Many were called...but chosen are the few. No listening ear will have regrets for VIP crane's music. 2016 lockdown- This talented artiste has taken time to voice out a wake up call for all youths and citizens to rise and aim at being successful in life. This vocalist from Team Fiery Immortals Nation unplugs a rhythm on Gasmillah's instrumental (Ghanaian producer) with several wordplay,proverbs,punch lines, and lovable hooks- above all,a perfect chorus. ' Oluwanishola ' inspires listeners never to be bothered by the ups and downs of life and never to give up regardless of what 'people' say or do. VIP-no doubt is ready to take the music industry to the next height. A couple of his tracks are available online on top blogs and youtube He is soon to release featuring tracks with home-based artistes Horlaitan and Abd'Malik . Abeeb Babalawlar a.k.a VIP crane hails from Osun state but he is for now a Kwara based artiste. The acclaimed 'Vocalist war
Dr. Alex Otti is the Group Managing Director/CEO of Diamond Bank
Plc. The bank recently announced the extension of his tenure for another
three years in recognition and appreciation of the impact his
leadership has had on the organisation since March 2011 when he was
named its CEO.
Otti focused on steadying the bank, which reeling from the effects of the global financial crisis of 2008/2009, had declined in size, and lost market share to competition. The bank was also confronted with the challenge of raising additional capital to meet the new Capital Adequacy Ratio required for the “International Banking License” issued by the Central Bank of Nigeria.
In this interview with Daily Sun, he disclosed that the management’s effort impacted on the turning around the institution quickly in 2012 to a profit of about N27.5billion, sustaining that to 2013 to about N33.5billion.
He noted that the efforts have started to pay off, as the International Finance Corporation (IFC) is making available another $30million for on lending in the agricultural segment, which is at the final stages of being disbursed in addition to the $70million Tier-2 capital and the $30million for on-lending to the micro small and medium scale enterprises (MSME).
Otti, in this interview explained that lots of structural impediments make it impossible for Nigerian banks to lend at single digit, while speaking on how this can be improved.
Excerpts.
Achievement
I am not sure I have any specific achievement I can say is the greater and I also find it difficult to be talking about achievements. But there are few things that one has done in the banking industry, starting from Citi Bank all the way to this time in Diamond Bank. Why it is difficult to call them achievements is because they are not personal because there is hardly anything you can achieve in the industry alone. Hence, if there are achievements the credits go to my team and all the people who worked with me, a bigger part of the credit goes to them.
If you are talking of the recent things we have done in Diamond Bank, I remain proud with the team assembled together from 2011 to date, which has delivered superlative numbers, given where we are coming from in 2011 with a loss of over N27 billion, then, turning that around quickly in 2012 to a profit of about N27.5 billion, sustaining that to 2013 to about N33.5 billion. I think this is one of the most important things I am proud of. The other one is positioning the bank, making it one of the most important banks in Nigeria. It was categorised last year as one of the eight systemic important banks, which was done by the Central Bank of Nigeria (CBN). The basis for that is that the banks have become what is called, “too big to fail.” It has a whole lot to do with the percentage of the total assets, which the banks control in the industry. We moved from a number of just about N560 billion in 2011 in terms of total assets to over N1.5 trillion as at June 2014. In terms of deposits, we are also about N1.2 trillion from N380 billion. So you will see that the bank has grown tremendously and has been put on the path of sustainable growth. Though I can say the bank is not the same anymore, I can say it is a bank to be reckoned with much more than it was in the past.
Right issues
The Right Issue is concluded now. The collecting banks are now collecting the numbers. We don’t have the formal information from them yet. But the informal information from them has it that the Rights were 100 per cent subscribed; existing shareholders took everything we put in the market. Given that it is supposed to be a stamp of confidence by existing shareholders about the strategies of the bank and its direction. We are very glad to know that the shares were fully subscribed. I know there were fears given the state of the market but all the shares were taken.
Foreign investors
You know it is a Right Issue. What you get is in proportion to existing holding. So, since all the shares were taken we believe that the foreign shareholders maintain their stakes. Of course, we won’t also rule out the possibility of some of those Rights being traded because there was an option for the Rights to be traded. I think what is most important is that all the shares were taken.
Core strength
The fact that we are Diamond Bank, which means we are precious, Diamonds are said to be forever. So, our name distinguishes us from the lot. But beyond that, our service is second to none and we keep thinking of how to make our service better than it is presently. Our people are forever thinking of new ideas, innovation, new products and ways of doing things and thinking convenience to customers. Beyond that, there are few other things we have done that few other banks are just thinking of doing; today we are the leading bank in terms of supporting the Small and Medium Scale Enterprises. You will notice that even the central bank has rolled out the N220 billion MSME funds, which the president launched not too long ago. But before then, we have made a very strong impact in that segment of the market. We are happy to have been there before others. We have enjoyed a lot of goodwill because that area is an area a lot of people feared to tread and it is an area we have made a success out of. So, anybody who is joining today is just learning the rules. We are happy to have more people coming there, but the major reason for us to go there was not necessarily profit even though banks need to remain profitable. For the fact that it is important as a responsible organisation to support indigenous entrepreneurship, people’s ideas, businesses of our people and that is the main reason we went there. We also thought that if we do that, we would impact the economy by reducing the level of unemployment and social tension. Unemployment leads to a whole lot of vices, including the reserve army of the unemployed being available for all sorts of activities that are unwholesome; armed robbery, kidnapping and many others. So, for us, we are very proud for impacting the economy positively.
We have also been a leader in technology. Today we have our mobile applications, which are rated as one of the best in the industry. We have new products including financial inclusion, which we have rolled out in the market that is defining how businesses are done. It also defines how customers are approached. Not too long ago, we also launched Diamond Yellow Product, which is making waves in the market. It simply means, if you have a SIM card, you can have an account to enable you do minimal transactions. Some people are thinking of the way we could do that but we have already done it.T he information reaching us is that the acceptance and acceptability in the market is quite high.
IFC’s MSME financing
It is a very interesting partnership because it is the first of its kind in Nigeria. Some of the initiatives we are embarking on, IFC felt they should support us. Not only supporting us by investing on tier-2 capital to the tune of $70 million but also supporting us with $30 million for on-lending to the micro-small and medium scale enterprises (MSME). It has gone viral; we have the right products, propositions and skills. We really don’t have challenges with it; the payments have been up to date. There may be minor cases but not to worry about that because the partnership is going very well. They have also indicated that they will make available another $30 million for on-lending in the agricultural segment. If that has not been disbursed, it should be at the final stages of being disbursed. This is their own way of impacting and supporting the local economy because they are not a commercial bank; hence they have to work through a commercial bank they trust and we happen to be one of the banks.
Performance
I am sure you will agree with me that our profit after tax are healthy numbers. We can always do better. I think the bank has done very well in terms of profitability. We have turned it around and sustained very healthy numbers. In terms of ratios, returns on equities (RoE) over 18 per cent as at June 2014 and over 20 per cent in the two years between 2012 and 2013. I think that is a good feat but we are also not unmindful of the regulatory environment where we operate that has become a bit more stringent and putting a lot of pressure on margins. But the issue is not dwelling on those ones but about how do we respond to that. And some of these things we are doing in the areas of new products and contributions, in the areas of partnerships like the IFC you mentioned and the world women banking and World Bank and other financial multilateral institutions that support us.
We also pay a lot of attention to service and we know that if we are serving the main top notch like it had been, the chances that we will increase our market share brighter and we also have our customers do a lot more because we need to bring convenience to them.
E-payment
That is an area a lot of banks are paying attention to, with the central bank coming up with cashless policy, which is now nationwide. It is also an important area for us; I have talked about the Diamond mobile applications, which make banking easy and convenient. Hence, we bring convenience to customers. The Point of Sale (PoS) terminals and we have quite a lot of them. We are one of the leading banks in the country, not just in terms of the numbers deployed but the active ones and of course, the other alternative delivery channels. And this is just to do two things; first, to bring convenience and safety because when you start carrying cash around, not only is it not convenient but unsafe as you are vulnerable to robbery and kidnapping. But when a lot of people are carrying plastic cards, it reduces the risk. Secondly, to bring cost down because it simply does not make sense carrying cash to a whole lot of places; securing the cash, transporting and counting it. These are things you eliminate through alternative channels. Today, CBN has insisted and a lot of banks have also queued up and customers, even if it is against their wish, buy into it. For us, we are not only a strong supporter, we are also encouraging others, including customers, to buy into the cashless society that we have all agreed upon.
How we’re checking e-pay fraud
Fraud is a global issue, which cannot be eliminated completely. But the challenge for a bank is to be one step ahead of the fraudsters. Our systems are certified. Sometimes we have one or two things going wrong but a lot of times we are able to tame that. So, I wouldn’t say we have not been hit but we don’t have significant numbers. Our systems are not that vulnerable and when you talk about fraud, a lot of them may not necessarily be electronic fraud; some may be hacking and other fraudulent activities by those who are fraudulently minded. But for us, we are always one step ahead. We have anti-phishing system to ensure that people who want to defraud the bank electronically are checkmated. For us, it is not that much of a problem; I do know that some banks have that much problem.
How Diamond Bank is supporting gas infrastructure
I am sure you know that Diamond Bank in the last two years has won awards as the Best Oil and Gas Bank in Africa. Personally, I collected those awards in London Stock Exchange for 2012 and 2014, which speak volumes about what we have done in the area of oil and gas and power sector. Before government went into privatisation of the power assets, we were one of the few banks that supported power project and I know that before then, we had done about three projects, the biggest one being Geometrics Power, which is 141megawatts integrated power project in Aba that carved out Aba as an island. This means that any day Geometrics switches on, Aba and environs will switch off PHCN. We are almost at the tail end of the project; hopefully, before the end of the year it will be commissioned. So, we have been recognised for taking the risk. Again, it also ties into what I said earlier where we moved in to ensure that we impact the society where we operate. Because of the skills that are resident in Diamond Bank, we get involved in the oil and gas transactions in terms of structuring and executing. Even the execution of Shell divestments, most of the organisations that participated in the bid, we are involved in one way or the other. This is an area we have done very well and I am proud of what we have done. We can do more but there are also constraints given that there are a maximum percentage of your risk assets that would be accounted for by any particular sector. I guess that is part of what is restraining us from doing more than we have done. It is an area we have won several international awards and recognised locally.
Providing single digit credit to manufacturers
There is a saying that you don’t give what you don’t have. Customers who are placing fund with you are short-termish in nature, like 90 days and 30 days. So, if you now invest those funds by giving out loans that are long tenure, the day you come for your money I may probably not be able to pay. You will say that I probably have a problem.
When you come to place your funds in the bank, you will be asking for double digit interest. So, I can take money from you on double digits and lending out on single digit. Today, the MPR, which is the minimum discount rate; the risk-free rate is at 12 per cent. That means essentially, if I don’t do anything, I can get 12 per cent. So, why should I lend it to you at single digit? So, there are whole lots of structural impediments that make it impossible to lend at single digit. While it is our wish that we will get there, we are not there yet. It is not going to be easy to get there unless a few things happen.
Charges on ATM
After discussions with the central bank and negotiations, it was decided that we bring it down to N65 from the initial N100, just to cover the cost. If you withdraw funds from your bank’s ATM you will pay nothing but if you withdraw from another bank’s ATM, after the fourth withdrawal you will begin to pay because there are costs that are associated with those withdrawals, which the individual banks bear. But in an era of very tight regulatory environment it becomes very difficult for banks to bear these costs. If you don’t want to bear those fees, you don’t withdraw more than three times or you withdraw from your bank’s ATM. But banks are not compelled to charge because I am aware of some banks that are considering waving those charges.
Commission on turnover (COT)
I have always said that COT is endangered specie because if you follow the central bank’s regulation it has been coming down on a year-by-year basis. It is said that by 2016, it will disappear. It does not exist elsewhere, maybe you are right but charges exist. When the COT is not there, transaction charges exist because if your bank gives you a banker’s cheque they levy some charges. If you do a particular transaction, you pay for it. If you maintain an amount that is lower than the minimum amount you are supposed to maintain, they charge you, hence there are charges everywhere. The other way to respond to it is that you don’t necessarily look at what is easier because there are lots of things that exist here but don’t exist there. Power is one thing; if you are running a branch in London, you don’t need generator like we do here. If I have 200 branches, I have minimum of 400 generators; that is not where the problem is but the problem is in the diesel, which I call the “spirit of diesel,” which is an evil spirit. When you look at the cost of doing business in Nigeria, it is not the same elsewhere.
Why banks are accused of forex malpractices
I am not too sure that it is an issue on the table because a lot of banks these days don’t get involved in foreign exchange malpractices. I don’t know banks that do, maybe one or two banks. We will not answer for them but I can assure you that Diamond Bank has never been mentioned and will never be mentioned around malpractices because we do not think it is the right way to make money; we don’t think it is sustainable, we believe there are other things we can do to make money rather than malpractices. What people also don’t know is that when you get involved in those malpractices, the day you will be caught, you will vomit much more than you think you have gained. We are very ethical bank and our name is very important to us. We play absolutely by the rules.
Otti focused on steadying the bank, which reeling from the effects of the global financial crisis of 2008/2009, had declined in size, and lost market share to competition. The bank was also confronted with the challenge of raising additional capital to meet the new Capital Adequacy Ratio required for the “International Banking License” issued by the Central Bank of Nigeria.
In this interview with Daily Sun, he disclosed that the management’s effort impacted on the turning around the institution quickly in 2012 to a profit of about N27.5billion, sustaining that to 2013 to about N33.5billion.
He noted that the efforts have started to pay off, as the International Finance Corporation (IFC) is making available another $30million for on lending in the agricultural segment, which is at the final stages of being disbursed in addition to the $70million Tier-2 capital and the $30million for on-lending to the micro small and medium scale enterprises (MSME).
Otti, in this interview explained that lots of structural impediments make it impossible for Nigerian banks to lend at single digit, while speaking on how this can be improved.
Excerpts.
Achievement
I am not sure I have any specific achievement I can say is the greater and I also find it difficult to be talking about achievements. But there are few things that one has done in the banking industry, starting from Citi Bank all the way to this time in Diamond Bank. Why it is difficult to call them achievements is because they are not personal because there is hardly anything you can achieve in the industry alone. Hence, if there are achievements the credits go to my team and all the people who worked with me, a bigger part of the credit goes to them.
If you are talking of the recent things we have done in Diamond Bank, I remain proud with the team assembled together from 2011 to date, which has delivered superlative numbers, given where we are coming from in 2011 with a loss of over N27 billion, then, turning that around quickly in 2012 to a profit of about N27.5 billion, sustaining that to 2013 to about N33.5 billion. I think this is one of the most important things I am proud of. The other one is positioning the bank, making it one of the most important banks in Nigeria. It was categorised last year as one of the eight systemic important banks, which was done by the Central Bank of Nigeria (CBN). The basis for that is that the banks have become what is called, “too big to fail.” It has a whole lot to do with the percentage of the total assets, which the banks control in the industry. We moved from a number of just about N560 billion in 2011 in terms of total assets to over N1.5 trillion as at June 2014. In terms of deposits, we are also about N1.2 trillion from N380 billion. So you will see that the bank has grown tremendously and has been put on the path of sustainable growth. Though I can say the bank is not the same anymore, I can say it is a bank to be reckoned with much more than it was in the past.
Right issues
The Right Issue is concluded now. The collecting banks are now collecting the numbers. We don’t have the formal information from them yet. But the informal information from them has it that the Rights were 100 per cent subscribed; existing shareholders took everything we put in the market. Given that it is supposed to be a stamp of confidence by existing shareholders about the strategies of the bank and its direction. We are very glad to know that the shares were fully subscribed. I know there were fears given the state of the market but all the shares were taken.
Foreign investors
You know it is a Right Issue. What you get is in proportion to existing holding. So, since all the shares were taken we believe that the foreign shareholders maintain their stakes. Of course, we won’t also rule out the possibility of some of those Rights being traded because there was an option for the Rights to be traded. I think what is most important is that all the shares were taken.
Core strength
The fact that we are Diamond Bank, which means we are precious, Diamonds are said to be forever. So, our name distinguishes us from the lot. But beyond that, our service is second to none and we keep thinking of how to make our service better than it is presently. Our people are forever thinking of new ideas, innovation, new products and ways of doing things and thinking convenience to customers. Beyond that, there are few other things we have done that few other banks are just thinking of doing; today we are the leading bank in terms of supporting the Small and Medium Scale Enterprises. You will notice that even the central bank has rolled out the N220 billion MSME funds, which the president launched not too long ago. But before then, we have made a very strong impact in that segment of the market. We are happy to have been there before others. We have enjoyed a lot of goodwill because that area is an area a lot of people feared to tread and it is an area we have made a success out of. So, anybody who is joining today is just learning the rules. We are happy to have more people coming there, but the major reason for us to go there was not necessarily profit even though banks need to remain profitable. For the fact that it is important as a responsible organisation to support indigenous entrepreneurship, people’s ideas, businesses of our people and that is the main reason we went there. We also thought that if we do that, we would impact the economy by reducing the level of unemployment and social tension. Unemployment leads to a whole lot of vices, including the reserve army of the unemployed being available for all sorts of activities that are unwholesome; armed robbery, kidnapping and many others. So, for us, we are very proud for impacting the economy positively.
We have also been a leader in technology. Today we have our mobile applications, which are rated as one of the best in the industry. We have new products including financial inclusion, which we have rolled out in the market that is defining how businesses are done. It also defines how customers are approached. Not too long ago, we also launched Diamond Yellow Product, which is making waves in the market. It simply means, if you have a SIM card, you can have an account to enable you do minimal transactions. Some people are thinking of the way we could do that but we have already done it.T he information reaching us is that the acceptance and acceptability in the market is quite high.
IFC’s MSME financing
It is a very interesting partnership because it is the first of its kind in Nigeria. Some of the initiatives we are embarking on, IFC felt they should support us. Not only supporting us by investing on tier-2 capital to the tune of $70 million but also supporting us with $30 million for on-lending to the micro-small and medium scale enterprises (MSME). It has gone viral; we have the right products, propositions and skills. We really don’t have challenges with it; the payments have been up to date. There may be minor cases but not to worry about that because the partnership is going very well. They have also indicated that they will make available another $30 million for on-lending in the agricultural segment. If that has not been disbursed, it should be at the final stages of being disbursed. This is their own way of impacting and supporting the local economy because they are not a commercial bank; hence they have to work through a commercial bank they trust and we happen to be one of the banks.
Performance
I am sure you will agree with me that our profit after tax are healthy numbers. We can always do better. I think the bank has done very well in terms of profitability. We have turned it around and sustained very healthy numbers. In terms of ratios, returns on equities (RoE) over 18 per cent as at June 2014 and over 20 per cent in the two years between 2012 and 2013. I think that is a good feat but we are also not unmindful of the regulatory environment where we operate that has become a bit more stringent and putting a lot of pressure on margins. But the issue is not dwelling on those ones but about how do we respond to that. And some of these things we are doing in the areas of new products and contributions, in the areas of partnerships like the IFC you mentioned and the world women banking and World Bank and other financial multilateral institutions that support us.
We also pay a lot of attention to service and we know that if we are serving the main top notch like it had been, the chances that we will increase our market share brighter and we also have our customers do a lot more because we need to bring convenience to them.
E-payment
That is an area a lot of banks are paying attention to, with the central bank coming up with cashless policy, which is now nationwide. It is also an important area for us; I have talked about the Diamond mobile applications, which make banking easy and convenient. Hence, we bring convenience to customers. The Point of Sale (PoS) terminals and we have quite a lot of them. We are one of the leading banks in the country, not just in terms of the numbers deployed but the active ones and of course, the other alternative delivery channels. And this is just to do two things; first, to bring convenience and safety because when you start carrying cash around, not only is it not convenient but unsafe as you are vulnerable to robbery and kidnapping. But when a lot of people are carrying plastic cards, it reduces the risk. Secondly, to bring cost down because it simply does not make sense carrying cash to a whole lot of places; securing the cash, transporting and counting it. These are things you eliminate through alternative channels. Today, CBN has insisted and a lot of banks have also queued up and customers, even if it is against their wish, buy into it. For us, we are not only a strong supporter, we are also encouraging others, including customers, to buy into the cashless society that we have all agreed upon.
How we’re checking e-pay fraud
Fraud is a global issue, which cannot be eliminated completely. But the challenge for a bank is to be one step ahead of the fraudsters. Our systems are certified. Sometimes we have one or two things going wrong but a lot of times we are able to tame that. So, I wouldn’t say we have not been hit but we don’t have significant numbers. Our systems are not that vulnerable and when you talk about fraud, a lot of them may not necessarily be electronic fraud; some may be hacking and other fraudulent activities by those who are fraudulently minded. But for us, we are always one step ahead. We have anti-phishing system to ensure that people who want to defraud the bank electronically are checkmated. For us, it is not that much of a problem; I do know that some banks have that much problem.
How Diamond Bank is supporting gas infrastructure
I am sure you know that Diamond Bank in the last two years has won awards as the Best Oil and Gas Bank in Africa. Personally, I collected those awards in London Stock Exchange for 2012 and 2014, which speak volumes about what we have done in the area of oil and gas and power sector. Before government went into privatisation of the power assets, we were one of the few banks that supported power project and I know that before then, we had done about three projects, the biggest one being Geometrics Power, which is 141megawatts integrated power project in Aba that carved out Aba as an island. This means that any day Geometrics switches on, Aba and environs will switch off PHCN. We are almost at the tail end of the project; hopefully, before the end of the year it will be commissioned. So, we have been recognised for taking the risk. Again, it also ties into what I said earlier where we moved in to ensure that we impact the society where we operate. Because of the skills that are resident in Diamond Bank, we get involved in the oil and gas transactions in terms of structuring and executing. Even the execution of Shell divestments, most of the organisations that participated in the bid, we are involved in one way or the other. This is an area we have done very well and I am proud of what we have done. We can do more but there are also constraints given that there are a maximum percentage of your risk assets that would be accounted for by any particular sector. I guess that is part of what is restraining us from doing more than we have done. It is an area we have won several international awards and recognised locally.
Providing single digit credit to manufacturers
There is a saying that you don’t give what you don’t have. Customers who are placing fund with you are short-termish in nature, like 90 days and 30 days. So, if you now invest those funds by giving out loans that are long tenure, the day you come for your money I may probably not be able to pay. You will say that I probably have a problem.
When you come to place your funds in the bank, you will be asking for double digit interest. So, I can take money from you on double digits and lending out on single digit. Today, the MPR, which is the minimum discount rate; the risk-free rate is at 12 per cent. That means essentially, if I don’t do anything, I can get 12 per cent. So, why should I lend it to you at single digit? So, there are whole lots of structural impediments that make it impossible to lend at single digit. While it is our wish that we will get there, we are not there yet. It is not going to be easy to get there unless a few things happen.
Charges on ATM
After discussions with the central bank and negotiations, it was decided that we bring it down to N65 from the initial N100, just to cover the cost. If you withdraw funds from your bank’s ATM you will pay nothing but if you withdraw from another bank’s ATM, after the fourth withdrawal you will begin to pay because there are costs that are associated with those withdrawals, which the individual banks bear. But in an era of very tight regulatory environment it becomes very difficult for banks to bear these costs. If you don’t want to bear those fees, you don’t withdraw more than three times or you withdraw from your bank’s ATM. But banks are not compelled to charge because I am aware of some banks that are considering waving those charges.
Commission on turnover (COT)
I have always said that COT is endangered specie because if you follow the central bank’s regulation it has been coming down on a year-by-year basis. It is said that by 2016, it will disappear. It does not exist elsewhere, maybe you are right but charges exist. When the COT is not there, transaction charges exist because if your bank gives you a banker’s cheque they levy some charges. If you do a particular transaction, you pay for it. If you maintain an amount that is lower than the minimum amount you are supposed to maintain, they charge you, hence there are charges everywhere. The other way to respond to it is that you don’t necessarily look at what is easier because there are lots of things that exist here but don’t exist there. Power is one thing; if you are running a branch in London, you don’t need generator like we do here. If I have 200 branches, I have minimum of 400 generators; that is not where the problem is but the problem is in the diesel, which I call the “spirit of diesel,” which is an evil spirit. When you look at the cost of doing business in Nigeria, it is not the same elsewhere.
Why banks are accused of forex malpractices
I am not too sure that it is an issue on the table because a lot of banks these days don’t get involved in foreign exchange malpractices. I don’t know banks that do, maybe one or two banks. We will not answer for them but I can assure you that Diamond Bank has never been mentioned and will never be mentioned around malpractices because we do not think it is the right way to make money; we don’t think it is sustainable, we believe there are other things we can do to make money rather than malpractices. What people also don’t know is that when you get involved in those malpractices, the day you will be caught, you will vomit much more than you think you have gained. We are very ethical bank and our name is very important to us. We play absolutely by the rules.
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