Dear Afrinvestor,

Please find below our Research Note expressing our initial thoughts on the recently released H1 2012 results by Diamond Bank Plc.

Diamond Bank recently released its 2012 half year results, showing an impressive Year-on-Year growth of 48.5% in Gross Earnings from N43.6bn to N64.8bn, while PBT and PAT surged by 408.1% apiece to N15.4bn and N10.0bn from N3.0bn and N2.0bn in H1 2011 respectively. Q2 2012 also contributed 11.0% more than Q1 2012 to H1 2012’s gross earnings, as PBT and PAT improved by 5.0% and 5.2% respectively over the corresponding periods. These numbers surpassed our expectations, with gross earnings 17.1% above our un-annualized N55.3bn forecast, while PBT and PAT beat our forecasts of N11.5bn and N7.9bn by 34.0% and 25.9% respectively.

Diamond Bank currently trades at a discount to its peers, at a P/BV multiple of 0.4x versus a peer average of 0.6x, while the Bank’s impressive un-annualized ROAE of 22.0% beats a peer average of 6.7%. Our rating on Diamond Bank is UNDER-REVIEW, while we await the finer details from management in its forthcoming conference call.