Nigeria’s Diamond Bank to Boost Network, Considers Purchases

Diamond Bank Plc (DIAMONDB), the 10th-largest Nigerian lender by market value, wants to expand its branch network in Africa’s biggest oil producer by more than 50 percent over two years, and may make acquisitions to spur growth.

The Lagos-based lender wants 130 more branches, taking its total to 350, either through a purchase or “organic” growth, Chief Financial Officer Abdulrahman Yinusa said by phone today. The lender also plans to expand its loan book by 20 percent this year to about 80 billion naira ($508 million), he said.

Diamond Bank doesn’t have a “specific” acquisition target, Yinusa said. According to Muyiwa Oni, a Lagos-based analyst at Stanbic IBTC Bank Plc (IBTCCB), Diamond Bank may buy one of the three state-owned banks that were bailed out in 2009 as a lending crisis threatened the nation’s financial system.

Diamond Bank said two days ago that on April 30, it will ask shareholders’ permission to enter into acquisition talks. The bank also posted a more-than-fourfold increase in first- quarter profit as deposits grew and bad loans declined.

“We like to keep our options open,” Yinusa said. With shareholder approval for a potential purchase, “we are ready if something comes up.”

Rescued Banks

So far, five of the banks rescued in 2009 have been bought by other lenders. A state agency created to buy bad debt said last month it’s seeking advisers to help sell Mainstreet Bank Ltd., Keystone Bank Ltd. and Enterprise Bank Ltd.

Those banks “appear to be the easiest options right now,” Oni said by phone yesterday. Diamond “doesn’t have the muscle” to buy larger banks such as United Bank for Africa Plc (UBA), he said.

Diamond Bank said in July it was in talks to buy Oceanic Bank International Plc, which was ultimately acquired by Ecobank Transnational Inc. (ETI) in September.

Nationalized banks’ loan books “will most definitely be very clean or tiny,” and the state may be willing to unload them for nothing, said Bunmi Asaolu, head of equity research at FBN Capital Ltd.

The company’s stock was unchanged at 2.54 naira at the 2:30 p.m. close in Lagos. Diamond Bank’s shares have risen 32 percent this year, compared with the 6.8 percent gain of the Bloomberg NSE Banking Index (NGSEB10), which tracks the performance of Nigeria’s 10 largest lenders.

To contact the reporters on this story: Chris Kay in Abuja at ckay5@bloomberg.net; Emele Onu in Lagos at eonu1@bloomberg.net

To contact the editors responsible for this story: Stephen Kirkland at skirkland@bloomberg.net; Antony Sguazzin at asguazzin@bloomberg.net

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