Diamond Bank Q2 2018 first reaction

Event: Diamond Bank reports Q2 2018 results

ImplicationsCompared with our forecast, PBT missed by -35% due to negative surprises in funding income, loan loss provisions and opex. The bank’s H1 2018 PBT of N2.9bn also tracks behindconsensus 2018E PBT forecast of N8.0bn. As such, we expect to see downward revisions to consensus 2018E forecasts and a negative reaction from the market.  

Positives: Diamond’s Q2 non-interest income grew by 25% y/y and came in 34% higher than our forecast.

Negatives: Q2 PBT declined by -63% y/y, driven mainly by a 12% y/y reduction in funding income and a 14% y/y rise in loan loss provisions. Further down the P&L, Diamond reported an after-tax loss of –N442m  (vs. –N663m Q2 2017). When annualised, Diamond’s H1 PAT implies an ROAE of 0.6%, well below management’s FY 2018E guidance of 3.0%.

We rate Diamond Bank shares Underperform. Our estimates are under review.

Conference call details:

Date: Tuesday, August 7, 2018

Time: 14:30 Lagos/ 14:30 London/ 9:30 New York

Dial in: +234 19030080 (Nigeria); +27 216724118 (South Africa); 08003589473 / +44 3333000804 (UK); +1 6319131422 (US)

Access code: 86701100#

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