Diamond Bank Climbs to 20-Month High as Rally Predicted in 2013Vincent Nwanma
Diamond Bank Plc, a Nigerian lender, climbed to its highest level in 20 months, after FBN Capital said banking stocks will lead a 15 percent advance in Nigerian equities this year.
The shares climbed 3 percent to 6.80 naira by the close in Lagos, Nigeria’s commercial capital, the highest level since May 2011. The volume of securities traded was more than 3 1/2 times the three-month daily average, according to data compiled by Bloomberg.
FBN Capital set a year-end target price of 8.2 naira for Diamond, naming the stock its “top pick” in a note released yesterday. It placed an outperform rating on Diamond, Skye Bank Plc and United Bank for Africa Plc. Diamond Bank’s first-half profit through June rose more than fourfold to 9.99 billion naira ($63 million), from 1.71 billion naira a year earlier, the lender said on July 11.
The profit climbed because of “a combination of topline growth and a marked reduction in loan loss provisions,” according to FBN Capital.
The Central Bank of Nigeria set up Asset Management Corp. of Nigeria, or Amcon, which bought bad debts from the nation’s lenders after a debt crisis in 2008 and 2009. This enabled the banks to enter 2012 with cleaned-up balance sheets, reduced loan-loss provisions, FBN Capital said.