,104 46,623 7,900,727
directly in equity
Balance at 31 December 2015 11,580,195 134,532,974 16,385,685 23,245,572 21,579,771 3,966,628 1,098,583 1,955,384 214,344,792 264,663 214,609,455
Balance at 1 January 2014 7,237,622 89,629,324 17,483,423 19,361,930 - 3,966,628 (65,816) 1,087,073 138,700,184 153,516 138,853,700
Transfer from/(to) retained earnings - - (3,308,580) 3,308,580 - - - - - - -
Foreign currency translation differences - - - - - - - (480,927) (480,927) (11,312) (492,239)
Fair value changes on
Total comprehensive income - - 22,100,117 3,308,580 - - 275,123 (480,927) 25,202,893 64,524 25,267,417
directly in equity
Total contributions and distributions 4,342,573 44,903,650 (4,342,573) - - - - - 44,903,650 - 44,903,650
Balance at 31 December 2014 11,580,195 134,532,974 35,240,967 22,670,510 - 3,966,628 209,307 606,146 208,806,727 218,040 209,024,767
Bank Small Scale
capital premium earnings reserve risk reserve reserve reserve Total
Balance at 1 January 2015 11,580,195 134,532,974 32,845,896 22,422,273 - 3,966,628 312,801 205,660,767
Transfer from/(to) retained earnings - - (22,154,833) 575,062 21,579,771 - - -
directly in equity
Dividends - - (2,316,039) - - - - (2,316,039)
Balance at 31 December 2015 11,580,195 134,532,974 12,208,773 22,997,335 21,579,771 3,966,628 1,210,708 208,076,384
Balance at 1 January 2014 7,237,622 89,629,324 18,439,851 19,113,693 - 3,966,628 (83,894) 138,303,224
Transfer from/(to) retained earnings - - (3,308,580) 3,308,580 - - - -
directly in equity
Dividends (4,342,573) (4,342,573)
Balance at 31 December 2014 11,580,195 134,532,974 32,845,896 22,422,273 - 3,966,628 312,801 205,660,767
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015
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Diamond Bank Annual Repo

Diamond bank annual report 2015

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