LAGOS – Over 1,000 staffs of Diamond Banks Plc have been relieved of their duties at the financial institution as a result of the economic downturn in the country, coupled with the difficult regulatory climate, seems to be taking its toll on the financial sector.
The Nigerian Observer in its findings revealed that the latest disengagement by the bank had to do with the need to realign its operations for a tougher 2015, especially as the monetary policy environment continues to get tighter.
Some of the regulatory measures introduced by the Central Bank of Nigeria aimed at protecting the economy, according to findings, have started affecting the banks’ profitability.
Authoritative source revealed that apart from job cuts, the bank is also planning to reduce the number of new branches to be opened this year.
The source within the bank, who revealed that the affected workers cut across all branches of the financial institution added that major projects and sponsorship programmes for third-party companies, which may not readily add to the bottom line, are also due to be axed by the bank.
The fortunes of Diamond Bank has recently not been on the positive side as its 2015 first-quarter pre-tax profit fell 9.5 per cent to 8.36 billion naira ($42 million) from a year earlier.
The bank did not disclose why profit for the period end-March fell but said in a statement that revenue climbed 5.8 per cent during the period to 40.48 billion naira.
The banks profit after tax also fell by 10.72 per cent to N25.48 billion in 2014, compared with N28.54 billion in 2013 as regulatory induced costs continue to suppress profit.
Its operating expenses also increased by 19.89 per cent to N92.86 billion in 2014 from N77.40 billion in 2013. Cost-to-income ratio, which measures the ability of a bank in cutting costs while boosting profit, reduced to 72.30 per cent in 2014 as against 66.57 per cent in 2013.
The banks corporate communications unit could not immediately be reached for comment on the development.
It was also gathered that more financial institutions are planning to cut their staff strength in the following months, while others are already outsourcing a number of job functions, a development that has seen some of them transfer a significant number of their employees to third-party companies.
One of the banks, Skye Bank Plc, earlier in the year announced that it had transferred its tellers, drivers, security personnel and other support staff members to three outsourcing firms, a move that will affect hundreds of the bank’s workers.
