Diamond Bank Annual Report 2010

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2 0 1 0 A N N UA L R E P O RT A N D A C C O U N T S
20GEMYEARS

20OURPROMISEISASINDESTRUCTIBLEASOURNAME;
TOCONTINUETODEMONSTRATE
OURCOMMITMENTTO
OURCUSTOMERS,
OURPEOPLE,THEFINANCIALCOMMU...

2010
AND ACCOUNTS
ANNUAL REPORT
STRIVINGTOPROVIDEOURCUSTOMERSWITH
SERVICEOFFERINGSOFUNEQUALLED
QUALITYANDCONVENIENCE.

A strong financial services institution with effective
presence in Nigeria, Africa and indeed all the key
financial centre...

We are a customer service
oriented institution.
Our people, our community
and the physical environment
are the core consti...

1990 4DiamondBank Limitedfounded
1991 4Diamond Bank formallyopened forbusiness
1992 4IntroducedNigeria'spioneer virtualban...

4PromotedAspireNigeria,alongwith ShellNigeriaandGrofinSouthAfrica,insupportofSMEs'growthinNigeria.
4Upgraded banking ITpla...

OURHISTORYINBRIEF
RECOGNITIONANDAWARDS
ABOUTUS
OUROPERATIONALPERFORMANCE
uActis invested N17 billion in equity in Diamond ...

over 200 branches located in various cities and commercial Enterprises (AMSME) lending in the country. IFC also provided
c...

Result At A Glance
BANK
Apr'
2009
Dec'
2009
Dec'
2010
39,873,714
60,437,641
108,979,476
67,735,695
91,022,288
GROSS EARNIN...

Notice of Annual General Meeting
NOTICE IS HEREBYGIVEN that the 20thAnnualGeneral Meeting of DIAMOND BANK PLC will be held...

Notice of Annual General Meeting
makenecessarypreparationsforthepaymentofdividend.
4. Election&Re-electionofDirectors
In a...

Chairman's
statement
13

Chairman's Statement
Distinguishedstakeholders,LadiesandGentlemen.
Global financial conditions improved in the second half...

The Domestic Economy: Sustaining recovery despite representing a growth of 58.8 percent as a result of both price
challeng...

Chairman's Statement
banking stability and support lending to the real sector,the apex In December 2010, theAsset Manageme...

Chairman's Statement
improvement of the balance sheet through low-cost deposits, DIVIDENDPAYMENT
thus improving the net in...

approved divestment plan, the transition to Commercial and the first woman to hold that position. She is vastly
Banking wi...

Chairman's Statement
will take the Bank to the next level of leadership in the industry
as the Bank continues to deliver o...

Chairman's Statement
around 7.5 percent in 2011. Investment and capacity Let me also use this opportunity to express grati...

Group
ChiefExecutive
Officer'sreview
21

Group Chief Executive Officer's Review
s you may be aware, I assumed duty as the Bank's PERFORMANCE
Group Managing Directo...

Group Chief Executive Officer's Review
Given relative stability in operating expenses, the Bank's the end of the financial...

Group Chief Executive Officer's Review
leadership in thebanking industry. RetailBanking
Going forward and as part of our m...

Group Chief Executive Officer's Review
very positive and we will continue to add more values to this maximum period of fou...

Group Chief Executive Officer's Review
state-of-the-art technology-backed quality of our We provide comprehensive cash man...

Group Chief Executive Officer's Review
player in selected sectors of the top-end of corporate year. Overall, we expect to ...

Group Chief Executive Officer's Review
Also, developing both existing and new employees is critical where we are to where ...

Group Chief Executive Officer's Review
international bank.While transiting from universal banking you for your patience pa...

Board of Directors
1. HRM Igwe Nnaemeka Alfred Ugochukwu Achebe - Chairman
2. Dr.Alex Otti - Group Managing Director/Chief...

Management Team
Dr.Alex Otti GroupManagingDirector/CEO
UKEke ExecutiveDirector,Regional Businesses,Lagos/West
UzomaDozie E...

Directors' report 35
Compliance with code of corporate governance 40
Directors' responsibility and approval 61
Report of e...

Directors' Report
For period ended 31 December 2010
The directors present their annual report on the affairs of Diamond Ba...

Directors' Report
For period ended 31 December 2010
d. DirectorsandtheirInterests
The direct and indirect interests of dir...

Directors' Report
For period ended 31 December 2010
e (i)ShareholdingAnalysis
Theshareholdingpattern ofthe Bankasat31Decem...

Directors' Report
For period ended 31 December 2010
h. Substantialinterestinshares
According to the register of members as...

Directors' Report
For period ended 31 December 2010
j. PostBalanceSheetEvents
The erstwhileGroup Managing Director,Mr.Emek...

Compliance with Code of Corporate Governance
For period ended 31 December 2010
iamondBankPlcwasconceivedwiththevisionofcre...

Lt.Gen Useni held various top military and political appointments including Director of Supply andTransport, Director of O...

where he worked for some years and later moved toCitizens International Bank Limited where he worked in theOil andGas Divi...

ALEXOTTI–GroupManagingDirector/ChiefExecutiveOfficer
Alex Otti graduated from the University of Port Harcourt with a First...

and rose to the position of Senior FinancialAnalyst when he left in 1993 to join FSB International Bank (now part of Fidel...

The Board also performs certain of its functions through Board Committees and Management Committees.The delegation of thes...

Audit Committee: This Committee is established in accordance with the provisions of section 359(3) to (6) of the Companies...

Business Continuity and Security Committee: This Committee implements contingency response plans and strategies; and
formu...

Corporate Audit, and Security. The Compliance unit is responsible for promoting compliance with statutory and regulatory
r...

consistent with ourrisk appetite.
RiskManagementPhilosophy&Culture
Diamond Bank undertakes all profitable transactions tha...

Compliance with Code of Corporate Governance
For period ended 31 December 2010
RoleofCorporateAudit
Without prejudice to t...

Compliance with Code of Corporate Governance
For period ended 31 December 2010
Ourriskappetite isguided bythe following co...

b. Minimizedexception reporting byauditorsand regulatory examiners.
Operational:
Thefollowing performance indicatorsgovern...

Compliance with Code of Corporate Governance
For period ended 31 December 2010
activities;
d. monitoringriskeventsand loss...

Compliance with Code of Corporate Governance
For period ended 31 December 2010
Remedial Assets
Risk Management Governance ...

I. RiskOwnership&Management-1stLineofDefence
BoardofDirectors
The Board sets the Group's overall risk appetite, approves r...

The Group's risk management structure integrates the various control units to the Group's risk management function through...

mitigate, manage, track and report all the risks within the group. Risk Division recommends the Group's policies for Board...

CorporateCommunicationsUnit:
a. PromotetheGroup'simage and perception in thepublicmind;
b. Maximise thevalueoftheGroup'sbr...

Diamond Bank seeks to achieve an appropriate balance between risk and reward in its business and strategy, and continue to...

Attendance At Meetings
uMr.IanGreenstreet = Independent Director – Appointment effective 2ndAugust 2010. Appointment to BC...

Responsibility for Annual Financial Statements
TheCompanies andAllied MattersAct and the Banks andOther Financial Institut...

Report of External Consultant on The Board Appraisal
e conducted the appraisal of the Board of Directors ('the Board') of ...

In accordance with the provisions of section 359(6) of the Companies and Allied Matters Act. Cap. C20 Laws of the
Federati...

Reportonthefinancialstatements
We have audited the accompanying financial statements of Diamond Bank Plc (“the Bank”) and ...

Opinion
In our opinion the accompanying financial statements give a true and fair view of the state of the financial affai...

Statement of Significant Accounting Policies
Theprincipalaccountingpoliciesadoptedin thepreparationofthesefinancialstateme...

Statement of Significant Accounting Policies
- assetsandliabilitiesfor each balancesheetpresentedaretranslatedattheexchang...

g. Underwritingresults
The Group conducts life assurance and non-life insurance business through its subsidiary operations...

Statement of Significant Accounting Policies
h. Deferredacquisitionandmaintenanceexpenses
Prepaid expenses include deferre...

Statement of Significant Accounting Policies
was charged to the profit and loss account,is credited to the profit and loss...

Statement of Significant Accounting Policies
Subsequent costs are included in the asset's carrying amount or are recognise...

Statement of Significant Accounting Policies
defined as the difference between the gross investment and the present value ...

Statement of Significant Accounting Policies
accumulated impairment losses. Gains and losses on the disposal of an entity ...

Statement of Significant Accounting Policies
introduction of,or changes to past employment benefits. Past service costs ca...

Statement of Significant Accounting Policies
therequirementsoftheCompany andAlliedMattersAct.
w. Off-balancesheettransacti...

Profit and Loss Accounts
For the 12 months period ended 31 December 2010
The accompanying statement of significant account...

Balance Sheets As at 31 December 2010
The accountingpolicies on pages 66 to 75 and financial statements and notes on pages...

Cash Flow Statements
For the period ended 31 December 2010
Theaccompanyingstatementofsignificantaccountingpoliciesandexpla...

Notes to the Financial Statements
For period ended 31 December 2010
1. Thebank
Diamond Bank Plc (the Bank) was incorporate...

Notes to the Financial Statements
For period ended 31 December 2010
2. Segmentanalysis(continued)
At 31 December 2010
busi...

Notes to the Financial Statements
For period ended 31 December 2010
(b) Bygeographicalsegment
TheGroup's threebusiness seg...

Notes to the Financial Statements
For period ended 31 December 2010
3. Interestincome
Interest income earned outside Niger...

Notes to the Financial Statements
For period ended 31 December 2010
6. Investmentincome
Group
12 Months to
Dec.'2010
N'000...

Notes to the Financial Statements
For period ended 31 December 2010
Group
Dec.'2010
N'000
Group
Dec.' 2009
N'000
Bank
Dec....

Notes to the Financial Statements
For period ended 31 December 2010
Group
Dec.'2010
N'000
Group
Dec.' 2009
N'000
Bank
Dec....

Notes to the Financial Statements
For period ended 31 December 2010
Group
12 Months to
Dec.'2010
N'000
Group
8 Months to
D...

Notes to the Financial Statements
For period ended 31 December 2010
Group
Dec.'2010
N'000
Group
Dec.' 2009
N'000
Bank
Dec....

Notes to the Financial Statements
For period ended 31 December 2010
Group
Dec.'2010
N'000
Group
Dec.' 2009
N'000
Bank
Dec....

Notes to the Financial Statements
For period ended 31 December 2010
Group
Dec.'2010
N'000
Group
Dec.' 2009
N'000
Bank
Dec....

Notes to the Financial Statements
For period ended 31 December 2010
Group
Dec.'2010
N'000
Group
Dec.' 2009
N'000
Bank
Dec....

Notes to the Financial Statements
For period ended 31 December 2010
Group
Dec.'2010
N'000
Group
Dec.' 2009
N'000
Bank
Dec....

NotestotheFinancialStatements
Forperiodended31December2010
20.Condensedresultsofconsolidatedentities
DBBDSLDPFCDMLADICDCLD...

20.Condensedresultsofconsolidatedentities(continued)
DBBDSLDPFCDMLADICDCLDRL
N’000N’000N’000N’000N’000N’000N’000
Financedb...

Group Group Bank Bank
Dec.’ 2010 Dec.’ 2009 Dec.’ 2010 Dec.’ 2009
N’000 N’000 N’000 N’000
21. Deferred tax
At 1 January 5,...

Dec.’ 2010 Dec.’ 2009 Dec.’ 2010 Dec.’ 2009
N’000 N’000 N’000 N’000
22. Other assets
Prepayments 10,635,192 11,832,061 5,6...

24.Property,plantandequipment
Group
CostAt1JanAt31Dec'
2010difference2010
=N=000=N=000=N=000=N=000=N=000=N=000
Workinprogr...

24.Property,plantandequipment(continued)
Bank
CostAt1JanAdditionsDisposalsReclassificationAt31Dec'
20102010
=N=000=N=000=N...

Group Group Bank Bank
Dec.’ 2010 Dec.’ 2009 Dec.’ 2010 Dec.’ 2009
N’000 N’000 N’000 N’000
25. Customer deposits
Demand 203...

Group Group Bank Bank
Dec.’ 2010 Dec.’ 2009 Dec.’ 2010 Dec.’ 2009
N’000 N’000 N’000 N’000
29. Other liabilities
Customers'...

Group Group Bank Bank
Dec.’ 2010 Dec.’ 2009 Dec.’ 2010 Dec.’ 2009
N’000 N’000 N’000 N’000
31. Retirement benefit obligatio...

Group Group Bank Bank
Dec.’ 2010 Dec.’ 2009 Dec.’ 2010 Dec.’ 2009
N’000 N’000 N’000 N’000
33. Share capital
a. Ordinary sh...

34.Reserves
GroupStatutorySSIContingencyRevaluationTranslationRetainedTotal
reservereservereserveReservereserveearnings
N'...

34. Reserves (continued)
Bank Statutory SSI Retained Total
reserve reserve earnings
N'000 N'000 N'000 N'000
At 1 May 2009 ...

NotestotheFinancialStatements
Forperiodended31December2010
36.Relatedpartytransactions
TheGrouphasrelatedpartyrelationship...

Group Group Bank Bank
Dec.’ 2010 Dec.’ 2009 Dec.’ 2010 Dec.’ 2009
N’000 N’000 N’000 N’000
37. Employees and directors
a. E...

37. Employees and directors (continued)
Group
Dec.’ 2010 Dec.’ 2009
N'000 N'000
Fees and other emoluments disclosed above ...

Group Group Bank Bank
Dec.’ 2010 Dec.’ 2009 Dec.’ 2010 Dec.’ 2009
N’000 N’000 N’000 N’000
38.Reconciliation of profit befo...

40. Earnings per share
Basic earnings per share (EPS) is calculated by dividing the net profit attributable to shareholder...

42. Comparatives
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the curr...

Balance Sheet - Group
N'000 N'000 N'000 N'000 N'000
Dec.’2010 Dec.’ 2009 2009 2008 2007Apr.' Apr.' Apr.'
Assets:
Cash and ...

FiveYear Financial Summary
For period ended 31 December 2010
Balance Sheet - Bank
Dec.’2010 Dec.’ 2009 Apr.’ 2009 2008 200...

Creditrisk
The Group takes on exposure to credit risk, which is the risk that a counter party will cause a financial loss ...

(b)Debtsecuritiesandotherbills
For debt securities and other bills, external rating such as Standard & Poor's rating or th...

Approval limits areset bythe BoardofDirectorsand reviewedfromtime totime asthecircumstancesoftheGroupdemand.
Exposure to c...

Enterpriseriskreview
The underlying premise of Enterprise Risk Management is that every entity exists to provide value for...

ExecutiveManagement
Executive Management under the leadership of theGroup Managing Director/Chief ExecutiveOfficer is resp...

Unitsandfunctionswithprimaryresponsibilityforevaluatingandprovidingindependentassurance
This ismadeofthefollowing:
uIntern...

Non-performing loans by Industry
Dec. 2010 Dec. 2009
N'000 N'000
Agriculture 136,012 937,595
Oil & Gas 17,463,857 12,692,1...

finance lease
At 31 Dec.'2009 N'000 N'000 N'000 N'000
South - South 12,878,953 179,568 12,482,761 25,541,282
South - West ...

Foreign exchange risk
The Group takes on exposure to the effects of fluctuations in the prevailing foreign currency exchan...

Maturityprofile-onBalanceSheet
31Dec.2010Upto1Month1-3Months3-6Months6-12Months1-5YearsOver5YearsTotal
N'000N'000N'000N'00...

Maturityprofile-onBalanceSheet
31Dec.2010Upto1Month1-3Months3-6Months6-12Months1-5YearsOver5YearsTotal
N'000N'000N'000N'00...

Maturityprofile-onBalanceSheet
31Dec.2009Upto1Month1-3Months3-6Months6-12Months1-5YearsOver5YearsTotal
N'000N'000N'000N'00...

Maturityprofile-onBalanceSheet
31Dec.2009Upto1Month1-3Months3-6Months6-12Months1-5YearsOver5YearsTotal
N'000N'000N'000N'00...

FinancialRiskAnalysis
Forperiodended31December2010
31Dec.2010Upto1month1-3months3-6months6-12months1-5YearsOver5YearsTotal...

Capitalmanagement
TheGroup's objectiveswhen managing capital,which isabroaderconceptthan the'equity' onthefaceofbalanceshe...

The table below summarises the composition of regulatory capital and the ratios of the Group for the periods ended 31 Dece...

Thedecreasein theregulatory capital in 2010 ismainlyduetotheincreaseinoff-balancesheetengagements.
Operationalrisk
Operati...

Diamond Bank Plc Locations Nationwide
LOCATIONS CODE TELEPHONE NUMBERS
uAbia
uAbuja (FCT)
uAdamawa
uAkwa Ibom
uAnambra
uBa...

LOCATIONS CODE TELEPHONE NUMBERS
uBayelsa
uBenue
uBorno
uCross River
uDelta
uEbonyi
uEdo
uEkiti
uEnugu
uGombe
uImo
uYenego...

LOCATIONS CODE TELEPHONE NUMBERS
u
uKaduna
uKano
uKatsina
uKebbi
uKogi
uKwara
uLagos
Jigawa
uDutse, Plot C1 Sanni Abacha W...

LOCATIONS CODE TELEPHONE NUMBERS
uTrade Fair Complex 2, Aspamda Office Block 2,Trade Fair
Complex, Badagry Expressway 076 ...

LOCATIONS CODE TELEPHONE NUMBERS
uNiger
uOgun
uOndo
uOsun
uOyo
uPlateau
uRivers
uSokoto
uTaraba
uYobe
uZamfara
uMinna, 118...

Our Branch Network
Abuja
Abia
Adamawa
Akwa Ibom
Anambra
Bauchi
Bayelsa
Benue
Borno
Cross River
Delta
Ebonyi
Edo
Ekiti
Enug...

PROXY FORM
ANNUAL GENERAL MEETING TO BE HELD ON 29TH OF APRIL AT THE CIVIC CENTRE,
OZUMBA MBADIWE ROADVICTORIA ISLAND,LAGO...

PROXY FORM
DB PLC/AGM/19/10
PLEASE
AFFIX
STAMP HERE

DearShareholder(s)
In view ofthe robust developmentsin the financial sector,Diamond Bank Plc is pleased to introduce our e...

Corporate Information
Rue 308 du Reverend Pere Colineau-Ganhi
01 BP 955 Cotonou, BENIN
Tel: +229-21-31-97-97, +22-21-31-98...

W W W . D I A M O N D B A N K . C O M

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