Please find below our Research Note expressing our initial thoughts on the recently released Q3 2012 results by Diamond Bank Plc.
Diamond Bank recently released its unaudited Q3 2012 results, displaying a 47.5% year-on-year (y-o-y) rise in Gross Earnings from N74.6bn to N110.1bn, while PBT and PAT surged to N23.2m and N18.2m from the respective losses recorded in Q3 2011. Compared with our un-annualized forecasts, Gross Earnings exceeded our N95.2bn estimate by 15.1%, while our PBT estimates of N23.7bn surpassed the lenders figure by 2.0%. Our PAT forecast of N18.0bn was however in tandem with the banks announced figure albeit with a 0.7 negative variance.
With an average P/BV of 0.6x, Diamond Bank trades at a slight discount (9bps) to its peers, trading at an average P/BV of 0.7x (spiked by a single lender). We however remain BUYERS of the franchise with a trailing EPS of N1.23, translating to a P/E of 3.6x trailing earnings. Our forecasts currently indicate an intrinsic value of N5.91, yielding a FYE2012 target price of N8.07 (an upside of 80.5%).