Diamond Bank plans to raise N86.9 billion in debt or equity to expand its lending operations this year, Abdulrahman Yinusa, the bank’s chief financial officer on Tuesday told Reuters.
Yinusa told a Reuters Africa Investment Summit in Lagos that the bank would use the funds to increase lending to the oil and gas, power and infrastructure sectors of the country’s economy.
He added that the bank expected a 20 percent increase in its loan book this year, from its current N500 billion, after last year’s 40 percent increase largely reflecting a recovery from write downs of bad loans.
The debt was part of $750 million needed for operations, of which $200 million had already been raised last year, he said.
“The balance of $550 million is what we will raise this year”, Yinusa said, adding that it would seek to close the gap while pricing was favourable. The bank had not yet decided whether to issue debt or equity, but Diamond will seek a shareholders’ vote on the plans this month, he said.
“We need to be able to do either equity or debt”, he said, adding that part of it could be a Eurobond. The bank last year appointed HSBC, Standard Chartered Bank and Renaissance Capital to lead manage a $300 million Eurobond, but Yinusa said whether that goes ahead would depend on how attractive the pricing is relative to other options.
Nigerian banks are increasingly seeking dollar financing for infrastructure projects, especially from power companies buying state assets under a privatisation programme launched this year.
Diamond Bank completed acquisition of a London-based niche operation owned by Access Bank, last week, which Access had earlier bought off rescued lender Intercontinental Bank, Yinusa said. The move would help Diamond profit from growing trade flows between Europe and Nigeria, he said.
Meanwhile, Diamond Bank said on Tuesday its 2012 pretax profit was N27.5 billion, against a loss of N17.9 billion a year earlier, but an announcement that there would be no dividend sent its shares tumbling, reports Reuters.
Diamond Bank shares fell the maximum 10 percent allowed to hit N6.30, after the results announcement disappointed investors expecting a dividend. Diamond’s shares are still up 41.7 percent since the start of the year.
“It appears that the bank’s negative retained earnings hindered management’s ability to pay a dividend. We had forecasted dividend payout of N0.3 per share”, analysts at Renaissance Capital wrote in a note to clients.
Gross earnings at the mid-tier lender jumped 34.8 percent to N112.4 billion during the period, as against N83.4 billion the previous year.
