Diamond Bank Annual Report 2009

A strong financial services institution with
effective presence in Nigeria, Africa and indeed all
the key financial centres of the world.
vision
To create a unique international bank focused on
providing creative solutions to customers'
business problems, with an absolute
commitment to quality.
mission

contents
Mission and Vision 03
Results at a Glance 05
Notice of AGM 06
Chairman's Statement 08
GMD/CEO's Review 13
Frequency of Board Meetings 45
Report of the Independent Auditors 46
Statement of Significant Accounting Policies 47
Consolidated Profit and Loss Account 57
Consolidated Balance Sheet 58
Consolidated Cash Flow Statement 59
Notes to the Consolidated Financial Statements 60
Statement ofValue Added 88
FiveYear Financial Summary Group 89
FiveYear Financial Summary Bank 91
Financial Risk Analysis 92
Corporate Directory 109
Proxy Form 115
e-dividend form 117
Unclaimed Dividend 118
Report of External Consultant on the Board Appraisal 20
Report of Audit Committee 21
Board of Directors 22
Management Team 23
Financials
Director's Report 26
Responsibility for Annual Financial Statement 30
Corporate Governance 31
4

5
Result at a Glance
GROSS EARNINGS N(’000) PROFIT BEFORE TAX N(’000)
TOTAL ASSETS N(’000) TOTAL DEPOSITS N(’000)
GROSS EARNINGS N(’000) PROFIT BEFORE TAX N(’000)
TOTAL ASSETS N(’000) TOTAL DEPOSITS N(’000)
2006 2007 2008 Apr’ 2009 Dec’ 2009 2006 2007 2008 Apr’ 2009 Dec’ 2009
2006 2007 2008 Apr’ 2009 Dec’ 2009 2006 2007 2008 Apr’ 2009 Dec’ 2009
2006 2007 2008 Apr’ 2009 Dec’ 2009 2006 2007 2008 Apr’ 2009 Dec’ 2009
2006 2007 2008 Apr’ 2009 Dec’ 2009 2006 2007 2008 Apr’ 2009 Dec’ 2009
22,713,742
39,873,714
67,735,694
60,437,641
108,979,476
1,379,451
16,213,791
5,901,951
-12,374,154
7,640,882
223,651,484
320,950,167
625,669,618
682,077,914
650,757,117
148,562,796
217,737,408
419,707,636
466,889,851
482,056,310
21,730,220
38,524,708
56,612,235
101,659,260
64,667,401
1,110,524
8,792,775
15,059,114
8,343,738
-9,055,793
218,866,192
312,249,722
603,326,540
650,891,836
604,361,884
144,569,685
211,634,824
403,710,120
444,815,118
449,020,259
BANK
GROUP

NOTICE IS HEREBYGIVEN that the 19thAnnualGeneral Meeting of DIAMOND BANK PLC
will be held at Le Méridien Ibom Hotel & Golf Resort, Uyo,Akwa Ibom State of Nigeria on
the3rddayofJune2010at9:00a.m.prompt,totransactthefollowingbusiness:
AGENDA
OrdinaryBusiness
1. To receive the Report of the Directors, the Audited Financial Statements for the period ended 31st December 2009, and the
ReportsoftheAuditorsandAuditCommitteethereon.
2. Toelect/re-electDirectors.
3. ToauthorisetheDirectorstofixtheremunerationoftheAuditors.
4. ToelectthemembersoftheAuditCommittee.
SpecialBusiness
5. Toconsiderandifthoughtfittopassthefollowingasanordinaryresolution:
“That the Directors' fees shall until reviewed by the Company in Annual General Meeting be and is hereby fixed at
N100,000,000.00foreachfinancialyear.”
6. Toconsiderandifthoughtfittopassthefollowingasaspecialresolution:
“That the Board of Directors be and are hereby authorised to convert the outstanding International FinanceCorporation (IFC) loan
amount of $24,545,463.80 (Twenty Four Million, Five Hundred and Forty Five Thousand, Four Hundred and Sixty Three Dollars
Eighty cents) into ordinary shares of theCompany at a price to be determined,and to allot such shares to IFC.”
7. To consider and if thought fit to pass the following as a special resolution:
“That approval is hereby given for Diamond Bank Plc to enter into a business combination with or transfer, assign or otherwise
dispose of its shareholding in any of its subsidiaries as may be determined necessary by the Board of Directors for the purpose of
optimizing the business of the Diamond BankGroup;and the Directors be and are hereby authorised to execute all documents and
doallsuchthingsasarenecessaryorincidentalthereto.”
Notes
1. Proxy
A member of theCompany entitled to attend and vote at anyAnnualGeneral Meeting is entitled to appoint a proxy to attend and
vote on his behalf.A proxy need not be a member of theCompany.For the appointment to be valid,a completed and duly stamped
proxy form must be deposited at the office of the Registrar of the Company, Diamond Registrars Limited, 59, Ogunlana Drive,
Surulere,LagosStatenotlessthan48hoursbeforethetimefixedforthemeeting.
2. AuditCommittee
In accordance with Section 359 (5) of the Companies andAllied MattersAct, 1990, any shareholder may nominate a shareholder
for appointment to theAuditCommittee. Such nomination should be in writing and should reach the Company Secretary at least
twentyone(21)daysbeforetheAnnualGeneralMeeting.
Notice of Annual General Meeting
6

TheCentral Bank of Nigeria in itsCode ofCorporateGovernance for Banks stipulates that some members of theAuditCommittee
should be knowledgeable in internal control process, accounting and financial matters. Consequently, we will require a detailed
curriculumvitabesubmittedwitheachnomination.
3. Election/Re-electionofDirectors
In line with the provisions of theArticles ofAssociation the directors to retire by rotation are Mr.ChrisOgbechie and Chief John D.
Edozien.Beingeligibleforre-election,Mr.ChrisOgbechieandChiefJohnD.Edozienofferthemselvesforre-election.
4. ClosureofRegisterofMembers
The Register of Members will be closed from 27th May 2010 till 28th May 2010 to enable the Registrar update the Register.
Datedthis5thdayofMay2010
BYORDEROFTHEBOARD
NkechiNwosu
Company Secretary
Notice of Annual General Meeting

ore importantly, the AGM will review the Bank's Governments and central banks around the world took wide-
performance during an extra-ordinarily challenging ranging policy actions to support their banking systems by
Mperiod of major reforms introduced by the new providing liquidity, recapitalizing financial institutions, and
Central Bank of Nigeria (CBN)Governor, Mallam Sanusi Lamido addressing decisively the problem of impaired assets. Despite
Sanusi, since the second half of 2009. The reforms have these actions, financial strains remained acute in 2009, pulling
significantly altered the industry structure and the down the real economy, with the international operating
regulatory/supervisoryframeworkwithinaveryshortperiod. environment remaining very challenging. Unemployment and
its spillover effects remained major challenges in many
The impact of the global economic downturn hurt many of our advanced economies, and poverty a problem to many
customers,putting corporate profitability under pressure and in developingeconomies.
turn, led to deterioration in credit quality and diminution in the
value of investments. The consequent high level of provision The unprecedented stimulus packages adopted at different
resulted in an overall loss position for the Diamond Bank Group. times by various governments of the world and the coordinated
The financial results were very disappointing notwithstanding efforts by international bodies such as G-20, IMF and World
that they reflect the impact of a weak economy.However,steps Bank started to have impact from the third quarter of 2009, as
are being taken by both the Board and Management to ensure most economies showed signs of improvement.This was largely
that we do not find ourselves in this unfortunate position going driven by increasing demand as well as lowered uncertainty and
forward, irrespective of the vagaries of the economy.With this systemic risk in financial markets supported by huge and wide-
resolve and the strategic actions we have taken so far,theGroup ranging publicintervention,rising commoditiesprices,returning
has returned to the path of profitability in the first quarter of consumer confidence,and reboundin manufacturingsector and
this year. I have no doubt that we will sustain satisfactory stabilizing retail sales.Indeed,the world economy is expected to
performancehenceforth. sustain a recovery track from 2010. The IMF in April 2010
projected that the global economic growth will rise to 4.2
To properly situate the Bank's performance, it is pertinent that I percentin2010.
first review the key developments that shaped the operating
environment during the period so that we all can appreciate the The Domestic Economy - ExtremeVolatility Giving Way
circumstancesthatourBankfaced. toRecovery
Global Economy - Contraction in 2009 Despite Huge The Nigerian economy had a mixed performance in 2009 as the
country felt the second round effects of the global economicStimulus Packages
meltdown,especially in the later part of 2008 and 2009. As the
global economy began recovery, Nigeria recorded significantThe world output was estimated to have declined by 0.6 percent
growth in the second half of the year, although there were stillin 2009,the lowest level sinceWorldWar II,due to the effects of
challenges. Data from the National Bureau of Statistics (NBS)the financial and economic crisis, which started in the United
indicated that real Gross Domestic Product (GDP) grew by 6.9States in 2006/7 and spread worldwide in 2008. Unrelenting
percent which is significantly higher than the 6.0 percentfinancial turmoil caused asset values to fall sharply across
recorded in 2008.The non-oil sector remained the major driveradvanced and emerging economies, decreasing household
of growth although this was complemented by the sharpwealth and putting downward pressure on consumer demand.
increase in oil revenue following relative peace in the NigerProduction and trade were constrained as a consequence.
Delta region.
Distinguished Shareholders,Ladies andGentlemen
I welcome you all to the 19thAnnual General Meeting (AGM) of our Bank.This
AGM is special in many respects. It is the first following the adoption of
December 31st common year-end in the banking industry, bringing the period
underreviewtoeightmonthsfromMaytoDecember2009.
Chairman's Statement
9

Statistics from NBS showed that inflation fluctuated during the Prior to June 2009, the CBN tried to address the challenges by
year before settling at 12.0 percent at the end of 2009.The huge adopting various options like the Expanded Discount Windows
liquidity in the financial system coming from the quantitative (EDW) and the initial postponement of provisioning for bad
easing measures of the CBN, fiscal expansion and rising global margin loans. However, following the appointment of a new
commodity prices made a single digit inflation rate target CBN governor, the apex bank conducted a special audit on all
unattainable in 2009.In addition,the significant depreciation of banks withfocus onthequality ofriskassets.
the Naira during the year impaired the performance of the real
sector and the ability of the operators to meet their credit By October 2009, eight banks that failed the stress test went
obligations. into CBN administration under new executive managements
and had additional capital injection by theCBN. In addition, the
The money market ended 2009 on a relatively liquid note in CBN gave two other banks up to June 2010 to recapitalize. It is
contrast to the tightness that dominated the first half of the pleasing to note that our Bank was among the first five banks to
year as well as 2008. This was due to quantitative easing beclearedbytheCentral BankofNigeria.
strategies and other measures adopted by the CBN and the
government to ensure stability in the Nigerian financial system. Analysts believed that the CBN intervention saved the banking
Average Prime Lending Rate to the economy stood at 18.7 industry from systemic distress and risk,considering the market
percent in 2009, up from 17.4 percent in 2008. The average share of loans and deposits of several of the distressed banks.
interest rate on savings account stood at 3.4 percent in 2009, The CBN action also helped to protect all depositors and
marginallydownfrom3.5 percent in 2008. creditors and removed the probable cause of financial
instability from the banking system. This action possibly
It is comforting to note that, on the strength of the last quarter supported the implementation of common year-end by banks,
growth in 2009, there is considerable optimism about the without the unnecessary spike in interest rates that was
nation's economic growth in 2010 with projections hovering responsibleforthereversalofthepolicythepreviousyear.
around 7-8 percent. There is an expectation that the absolute
growth in oil production and prices in the third quarter of 2009 The CBN intervention has the potential of altering industry
will continue in 2010. External reserves will likely improve structure in terms of ownership,number of banks in the industry
further and help in stabilizing the value of the naira. Consumer and market share.The directives from the apex bank on loan loss
confidence is returning as the capital market crash seems to provisioning saw most banks' announcing huge losses, which
havebottomedout. eroded their capital bases.Six of the rescued banks that released
their results as at the end of September 2009, reported a
The growth expectation may however be moderated by combined loss of over N1.5 trillion ($11 billion) and
persistent credit crunch,the likelihood of inflation escalating on provisioning for impaired assets in excess of N2.2 trillion.In a bid
account of 2011 election spending and accommodative to address the situation, banks became risk-averse thereby
monetary policies of the government, infrastructural rigidities, accentuating credit crunch in the system. However, it is
andshortageofhumancapital. expected that when the CBN's proposed Asset Management
Company (AMC) comes on stream, it will absorb some of the
toxic assets thereby stabilizing the banking industry and easingBankingIndustryReview
creditflow.
Following the conclusion of the 2004/2005 consolidation
FinancialResultsexercise and with billions of naira in banks' vault,Nigerian banks
grew loan volumes across the board, particularly to the oil and
gas sector, capital market and real estate businesses. As at the Distinguished Shareholders, as I said at the beginning, the
end of 2008 credit volumes to private borrowers was already difficult macro-economic environment during the period under
more than two and half times the N3.1 trillion federal budget for review adversely affected the performance of our Diamond
2009.Lacking in many instances the risk management expertise BankGroupinthelastfinancialyear.
and corporate governance structures to effectively contain
these new exposures, many banks were mid way confronted The impact of the weak operating environment on the quality of
with the sudden change in macroeconomic conditions in our credit portfolio was severe. Notwithstanding the effect on
second half of 2008 through 2009 caused by the global credit profit, we were determined to ensure that the Banks' non-
crisis. performing loans are adequately provisioned. Accordingly, the
Group made additional provisions of N24.7 billion during the
10

period,resulting in a loss before taxation of N12.4 billion for the dropped by 57.1 percent and further 42.8 percent in 2008 and
8-month financial year ended December 31st 2009 compared 2009 respectively compared to 45.8 percent and 33.8 percent
to N5.9 billion profit made for full year endedApril 30,2009.We dip in NSE All-Share Index.This was due to a number of factors,
are aware of the responsibility this performance has imposed on including concerns over the impact of global economic
usatboththeBoardandManagementlevels. downturn, CBN reforms, and huge losses resulting from steep
provisioning in 2009. Our Bank's share price lost 57.5 percent in
Luckily, we have the opportunity to quickly return the Bank to 2008andonly0.8percentin2009toclosetheyearatN7.40.
profitability as our national economy is already in recovery
mode, thanks to the recovery momentum in the global Fortunately,we can see further recovery of the capital market in
economy and the positive effect on international crude oil price. 2010 over the gains of the second half of 2009.The benign steps
Consequently, it appears that the worst is over and we expect a taken by the government and the CBN to reform the banking
turnaround in the fortunes of business organizations in a industry as well as stimulate the local economy, and the global
manner that will impact positively on our earnings and economic turnaround will strengthen market confidence this
recoveries. It will also have a positive effect on the trend in our year. In spite of the loss made during the last financial year,
overallcreditportfolioqualityfromthis year. Diamond Bank's fundamentals remain strong and its capability
for improved and sustainable earnings has been significantly
Although the Group's balance sheet remained very strong with enhanced. I am therefore optimistic that the share price will
capital adequacy and liquidity ratios at 19.5 percent and 37.6 rideonthemarkettideas2010quarterlyresultsarereleased.
percent respectively, we know the importance of profitability in
sustaining the confidence and trust of our esteemed customers, FutureOutlook
employees,shareholders,regulators and other stakeholders.The
Bank has since commenced the implementation of the Looking ahead in 2010, I expect that our nation's economic
appropriate structures and strategies to improve the Group's growth will be underpinned by the upturn in crude oil prices and
resilience to vagaries in the operating environment, particularly production levels, growth of non oil sectors, growing level of
with regard to risk management, operating efficiency and investment in agriculture and infrastructure, strong private
organizationalproductivity. consumption, and returning confidence in the banking industry
and capital market. Nigeria's future banking growth will be
The effectiveness of our strategy in improving the Group's driven not only by growth in the national economy but also by
performance is borne out by a return to profitability in the first the consequent growth of the middle class and boom in
quarter of 2010. Our target is to move progressively to personallending,mortgages,andcreditcards.
becoming one of the top 3 Nigerian banks within 5 years in
terms of ROE, operational efficiency, and championship in Diamond Bank is still in a position of strength to take advantage
customer experience.It is my sincere belief that we will achieve of the opportunities arising from the expected economic
theseobjectives. growth. With the support of international financial services
consulting firms, the Bank is executing initiatives that will
SharePricePerformance transform our business. In this direction, we have strengthened
our credit risk policies to facilitate the identification of
Diamond Bank's Share performance, measured by the market expansion areas to drive revenue growth and, at the same time,
capitalization, was N108.0 billion at the end of December 2009 improve our loan portfolio quality. Besides, the Bank has made
signaling a rise almost to its 2008 level from N72.38 billion as at giant strides in the drive for cost efficiencies and improved
the end of May 2009. The share performance is gradually productivity.
improving following investors' apathy since the stock market
crash in late-2008/early 2009. Even with the improvement in The successful execution of these strategies in the short and
share price in the period under review, I recognize and feel the medium terms will help position our Bank for improved and
pain of shareholders as their investment eroded in value over sustainable performance from 2010.We are committed to the
the last two years.Nevertheless,I am comforted by the fact that effective implementation of the strategies towards elevating
the strategic actions we have taken in recent times should our Bank to the desired industry leadership position in the
restore sustainable shareholder value for all. medium term.
Indeed,share prices in the banking sector as a whole were highly
depressed during this period. The Banking Industry Index
11

BoardofDirectors Conclusion
We are mindful of the concerns of our shareholders over ourDuring the year, two non-executive directors resigned from the
performance in 2009. I want to assure you that we areBank's Board.Dr.Nkosana Moyo,one of the two Board members
committed to sustaining the quick return of Diamond Banknominated by Actis Capital, resigned with effect from 25th
Group to profitability in 2010 and we will do everything withinSeptember 2009, following his resignation from Actis Capital.
ourcontrolinthisregard.OurmoderateprofitbeforetaxofAlso, RetiredAirVice Marshal (AVM) Ishaya A. Shekarri resigned
N2 billion for the first quarter of 2010 will serve as a springboardfromtheBoardeffective1stOctober2009forpersonalreasons.
to much higher profitability as we progress through the
remaining quarters of this year. We believe that ourOn behalf of the entire Board of Directors and fellow
repositioning initiatives to ensure profitable and quality growthshareholders of our Bank, I wish to extend my profound
will see the Bank emerge an industry champion in the cominggratitude to the two directors for their invaluable contributions
years.to the growth and development of our Bank throughout their
tenure.I wish them all the best in their future endeavour.
Indeed, I look forward to 2010 with reasonable optimism
especially in view of the fast improving international businessFurthermore, let me use this opportunity to thank all my
environment, favourable domestic economic climate, andcolleagues on the Board for their contributions to building a
expected positive outcome of the ongoing banking industrystrong Bank that will endure the test of time. I have no doubt,
reforms. I am optimistic because I know that we have in placethat with such a Board, our Bank is positioned for the next level
the right business strategy and the required human capacity toof leadership in the industry.
effectively exploit the emerging business opportunities and
deliver commendable stakeholder value. As growth beckons, IManagementandStaff
enjoin all stakeholders to remain steadfast, supportive and
committed.On behalf of the Board members, I extend my appreciation to
the Management team and staff of our Bank for their hard work,
On behalf of the entire Board of Directors and fellowingenuity and commitment to duty that enabled our Bank to
shareholders of our Bank, I thank our valued customers for theirsurvive the harsh operating environment during the period
unwavering support and patronage especially in this difficultunder review. Their efforts, resilience and continued
time. I sincerely hope that we can continue to count on yourdetermination to move the Bank forward against all odds have
patronage in the interest of our mutually beneficialstarted paying off.
relationships. We will continue to support the attainment of
your business aspirations through our ever improving customerIndeed, the operating environment in the last twelve months
value-added propositions. Let me also use this opportunity tohas continued to witness developments which have stretched
express my sincere gratitude to all other stakeholders includingthe entire banking sector to its limits. Luckily, we are blessed
the CBN, NDIC, NSE, SEC and EFCC for their continued supportwith talented, experienced and determined management team
and guidance.and staff working with a clear strategic focus managing the
business prudently.Without doubt,our management's ability to
Thankyouallforyourattention.respond positively and flexibly to fast changing business
landscape will ensure remarkable improvement in stakeholder
value within a short period of time.
Our strength remains our people. Having one of the strongest
HRM,NnaemekaAlfredUgochukwuAchebe,ObiofOnitshateams of professionals, driven by a collaborative work culture
Chairmanand accountability is an important feature that will continue to
drive our Bank's success in the years ahead. Accordingly, the
development of Management team and staff will continue to be
a top priority for the Board towards ensuring continued
improvement in our Bank's performance.
12

istinguished Stakeholders, as you all know, 2009 was a Already, we have put in place all the necessary building blocks
very difficult and challenging year for businesses required to quickly and decisively return the bank to profitabil-
Daround the world. In Nigeria, the economy suffered ity and they are already yielding fruits as reflected in the profit
significantly from the second round effect of the global we recorded in the first quarter of 2010. We are very much
economic crisis particularly from the third quarter of 2008 to committed to ensuring that the Bank remains safe, stable and
the greater part of 2009.The resultant deterioration of the risk profitable. Our customer centric credentials remain intact and
assets of banks led to increasedprovisioningfor non-performing we will build on all of these in the coming months to restore real
loans following the initiatives taken by the CBN to reform the growth to stakeholders' value. Our values, our brand identity
industry. The huge provisions brought corporate profitability and our people, which are our invaluable assets, are still very
under severe pressure as banks shut down credit completely and much intact to help us navigate and maximally take advantage
focused on bad loanrecovery. of the improving business environment. In fact, we entered
2010 with a lot of confidence and renewed vigour to quickly
Indeed for the period of over a year to end-December 2009, I movetheGroupon the path profitability.
have the opportunity to manage Diamond Bank Group through
the most difficult circumstances in its history. I must confess GroupFinancialPerformance
that the business environment under which we operated during
the period under review was one of the most difficult in the The period under review has been challenging for the entire
history of banking in this country. The consequent loss we Nigerian banking sector. Diamond Bank's results before
recorded during the period regrettably is an aberration in our exceptional provisions have proved resilient in the face of these
Bank's history which we must put aside quickly. challenging conditions with the Group continuing to grow
deposits at a sensible rate and with operating income holding up
It is important to note that we have assessed the challenges that well. However, our profits have been impacted by large one-off
led to the Group's performance under review, identified the provisions which we have provided for in accordance with the
learning points and more importantly, set out the roadmap to CBN'sguidelinesfortheperiod.
recovery and profitable growth. We are mindful of the enor-
mous investments made in the Bank by all stakeholders and the Our operations for the 8-month period resulted in a loss before
level of expectations in terms of shareholders value.As a result, tax of N12.4 billion due mainly to the high provisioning of
we are positioning for strong performance in the aftermath of N24.7 billion, which resulted from increase in one-off large
theeconomiccrisis. provisions which have been taken care of. Really, six high value
loan accounts were responsible for N15.7 billion of the
We are committed to the implementation of initiatives that we provision figure while two accounts that recorded major
have identified to be critical to our success. The business operational losses contributed N3.7 billion to it. The capital
optimization initiatives will very soon lead to significant and market and downstream petroleum sectors have undergone
sustainable improvement in organisational efficiency, produc- turbulent phase in the past months and expectedly contributed
tivity and profitability. In addition to defending our leading significantlytothespikeinloanlossprovision.
position in our core middle market business, we are also
focusing more on theexecution of strategies that will drive rapid We are optimistic that the challenges of the macroeconomic
penetration and market share growth in sectors that present environment have eased significantly and indeed, a substantial
huge business potentials. We are also open to mergers and increase in economic activities has become apparent.
acquisitions that offer opportunity for a good strategic fit with Accordingly, we expect a turnaround in the fortunes of the
valuable synergic benefits as a means to leapfrogging our companies that account for the loan loss provisions in a manner
penetration of the growth market segments. that will impact positively on earnings and recoveries.
Group Chief Executive Officer's Review
13
Positioning for strong performance - committed implementation of
initiatives to improve organisational efficiency, productivity and profitability;
as well as driving rapid penetration and market share growth in sectors with
huge potentials.

Additionally, the strategic steps that we have taken to signifi- always depended on cash management and collections to
cantly improve the profitability of our operations over time will accumulate deposits required to fund assets. Lower disposable
yield substantial results this year (highlights under “Optimisa- income however affected liability generation both at the retail
tionandGrowth”below). andcorporatebusinesssegments.
Our gross earnings of N67.7 billion and operating income of In all, the Bank remained very strong as both Liquidity and
N42.5 billion compares favourably with N67.8 billion and N45.5 Capital Adequacy ratios at 38.0 percent and 19.4 percent were
billion respectively for the corresponding period of 2008. The well above regulatory minimum of 25 percent and 10 percent
relative stability in gross earnings was due to the fact that respectively.In the current year,we have projected stronger and
Commercial Papers which were off-balance sheet in 2008 had more rewarding balance sheet and income targets for the Bank.
been brought on-balance sheet by end-2009, implying that the We will intensify the implementation of a number of initiatives
drop in loans was actually higher than the 8.5 percent apparent which is expected to help us in achieving our 2010 targets.These
from the financial statement.The drop in loans was one of our include:
precautionary measures against the risk implications of the ! Focus on low-cost deposit mobilization and balance sheet
uncertainties about economic outlook during the period. management.
Significant decline in non-interest income was responsible for ! Loan recovery, given the level of provision for non-
the6.6percentdeclineinoperatingincome. performingloansin2009.
! Improve our credit monitoring activities with special
The Group's Total Assets closed at N650.8 billion, an increased emphasis on high risk areas as well as strengthen our
by 9 percent from N594.5 billion as at December 31, 2008.This enterprise-wide riskmanagementframework.
growth was supported by customer deposits which grew by 33 ! Boost cash management services to key clients with a view
percent to N482.1 billion from N363.3 billion during the period, to deepening our share of their businesses and aligning
which is a reflection of customers' confidence in Diamond Bank. resourcedeploymentwith opportunities/potentials.
It also points to the success of our retail banking strategy, ! Improve our organizational efficiency and productivity
making the business segment the major driver of deposit through committed implementation of the initiatives
growthduringtheperiod. currentlyongoingintheBank.
A review of the performances of our subsidiaries shows that theTheConsolidatedEntities
overall economic climate and operating environment remained
very challenging for them. The following subsidiaries recordedThe harsh operating environment and credit crunch in the
losses for their financial year ended December 31, 2009 -country which was further aggravated by the outcomes of the
Diamond Capital (N2.0 billion), ADIC Insurance (N0.78 billion)CBN's stress tests of banks affected all the Bank's business
and Diamond Mortgages (N0.48 billion). The very high losssectors, including the downstream oil, manufacturing, trading,
recorded by Diamond Capital was as a result of the mark-to-construction and services sectors. Growth was constrained
market approach adopted in the valuation of its subsidiary'sprincipally by the global economic meltdown which negatively
(Diamond Securities) share-related assets.Two of our subsidiar-affected liquidity in the system and our appetite for increasing
ies made profit before tax namely, Diamond Bank Benin S.A -credit. Consequently, the Bank's risk assets declined by 6.0
N0.34 billion and Diamond Pension Fund Custodian - N0.72percent to N323.8 billion from N344.3 billion as at December
billion.31,2008.However,our total deposits increased by 31.7 percent
to N449.0 billion from N341.0 billion as at December 31, 2008
Management however remains upbeat in the quick turnaroundmore as a result of flight to safety following the outcome ofCBN
in the fortunes of the subsidiaries especially in view of thespecial audit of banks in 2009 and the pull of our retail banking
positive economic outlook from 2010.Strategies have also beenpropositions than increased liquidity in the system. Money
formulated to reposition the subsidiaries in the light of thesupplyincreasedbyonly15.8percentduringtheyear.
lessons learnt from the recent challenges.The management of
the subsidiaries are working assiduously on the implementationThe Bank'sCorporate Bank SBU sought to de-risk in most part of
of the performance improvement and turnaround strategies2009 as well as concentrate on protecting existing assets. This
thathadearlierbeenapprovedbytheBoard.resulted in a conscious decision to manage existing assets,
refrain from the creation of new risk assets until the economic
outlook is clearer while making aggressive and proactive
provision for losses.Traditionally,the corporate banking SBU had
15

environment.We strongly believe in our people as the engine ofOptimisationandGrowth
our growth.Thus in 2009,we continued with the transformation
of our human capital management in order to position the bankIn order to realize optimal benefit of our growth strategy, we
as a performance-driven institution.We embarked on series ofhave focused on the development of competencies that will
initiatives towards building a strong, resilient, agile andgive us competitive advantage in the development of identified
motivated workforce across the entire DiamondGroup.and promising business opportunities. Incidentally, the quick
wins of our business transformation initiatives will contribute
We have also put in place a new performance managementsignificantly to returning our Bank to rapid profit growth path
system that will strategically link corporate strategy, resourcesthis year. The initiatives which commenced in late-2008, is
and processes with a view to achieving organizational goals andtransforming the Bank's business fundamentally.They span the
objectives. Communication and training of staff on the newentire value chain covering risk management, financial
performance management framework has been concluded inplanning, sales management, operations optimization, and
our determination to build a world class performance drivenInformationTechnology (IT) architecture and governance.
environment. Indeed, the resilient performance of the Bank
especially in this turbulent times and our consistent superiorIn the first instance, we have actively reviewed our risk
customer value addition over the years is largely driven by themanagement strategy in line with changing market conditions
quality of our human resource.We will continue to invest in ourand the Bank's strategy. We have introduced improved risk
people and adopt the best HR practices towards building amanagement methodology to facilitate the identification of
winning organization that will consistently deliver stakeholdersexpansion areas within the set risk appetite. We have also
value.continued with the implementation of best practice enterprise
risk management framework that is process driven and IT
The deployment of the state of the art IT infrastructure andenabled. Policies are integral to the bank's risk management
Architecture will improve overall IT resilience and responsive-process, spanning risk identification, measurement, mitigation,
ness to the business while reducing “run” risk and supportingmonitoring and reporting in the various risk areas to ensure that
automated processes, thereby contributing materially to costinherent risks in the business are effectively managed.
reduction and sales optimization.The initiatives are helping us
to set up efficient and scalable processes that will enable veryOverall levels of financial performance will, no doubt, be
profitable future growth,organically or inorganically.affected by our ability to improve operating efficiency and
productivity against the background of a lesser growth
We are also working on some strategic opportunities that canenvironment, with significantly lower levels of growth in net
create significant value and fast-track the achievement of ourinterest and non-interest income. We have re-engineered our
Bank's strategic intent of rapidly growing retail banking,financial planning and expense management process to realize
remaining a major player in middle market, and positioning as aexpense reduction and reliable planning data as well as
niche player in Corporate/Public Sector Banking. The strategicredefined our strategic metric system to set a good foundation
move will leap-frog the growth of our Bank's branch networkfor effective sales performance system.This improved planning
and customer base, and the utilisation of our technologicaland expense management process has high cost reduction
capabilities in the mobile and electronic banking market.potential and will significantly increase efficiency in the
allocation of capital to business units, thus supporting overall
bank strategy. IncreasedFocusonRetailBanking
The retail space remains largely untapped in Nigeria with aboutOur sales efficiency has been enhanced by freeing up time for
74 percent of the population unbanked, which will requiresales and driving an industrialization approach. In addition, we
banking services as systematic framework and infrastructureare introducing a systematic sales approach (customer
improves.The retail sector is therefore unanimously viewed assegmentation and sales process) thereby increasing sales
the next big opportunity for Nigerian banks as itbrings asset andeffectiveness and customer satisfaction. It will also become a
deposit growth while diversifying risk and making balance sheetgood springboard for future growth in high values business
sustainable.We are implementing a clear retail banking strategysegments,especiallyintheretailsector.
in order to claim a leading position in the very big space.
We are committed to strengthening and developing the
2009 saw us making a remarkable progress towards establishingcapacity and competencies of our workforce, rewarding
Diamond Bank as the retail bank of choice in Nigeria.The retailperformance and creating a holistic employee-friendly work
16

segment of our business, comprising personal and Micro, Small supporting the growth of their businesses, thereby contributing
and Medium enterprises (MSMEs) customers,is really becoming toGDPgrowthandhigheremployment.
increasingly important to the Bank and Group. During last
quarter of 2008,we revised and re-packaged our whole range of We are conscious of the fact that pivotal to winning in the retail
savings products, taking the best features from a large number space is the delivery of excellent customer experience to
of products and incorporating them into our very popular prospective and existing clients consistently. We know that
SavingsXtra account. It offers the opportunity for everyone to ultimately, no matter how good our products and propositions,
bank with us with a minimum balance of only N5,000 and customers will only bank with us if we are able to satisfy their
quickly became customers' favorite banking product with over 1 needs and deliver consistent total quality service. In 2009,
million accounts in 2009. We also re-packaged our Diamond through an independent external partner, we carried out a wide
Kiddies account for youngsters and introduced a new higher ranging customer satisfaction survey, involving mystery
interest deposit account called Diamond HIDA where balances shopping at 150 branches, one-on-one discussions with
havegrowntoN5billioninonly6months. corporate clients and telephone interviews of over 3,000
business and personal customers. The result was an average
Barely one year after its launch into the Nigerian consumer satisfaction level of 71 percent, which was reasonable and
market, DiamondVisa Credit Card, the first naira denominated, placed us easily in the top quartile of banks in Nigeria.However,
real credit card in the country, recorded well over 250,000 we know that is not good enough and we must constantly strive
successful transactions valued at over N6 billion. Remarkably, for improvement. We will carry out similar surveys twice in
30 percent of all the transactions have been outside Nigeria, 2010 and will share the results with our shareholders in our
while 70 percent were for payments within the country. Our annual report.We are confident of delivering a higher satisfac-
credit card package remains unequalled in the country and we tion level in 2010 for it is only through the recognition of our
are planning further enhancements in 2010, including the shortcomings that we can improve. We seek to deliver market-
addition of more partners for our rewards scheme. Feedback beating customer experience whilst creating superior value
from customers remains very positive, based on convenience addition toourcustomers.
and reliability the same card can be used with confidence to
facilitate payment across this country as well as in all countries During the 8-month period,retail banking deposits increased by
aroundtheworld whereVisaCardisaccepted. 22 percent. The Bank was able to continue to attract retail
deposits due to our strong distribution network and deliberate
As we continued to look for creative solutions to help our focus on attracting a larger percentage of low cost deposits,
customers solve the challenges of managing small businesses, rather than more expensive term deposits.This resulted in retail
we launched a new proposition for Micro, Small and Small banking average weighted cost of funds falling from 6 percent to
Enterprises (MSMEs) in October 2009 which proved to be so under 4 percent. With the launch of our new Business Express
popular and successful that the number of customers had Account in December 2009, the really exciting part of retail
doubled by the end of the year. The proposition comprises deposit collections is still to come in 2010. By scrapping
modification to our Diamond BusinessXpress Account (DBXA), commissions on transactions for small business accounts and
recognizing that one size does not fit all. We therefore intro- replacing them with a fixed fee structure, we expect to see SME
duced 3 variants,all priced differently aimed at Starter,Growing customers concentrate their deposits with Diamond Bank in the
and Established businesses. Through this proposition, we year ahead.This, coupled with the recently launched consumer
significantly reduced the cost of banking for MSMEs, thereby finance products in vehicle asset finance, personal loans and
removingthebarrierstotheirbankingwithus. mortgages,bolstersouroutlookfor2010.
We also incorporated many added value features to DBXA Our increased focus on the retail sector does not translate into
entrepreneurs guide, inexpensive ownership of their own abandoning other business segments. We will continue to
website and most importantly, enterprise educational seminars consolidate our position in these segments by investing in the
which have been embraced enthusiastically by hundreds of our development of propositions and services that will continue to
customers.Our partnership with IFC was further enhanced with endear the Bank to the clients. This way, we will continually
the launch of an additional lending product for MSME custom- sharpen our arsenal of weapons to retain our competitive edge
ers and during a time when many banks stopped lending in the affected sectors. In topmost corporate sector, there are
altogether, we lent in excess of N3 billion to this vitally high growth segments that offer opportunity to profitably
important segment of the economy.We remain committed to expand the business notwithstanding that recent lending boom
delivering support and finance to deserving MSME customers, is now taking its toll as reflected in non-performing assets and
17

provisions. Lending to the sector has become slow as corporate the review of implementation of the Pension Reform by
governance standard increases and margin pressure is increas- partnering with the National Pension Commission so as to
ing due to high competition. We will focus on proactively alleviate the suffering of pensioners. To help combat poverty
identifying the growth segments of the corporate sector and and support agriculture development, the Bank spent over N3
becominganicheplayerinthem. million supporting the workshop titled “Boosting Nigerian
Agricultural Sector through Financing, Processing, Capacity
CorporateSocialResponsibility Building, Capital Equipment and Market Access” hosted by the
American Embassy in Nigeria and the Bank of Industry Ltd (BOI).
Our Group is committed to building a sustainable business that
LookingAheadis trusted for upholding high standards of corporate governance
and social responsibility. Thus, as part of our strategy in
encouraging healthy and quality living among Nigerians, we In its April 2010, the IMF revised 2010 global growth forecast
spent N15 million in sponsoring the 34th Annual upwards to 4.2 percent on account of the successes of theglobal
Congress/Scientific Conference of the Ophthalmological “rescue operations” for the financial system and the economy.
Society of Nigeria (OSN) held in Lagos in September 2009.We Nonetheless,there are still some challenges ahead,especially in
seized the opportunity of sponsoring the conference to respect of high unemployment in most economies; fears that
demonstrate our corporate responsibility drive in giving back to some countries may tighten their economies too quickly; and
the society and to lend our weight on the fight to reduce the the growth effect of dwindling external demand, foreign direct
rate of blindness among Nigerians and in the Sub-Saharan investmentandweakcrediton emergingeconomies.
African.
On the local scene, the upturn in the last two quarters of 2009
In a survey carried out by the Nigerian Federal Ministry of allows for considerable optimism about the nation's economic
Health, more than a million Nigerians are blind and more than growth in 2010, with a convergence of projections centering on
three million others are visually impaired. Overall, two out of 5 -7 percent growth for the year. Increase in crude oil price and
every three blind Nigerians are blind from causes which could be the Amnesty Program in the Niger Delta should continue to
avoided.The Bank is determined to help alleviate this problem.It impact positively on oil sector performance.There are however
is a way of showing the public that their welfare is of paramount concerns that could threaten this positive outlook and some of
importance to the Bank. It will be recalled that Diamond Bank these are:
was the sole sponsor of the Third Edition of the International
Council of Ophthalmology (ICO) hosted in Nigeria by the Eye ! The impact of credit squeeze heightened by the CBN's
Foundation Center in 2008. Between 1999 and 2005, Diamond intervention in the banking sector in 2009, which may be
Bank also sponsored the Annual Diamond Bank/Eye Expedition mitigated by the establishment of the proposed Asset
Hospital freeeyeexpeditionprogramme. Management Company and the continuous loosening of
monetarypolicies.
We also identified with Lagos State government in hosting the ! Another major area of concern is the way and manner the
Lagos Infrastructure forum on the need to improve sustainable CBN will address inflation concerns in the face of a loose
infrastructure such as Intermodal passenger transport, monetary policy, expansionary budget 2010, and 2011
Affordable housing,Waste management, Power Solutions, Lekki election-inducedspending.
free trade zones, etc. As part of our youth development
initiative, our Bank set up a resource centre within the Niger Nigeria's future banking growth is set to be driven not only by a
Delta University campus for the school community. The growth in national oil revenue but also through the growth of
resource centre consist of cybercafe, computerized library, the middle class and boom in personal lending, mortgages, and
viewing center and server room spending over N9 million in the credit cards.While the short-term outlook remains challenging,
process with an additional sum of N11.6 million for furniture we are confident of an improvement in the second half of 2010.
and additional work-stations. In the area of sports, the Bank In the longer term, government's public infrastructure invest-
partnered with Sande Sports & Entertainment Ltd to organize ment programme will gain momentum and it should be a
Best of Fans football tournament, which is a fusion of football catalystforgrowththroughouttheeconomy.
and entertainment to help galvanize the youths into more
fruitfulendeavours. We are actively re-calibrating and refining our businesses to
ensure that we are optimally positioned to benefit from the
The Bank spent over N5 million on the National Conference on economic recovery. The management team is committed to
18

optimizing the growth opportunities through the implementa- confident that we have the resilience and drive to thrive in the
tion of initiatives that drive revenue growth while minimizing long term, notwithstanding that there will always be chal-
costandrisks. lenges.
Finally, on behalf of the Management and staff of the entireConclusion
Diamond Bank Group, I wish to thank all our customers and
shareholders for their understanding, patronage and commit-2009 was a tumultuous year for the Nigerian banking industry
ment.Your unwavering support has helped us to negotiate theand consequently, the competitive landscape is changing
bend successfully and maintain our strategic momentum infundamentally with the regulatory framework being radically
2010.altered. Our challenge is to ensure we remain focused on
returning to acceptable level of profitability very quickly and
Thankyouforyourattention.continue to deliver on a consistent basis by leveraging on
strategic opportunities in the medium term towards elevating
the Bank to the desired industry leadership position. We are
committedtoachievingthesegoals.
Our strategy is simple and its concepts are well tested in the
EmekaOnwukabanking and other industries. The successful execution of our
Group Managing Director/Chief ExecutiveOfficerstrategies at both short and medium term horizons should
position us for high and sustainable performance.We are also
19

20
e conducted the appraisal of the Board of Directors (“the Board”) of Diamond Bank Plc (“the Bank”) for the period
ended 31 December, 2009 in accordance with the standards set by the Central Bank of Nigeria (CBN) Code of
WCorporateGovernance for Banks in NigeriaPostConsolidation (“theCBNCode”).
Corporate governance is the system by which business corporations are directed and controlled to enhance performance and
long-termshareholdervalue.
We reviewed the Bank’s corporate governance report included on pages 31 to 45 of theAnnual Report for the period ended 31
December2009,aspreparedbytheBoard,andassessedthelevelofcomplianceoftheBoardwiththeCBNCode.
The principal recommendations from our appraisal of the Board of the Bank, in accordance with the CBN Code, were in the
followingareas:Directors’remunerationandtheappointmentofindependentDirectors.
However, subsequent to 31 December 2009, the Board has appointed two (2) independent Non-executive Directors, subject
totheapprovaloftheCBNandtheratificationoftheshareholders.
DimejiSalaudeen
Partner,KPMGProfessionalServices
Lagos,Nigeria
12May2010
Report of External Consultant
on the Board Appraisal

Report of Audit Committee
n accordance with the provisions of Section 359 (6) of the companies and Allied Matters Act, Cap.C20 Laws of the
Federation of Nigeria,2004,we the Members of theAuditCommittee of the Board of Directors of Diamond Bank Plc,having
Icarriedout our statutory functions under theAct with the co-operation of management and staff,hereby report that :
1. The accounting and reporting policies of the Bank andGroup are in accordance with legal requirements and agreed ethical
practices;
2. The scope and planning of both the external and internal audit programmes for the period ended 31 December,2009 were
satisfactory and reinforce theGroup's internal control system;
3. Having reviewed the external auditor's findings and recommendations on the management matters,we are satisfied with
the management responses thereon.
In addition to the foregoing,we have complied with the provisions of theCentral Bank of NigeriaCircular BSD/1/2006 dated 18
February,2004 on“Disclosure of the insider- related credits in the financial statements of banks”,and thereby confirm that an
aggregate amount of N2.3billion was outstanding as at 31 December,2009.
Nnamdi Nwakwesi
Chairman,AuditCommittee
12April,2010
Members of theAuditCommittee are:
Mr Nnamdi Nwakwesi Chairman
Lt.Gen J.T Useni (RTD) Member
Dr.Olubola Hassan Member
MrChrisOgbechie Member
Sir Enoch Iwueze Member
MrKabirAlkali Mohammed (mni) Member
In attendance
Nkechi Nwosu Secretary
21

Board Of Directors
22
8. Dr. Olubola Adekunle Hassan - Director
9. Lieutenant General Jeremaih Timbut Useni (RTD) - Director
10. AVM Ishaya Aboi Shekarri (RTD) - Director (Resigned w.e.f.1st Oct.2009)
11. Chris Ogbechie - Director
12. Chief John Edozien - Director
13. Dr Nkosana Moyo - Director - Director (Resigned w.e.f.24th Sept.2009)
14. Mr Simon Harford - Director
1. HRM Igwe Nnaemeka Alfred Ugochukwu Achebe - Chairman
2. Emeka Onwuka - Group Managing Director/CEO
3. Ohis Ohiwerei - Executive Director - Chief Financial Officer
4. U.K. Eke - Executive Director - Regional Businesses,Lagos/West
5. Uzoma Dozie - Executive Director - Corporate Banking
6. Oladele Akinyemi - Executive Director - Customer Services &Technology
7. Mazi Clement I. Owunna - Director
1
32
4 5 6
7
8
9 10 11
12 13
14

ManagementTeam
23
EMEKA ONWUKA GROUP MANAGING DIRECTOR/CEO
UZOMA DOZIE EXECUTIVE DIRECTOR - CORPORATE BANKING
UK EKE EXECUTIVE DIRECTOR- REGIONAL BUSINESSES, LAGOS/WEST
OLADELE AKINYEMI EXECUTIVE DIRECTOR - CUSTOMER SERVICES AND TECHNOLOGY
GARRY MARSH SENIOR ADVISER, RETAIL BANKING
AKIN PEARCE HEAD, RISK MANAGEMENT & CONTROL
NKECHI NWOSU COMPANY SECRETARY/LEGAL ADVISER
VICTOR EZENWOKO HEAD, REGIONAL BUSINESSES, UPCOUNTRY
JOHN AYUBA REGIONAL MANAGER-ABUJA
EUNICE WILLIAMS HEAD PUBLIC SECTOR
HUMPHREY AKACHUKWU HEAD, COMPLIANCE AND AUDIT
MILLICENT NWAOGU DIV. HEAD, INSTITUTIONAL BANKING
PREMIER OIWOH HEAD, BANKWIDE CUSTOMER SERVICES
CHIOMA NWABUOKU HEAD, GROUP-WIDE HUMAN CAPITAL MANAGEMENT
OBINNA URUAKPA REGIONAL MANAGER-SOUTH SOUTH
CHRIS OFIKULU REGIONAL MANAGER-VICTORIA ISLAND
REGINALD AKUJOBI-ROBERTS HEAD, GENERAL INTERNAL SERVICES
CHARLES NKATA REGIONAL MANAGER-SOUTH EAST
CHIZOMA OKOLI REGIONAL MANAGER-APAPA
YOMI OLORUNGBEJA HEAD, STRATEGIC PLANNING & RESEARCH GROUP
ANYA DUROHA DIV. HEAD, SPECIALIZED INDUSTRIES
AGNES FASEHUN REGIONAL MANAGER-WEST
BENSON ORAELOSI DIVISIONAL HEAD, REMEDIAL ASSETS
ABIYE KOKO HEAD, IT SERVICES
EMEKA OKERE GROUP HEAD, REMEDIAL ASSETS, NORTH
CHIUGO NDUBUISI HEAD, FINANCIAL MANAGEMENT DIVISION
DONALD NOSIRI HEAD, HUMAN CAPITAL MANAGEMENT
CHIDINMA LAWANSON HEAD, MSME PROPOSITION
BEN OBUEKWE REGIONAL MANAGER-NORTH CENTRAL
CHINEDU OKORO REGIONAL MANAGER-EAST CENTRAL
FOLORUNSHO ODOM BUSINESS MANAGER, GARKI ABUJA, MOHAMMED BUHARI WAY
MAGNUS NNOKA HEAD,CREDIT RISK MANAGEMENT

ManagementTeam
24
JUDE ANELE WORK STREAM LEADER,SALES OPTIMIZATION
ADEGBOYEGA ADEBAJO INVESTMENT BANKING
CHINEDU EKEOCHA OPERATIONS OPTIMIZATION -WORK STREAM LEADER 3
PAUL OKOROAFOR HEAD,CREDIT ANALYSIS AND PROCESSING
LANRE SHOWUNMI HEAD, BUSINESS TRANSFORMATION GROUP
ANGELA OKONMAH GROUP HEAD - PRODUCT & RETAIL BRAND SERVICES
MAUREEN OFFOR REGIONAL MANAGER-IKEJA
SAM ANEKE HEAD, PUBLIC SECTOR (COLLECTIONS GROUP)
BEN IHEKIRE MANAGING DIRECTOR, DIAMOND BANK BENIN REPUBLIC
TONY ONWU MANAGING , DIAMOND CAPITAL & FINANCIAL MARKETS
EMEKA OSUJI MANAGING DIRECTOR, DIAMOND PFC
CHIOMA SIDESO MANAGING DIRECTOR,ADIC INSURANCE
SUBSIDIARIES
DIRECTOR

Directors' report
Compliance with Code of Corporate Governance
Directors' responsibility and approval
Auditors' report
Statement of significant accounting policies
Profit and loss accounts
Balance sheets
Cash flow statements
Notes to the financial statements
Statement of value added
Five-year financial summary
25

The directors present their annual report on the affairs of Diamond Bank Plc (“the Bank”) and its subsidiaries ("theGroup"),together with the
financialstatementsandauditors'reportfortheeightmonthsended31December,2009.
a. LegalForm
The Bank was incorporated in Nigeria under the Companies and Allied Matters Act 1990 as a private limited liability company on 20
December 1990.It was granted license on the 15 March 1991 to carry on the business of commercial banking and commenced business
on 21 March 1991.The Bank converted into a Public Limited LiabilityCompany on 28 February 2005.The Bank's shares were listed on 27
May2005ontheflooroftheNigerianStockExchangebywayofintroduction.
b. PrincipalActivityandBusinessReview
The principal activity of the Group continues to be the provision of banking and other financial services to corporate and individual
customers. Suchservicesincludegrantingofloansandadvances,corporatefinanceandmoneymarketactivities.
The Bank has seven operating subsidiaries including Diamond Bank Benin S.A (95.38%),DiamondCapital and Financial Markets Limited
(DCL) (100%), Diamond Pension Fund Custodian Limited (100%), Diamond Mortgages Limited (100%) and ADIC Insurance Limited
(95%).TheBank'sconsolidatedfinancialstatementsincludetheresultsofalloperatingsubsidiaries.
The indirectly wholly owned subsidiaries (via DCL) are Diamond Securities Limited (DSL) and Diamond Registrars Limited (DRL).DSL has
awhollyownedsubsidiary-DBLSInsuranceBrokersLimited.
c. OperatingResults
GrossearningsoftheGroupreducedbyN41.2billionandprofitbeforetaxreducedbyN18.3billion.
HighlightsoftheGroup'soperatingresultsfortheperiodunderreviewareasfollows:
8monthsto 12monthsto
Dec.'2009 Apr.'2009
N'000 N'000
Grossearnings 67,735,694 108,979,476
Profitbeforetaxation (12,374,154) 5,901,951
Taxation 4,199,741 (730,195)
Profitaftertaxation (8,174,413) 5,171,756
Non-controllinginterest 32,402 (27,637)
Profitattributabletogroupshareholders (8,142,011) 5,144,119
Appropriations:
Transfertostatutoryreserves - 1,052,017
TransfertoSMEreserves - 342,556
Bonusissue - -
Transfertocontingencyreserve 70,365 75,339
Transfertoretainedearningsreserve (8,212,376) 3,670,207
(8,142,011) 5,144,119
Directors' Report
For period ended 31 December 2009
26

d. Directorsandtheirinterests
The direct and indirect interests of directors in the issued share capital of the Bank as recorded in the register of directors shareholding
and/or as notified by the directors for the purposes of sections 275 and 276 of the Companies and Allied Matters Act and the listing
requirementsoftheNigerianStockExchangeisnoted:
DirectShareholding IndirectShareholding
Dec2009 April2009 Dec2009 April2009
HRMIgweNnaemekaAlfredAchebe(Chairman) 3,547,637 3,547,637 - -
Mr.EmekaOnwuka (Managing) 20,000,000 30,484,873 - -
Mr.OhisOhiwerei (Executive) 16,445,952 20,294,783 - -
Mr.UrumKaluEke(Executive) 3,422,311 14,954,006 - -
Mr.UzomaDozie (Executive) 20,630,610 21,719,491 735,627,169 735,627,169
Mr.OladeleAkinyemi(Executive) 8,503,293 3,439,426 -
MaziClementOwunnaMFR 33,000 33,000 267,412,498 269,212,498
Mr.ChrisOgbechie 10,163,959 12,933,959 -
Lt.GeneralJeremiahTimbutUseni(Rtd) 6,672,306 6,672,306 176,720,019 176,865,355
AVMIshayaAboiShekarri(Rtd),OON (Resigned-01/10/09) 71,669,961 71,669,961 174,495,514 174,495,514
Dr.OlubolaAdekunleHassan 6,601,500 5,101,500 - -
Mr.SimonHarford - - - 1,975,935,789
Dr.NkosanaMoyo(Resigned-25/9/09) - - - 1,975,935,789
ChiefJohnD.Edozien 4,614,700 2,165,000 - 2,449,700
In line with the provisions of the Articles of Association the directors to retire by rotation are Mazi Clement Owunna and Chief John D.
Edozienwhobeingeligibleforre-electionofferthemselvesforre-election.
e. Directorsinterestsincontracts
For the purpose of section 277 of theCompanies andAllied MattersAct 1990,except as stated herein none of the directors had direct or
indirectinterestincontractsorproposedcontractswiththecompanyduringtheyear.
f. Property,PlantandEquipment
Information relating to changes in property, plant and equipment is given in Note 25 to the financial statements. In directors' opinion,
themarketvalueoftheGroup'spropertiesisnotlessthanthevalueshowninthefinancialstatements.
Number of
50k Ordinary
Shares Held
Number of
50k Ordinary
Shares Held
Number of
50k Ordinary
Shares Held
Number of
50k Ordinary
Shares Held
Directors' Report
27

g. ShareholdingAnalysis
The shareholding pattern of the Bank as at 31 December 2009 is as stated below:
ShareRange No.Of Percentageof No.of Percentage
Shareholders Shareholders(%) Holdings Holdings
1 -10,000 94,686 75.38 209,891,025 1.45
10,001 - 50,000 20,288 16.15 389,384,040 2.69
50,001 - 100,000 5,801 4.62 361,829,341 2.50
100,001 - 500,000 3,869 3.08 707,839,388 4.89
500,001 - 1,000,000 383 0.30 254,764,279 1.79
1,000,001-5,000,000 385 0.31 770,193,572 5.32
5,000,001-10,000,000 80 0.06 559,360,218 3.86
10,000,001-50,000,000 88 0.07 2,031,183,738 14.03
50,000,001-100,000,000 16 0.01 1,033,939,089 7.14
100,000,001-500,000,000 17 0.01 2,859,314,959 19.75
500,000,001-1,000,000,000 3 0.00 1,693,022,644 11.70
1,000,000,001-10,000,000,000 2 0.00 3,604,520,813 24.90
TOTAL 125,618 14,475,243,105 100.00
Actis DB Holdings Limited holds 14.79% of the Bank's ordinary shares while the balance is held by other individual and institutional
investors.
h. Substantialinterestinshares
According to the register of members as at 31 December 2009,no shareholder held more than 5% of the issued share capital of the Bank
exceptthefollowing:
PercentageOf
Shareholder Numberofsharesheld Shareholding(%)
ActisDBHoldingsLimited 2,140,888,455 14.79%
i. ShareCapitalHistory
YEAR AUTHORISEDSHARECAPITAL(?) TOTALNUMBEROFSHARES
1991 25,000,000 25,000,000
1991 50,000,000 50,000,000
1992 100,000,000 100,000,000
1993 200,000,000 200,000,000
1996 500,000,000 500,000,000
1997 1,000,000,000 1,000,000,000
2002 2,000,000,000 2,000,000,000
2004 3,500,000,000 7,000,000,000
2005 5,000,000,000 10,000,000,000
2007 7,000,000,000 14,000,000,000
2008 10,000,000,000 20,000,000,000
J. CharitableContributions
The Bank made contributions to charitable and non-political organizations amounting to N89 million (Apr.2009:N325 million) during
theperiod.
Directors' Report
28

k. PostBalanceSheetEvents
Therewerenosignificanteventsafterthebalancesheetdate.
l. HumanResources
EmploymentofDisabledPersons
The Bank operates a non-discriminatory policy on recruitment.Applications by disabled persons are always fully considered, bearing in
mind the respective aptitudes and abilities of the applicants concerned.In the event of members of staff becoming disabled,every effort
is made to ensure that their employment with the Bank continues and that appropriate training is provided. It is the policy of the Bank
that the training, career development and promotion of disabled persons should as far as possible, be identical with those of other
employees.
Health,SafetyandWelfareatWork
The Bank enforces strict health and safety rules and practice at the work environment,which are reviewed and tested regularly.The Bank
retainstop-classprivatehospitalswheremedicalfacilitiesareprovidedforstaffandtheirimmediatefamiliesattheBank'sexpense.
Firepreventionandfire-fightingequipmentareinstalledinstrategiclocationswithintheBank'spremises.
The Bank operates both aGroup PersonalAccident and theWorkmen'sCompensation Insurance covers for the benefit of its employees.
ItalsooperatesacontributorypensionplaninlinewiththePensionReformAct2004,foritsemployees
m. EmployeeInvolvementandTraining
The Bank places considerable value on the involvement of its employees and has continued its practice of keeping them informed on
matters affecting them as employees and the various factors affecting the performance of the Bank.This is achieved through regular
meetingsbetweenmanagementandstaff.
In accordance with the Bank's policy of continuous development, training facilities are provided in the Bank's well-equipped Training
School. In addition, employees of the Bank nominated to attend both locally and internationally organized courses. These are
complementedbyon-the-jobtraining.
n. Auditors
PricewaterhouseCoopers have indicated their willingness to continue in office in accordance with Section 357 (2) of theCompanies and
Allied Matters Act. A resolution will be proposed at the Annual General Meeting to authorize the directors to determine their
remuneration.
BYORDEROFTHEBOARD
NkechiNwosu
CompanySecretary
Plot1261,AdeolaHopewellStreet
VictoriaIsland
Lagos
15April2010
Directors' Report
29

ResponsibilityforAnnualFinancialStatements
The Companies and Allied Matters Act and the Banks and Other Financial Institutions Act 1991, require the directors to prepare financial
statements for each financial period that give a true and fair view of the state of financial affairs of the Bank at the end of the period and of its
profitorloss. TheresponsibilitiesincludeensuringthattheBank:
i. keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Bank and comply with the
requirements of theCompanies andAllied MattersAct and the Banks andOther Financial InstitutionsAct 1991;
ii. establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and other irregularities;and
iii. prepares its financial statements using suitable accounting policies supported by reasonable and prudent judgments and
estimates,thatareconsistentlyapplied.
The directors accept responsibility for the annual financial statements, which have been prepared using appropriate accounting policies
supportedbyreasonableandprudentjudgmentsandestimates,inconformitywith,
- NigerianAccountingStandards;
- PrudentialGuidelinesforLicensedBank;
- relevantcircularsissuedbytheCentralBankofNigeria;
- therequirementsoftheBanksandOtherFinancialInstitutionsActof1991;and
- therequirementsoftheCompaniesandAlliedMattersAct.
The directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the Bank and its
subsidiary operations and of their profit for the period. The directors further accept responsibility for the maintenance of accounting records
thatmayberelieduponinthepreparationoffinancialstatements,aswellasadequatesystemsofinternalfinancialcontrol.
Nothing has come to the attention of the directors to indicate that the Bank will not remain a going concern for at least twelve months from
thedateofapprovalofthefinancialstatements.
__________________________________________ __________________________________
EmekaOnwuka UzomaDozie
ManagingDirector ExecutiveDirector
Statement of Directors’ Responsibilities
30

iamond Bank Plc was conceived with the vision of creating a“strong financial services institution with effective presence in Nigeria,
Africa and indeed all the key financial centres of the world.” We are pleased to state that over the years, as our vision has been
Dfulfilledwehavenotlostsightofourcorevaluesofintegrity,excellence,customerandstakeholdersatisfaction.
Diamond Bank is managed in compliance with the Code of Corporate Governance for Banks in Nigeria Post Consolidation (“the CBN Code”)
and theCode ofCorporateGovernance in Nigeria.In addition,the Bank also endeavours to as closely as possible adhere to International Best
Practices. Further to this, the Bank and the Diamond Bank Group have adopted a Corporate Governance Framework established on the
following principles: (1) Discipline; (2) Transparency: (3) Independence; (4) Accountability; (5) Responsibility; (6) Fairness; and (7) Social
Responsibility.
In accordance with the requirements of the relevant Corporate Governance Codes, the position of Chairman and Managing Director/Chief
Executive Officer are held by different persons, the number of non-executive directors exceeds that of the executive directors, and the
ChairmanoftheBoarddoesnotserveonanyotherCommittees.
THEBOARD
The Board has the key responsibility for corporate governance and is responsible for the review and update of the Corporate Governance
Framework. Members of the Board are required to uphold good corporate governance practices when performing their fiduciary duties and
responsibilities.
The primary mission of the Board is to effectively represent and promote interest of shareholders and relevant stakeholders by adding value
totheCompany'sperformance.TheBoardofDirectorsofDiamondBankPlcisconstitutedbytheunder-listedpersons:
HRMIgweNnaemekaAlfredUgochukwuAchebe,CFR,MNI,TheObiofOnitsha-Chairman
HRM Nnaemeka Achebe is a Chemistry graduate of the Stanford University, California USA. He holds Masters in Business Administration
(MBA) fromColumbia University,NewYork amongst others.He is presently the traditional ruler (Obi) ofOnitsha,Anambra State.During the
extensive period of his career in the Shell companies (both local and international), he held several top level managerial positions before he
was appointed Executive Director at Shell Petroleum Development Company in 1988, a position he held till 1996 when he was appointed
SeniorCorporateAdviser,ShellInternationalCo.Limited,London.
He has held directorship positions in many multinationals and reputable organizations and is a patron of the MTN Foundation.In 2004,Igwe
Achebe was honoured by the Federal Government of Nigeria with a national merit award,Commander of the order of the Federal Republic
(CFR).He belongs to a number of international professional bodies such as the Nigeria Economic Society and theAcademy of Management,
USA.
MaziClementI.OwunnaMFR-Non-ExecutiveDirector
An accomplished pharmacist and businessman, Mazi Owunna is a graduate of the Drake College of Pharmacy, Iowa, United States. He is a
pioneer director of Diamond Bank.MaziOwunna is theChairman of several successful companies spanning pharmaceuticals,manufacturing,
commerce,real estate,food and chemicals.He is also a Fellow of the Nigerian Institute of Management.MaziOwunna has been a Director of
the Bank since 2000.
Dr.OlubolaAdekunleHassan,M.B,B.S,D.O,FRCS,FRCOPH,FWACS-Non-ExecutiveDirector
Dr. Hassan holds a Bachelor of Medicine, Bachelor of Surgery, M.BB.S and Diploma in Ophthalmology among other qualifications. He is the
ChiefConsultantOphthalmic Surgeon and Medical Director,Eye Foundation Hospital,Lagos and also acts as a consultant ophthalmologist to
a number of local and foreign hospitals.He has sixteen academic distinctions and awards and belongs to a host of professional and academic
bodies locally and internationally.Dr.Hassan joined the Board of Diamond Bank Plc in 2005.
31

LieutenantGeneralJeremiahTimbutUseni(Rtd)DSS,PSC,MNI-Non-ExecutiveDirector
Lt. General Useni (Rtd) is a graduate of the Indian Military Academy and holds a Diploma in Advance Military Transportation from the US
Army.He passed through notable institutions including the BritishArmyApprenticesCollege,Chepstow andCommand and StaffCollege,Jaji.
He is a fellow of the following institutions: the Nigerian Institute of Management (FNIM), the Chartered Institute of Transport (UK and
Nigeria) and the NationalWarCollege (FNWC).During his many years of meritorious service in the NigerianArmy,Lt.Gen Useni held various
top military and political appointments including Director of Supply and Transport, Director of Ordinance Services and Quartermaster
General of the Nigerian Army. He was Chairman of the National Railway Corporation, Military Governor of the former Bendel State, and
Minister of the Federal CapitalTerritory. He received many Military decorations including Forces Service Star, Long Service Medal, Defence
Medal,and Independence Medal.As a nationalist LtGen Useni is bestowed with twelve (12) chieftaincy/traditional titles from various states
of federation most notably the Sardauna of Plateau and Nasarawa States.He is currently theChairman of theArewaConsultative Forum. Lt.
Gen.Useni was appointed as a director of Diamond Bank in 2005
ChrisIkeOgbechie -Non-ExecutiveDirector
ChrisOgbechie has a FirstClass Honours degree in Mechanical Engineering from Manchester University and MBA from Manchester Business
School. He has wide experience in marketing and strategy derived from his work as head of marketing/sales at Nestle Nigeria., Xerox and
from his consulting work with Nigerian firms over the years.While in Nestle he had wide international exposure in Malaysia, Singapore and
Switzerland.He has been involved with several start-ups and is on the board of several companies.Mr.Ogbechie is a faculty staff of the Lagos
Business School,where he teaches Strategy andCorporateGovernance.Mr.Ogbechie has been a director of Diamond Bank since 2005.
SimonHarford-Non-ExecutiveDirector
Simon Harford holds an MBA from INSEAD, Fountainebleau, France and a BA (Hons) in Philosophy, Politics and Economics from Oxford
University, UK. Prior to joining Actis as Head of Actis,West Africa, Simon was with theVirgin Group and was the Chief Executive Officer of
Virgin Nigeria,after having held a number of senior management positions in various organizations.Mr.Harford is currently the Head ofActis
Africa and SouthAmerica.He has been a director of Diamond Bank since 2007.
ChiefJohnD.Edozien-Non-ExecutiveDirector
Chief Edozien holds a B.Sc. (Hons) (Econs.) from the University of Ibadan and an M.A. Economics from the University ofWisconsin.As aCivil
Servant, he rose to the position of Permanent Secretary of the Cabinet Office in 1987 and National Planning,Office of Planning and Budget
both in The Presidency. Chief Edozien served as Deputy Governor of Bendel state and later Delta State. He was the Group Managing
Director/CEO ofAfribank Nigeria Plc as well asChairman ofAfribank International Limited (Merchant Bankers) from 1993 to 1999.He is the
chairman of a number of Nigerian companies such as Jenkyns Consult Nigeria Limited and Mercedes BenzAutomobile Services Limited. He
also holds other directorate positions in several companies.Chief John D.Edozien became a director of Diamond Bank in 2008.
EmekaOnwuka-ManagingDirector/ChiefExecutiveOfficer
Prior to joining Diamond Bank, Emeka worked with Arthur Andersen and Co., where he was exposed to both local and offshore training in
accounting and management consulting for the finance as well as oil and gas industries. Emeka joined the Bank in 1992, and has worked in
the key areas of corporate and investment banking, branch banking, treasury and commercial banking, among others. He was Head of the
Bank'sCommercial Banking Division before his appointment as the Managing Director in 2005.
U.K.Eke-ExecutiveDirector,BusinessBanking,Lagos&West
Mr. Eke started his working career with Deloitte Haskins Sells International in 1985, and majored as an accounting professional with
specialisation in audit, taxation and management consulting. In 1992, he joined Diamond Bank after a year's stint atAbacus Merchant Bank
Ltd. He has attended various business, leadership and professional courses both in Nigeria and overseas. He was the Bank's Head of
Commercial Banking Division (Lagos/West) prior to his appointment as Executive Director (Commercial Banking) in 2005.
OhisOhiwerei-ExecutiveDirector/ChiefFinancialOfficer
Mr. Ohiwerei began his banking career in Guaranty Trust Bank Plc where he worked in Credit, Marketing and Treasury units. He moved to
32

Ecobank in 1998 asTreasurer and in February 2000,joined Diamond Bank as Head of theTreasury Unit.His experience spans over 15 years in
all the key areas of banking, much of this dominated by his stint in the area of treasury management. He was the Bank's Chief Financial
Officer (CFO) before he was appointed Executive Director of the Bank/CFO. Mr.Ohiwerei has recently proceeded on terminal leave prior to
hisresignationfromtheBoardoftheBank.
UzomaDozie-ExecutiveDirector,CorporateBanking
Mr. Dozie's banking career started in the Commercial Banking unit ofGuarantyTrust Bank Plc. He later moved toCitizens International Bank
Limited where he was a part of the Oil and Gas Division. 1n 1998, he joined the Bank as Head of the Oil & Gas Unit. He was appointed as
Executive Director in 2005.
OladeleAkinyemi-ExecutiveDirector,CustomerServicesandTechnology
Mr. Akinyemi first joined Diamond Bank from erstwhile Lead Merchant Bank in 1991 as head of Systems Unit. He later headed the
Commercial & Consumer Banking and the Retail Banking units of the Bank before leaving for UBA in 1997. He left UBA to become an
Executive Director of One-to-One Nigeria Limited and whilst there, he built the first database marketing service company in Nigeria and
pioneered List Rental business in Nigeria.He then joinedCitibank Nigeria in 1999 as Head ofCards,Cash Management and e-SolutionsGroup.
He rejoined Diamond Bank in 2002 as Head of the InformationTechnologyGroup.He was appointed to the Board in 2006.
TRAININGANDEVALUATION:
Diamond Bank has always placed emphasis on the performance of the Board as a whole as well as on the performance of individual members
in relation to their contributions to the Board and the Bank. Evaluation of the Executive Directors is carried out by the Governance and
PersonnelCommittee which is comprised entirely of Non-Executive Directors while the evaluation of the Non Executive Directors is done by
externalconsultants.
In order to further develop the skill levels of the Board,members attend courses and training programmes suited to enhancing their functions.
If the situation necessitates it, the directors are entitled to seek independent professional advice on matters for which they require
clarification.
FUNCTIONSOFTHEBOARD:
The Board meets regularly (at least once every quarter) to perform its stewardship and oversight functions,primary among which are:
o Determination of the Diamond Bank Group's purpose and values, the strategy to achieve its purpose and to ensure that its values and
strategyareimplemented.
o Evaluation of present and future strengths, weaknesses and opportunities of the Bank. Comparisons with competitors, locally and
internationally,andbestpracticeareImportantelementsofthisprocess.
o ReviewandapprovaloftheBank'sfinancialobjectives,plansandactionsandsignificantallocationandexpenditure.
o Approvaloftheannualbudget;
o Approvaloftheannualandhalf-yearlyfinancialstatements,annualreportandreportstoshareholders;
o Considerationandwhereappropriate,declarationorrecommendationofthepaymentofdividends.
o ReviewingtheBank'sauditrequirements.
o Reviewingtheperformanceof,necessityfor,andcompositionofBoardCommittees.
o ApprovaloftheremunerationoftheChairman,Non-ExecutiveDirectorsandManagement
o Reviewingriskmanagementpoliciesandcontrols,includingcompliancewithlegalandregulatoryrequirements.
o ReviewingtheBank'scodeofconductandethicalstandards.
o Reviewingshareholderandclientrelationships.
The Board also performs certain of its functions through BoardCommittees and ManagementCommittees.The delegation of these functions
doesnotinanywaymitigateordissipatethedischargebymembersoftheirdutiesandresponsibilities.
33

BOARDCOMMITTEES
The BoardGovernance and PersonnelCommittee:The Governance and Personnel Committee is made up entirely of non executive
directors. As the name suggests, this Committee is responsible for the overall governance and personnel function of the Board. Some
functions of the Committee are as follows: To consider and make recommendations to the Board on its composition and that of the
Committees and Subsidiaries; Review and recommend nomination of directors to the Board based on a proper selection process; Ensure
adequate succession planning for Board of Directors and Chief Executive Officer; Ensure the orientation and continuous education of
Directors; Monitor the procedures established for compliance with regulatory requirements for related party transactions; Monitor staff
compliance with the Code of Ethics and Business Conduct of the Bank; Ensure compliance with regulatory standards of Corporate
Governance and regularly identify international Best Practices of Corporate Governance and close any identified gaps; Recruitment or
promotion staff toAssistantGeneral Manager level and above and to approval of the remuneration,benefits and other terms and conditions
of the service contracts of such officers; Recommend to the Board the terms and conditions of the service contract, including remuneration
packages of the Executive Directors with a view to ensuring that these officers are fairly rewarded for their effort;Review cases of infractions
of the Bank's policies committed by staff of Assistant General Manager level and above and apply appropriate sanctions where necessary;
Review and approval of policies on staff welfare and fringe benefits;Annual review of the BoardCharter;and Ensuring the annual review of the
Board and BoardCommittees' performance.
Members of the Board Governance and Personnel Committee are: Chief John D. Edozien (Chairman), Mazi Clement Owunna, Mr. Chris
OgbechieandMr.SimonHarford
The Board Audit and Risk Management Committee: The Board Audit and Risk Management Committee comprises non-executive
directors and executive directors. The functions of this Committee include: Understanding the principal risks to achieving the Group's
strategy; Establishing the Bank's risk appetite and ensuring that the business profile and plans are consistent with the risk appetite;Establish
and communicate the risk management framework including responsibilities, authorities and key controls; Establishing key control
processes and practices, including limit structures, impairment, allowance criteria and reporting requirements; Monitoring the operation of
the controls and adherence to risk direction and limits; Interpret and report on risk exposures, concentrations and risk- taking outcomes as
well as on sensitivities and key risk indicators;Reviewing and challenging all aspects of theGroup's risk profile;Review the financial reporting
process with a view to ensuring the company's compliance with accounting and reporting standards, other financial matters and the
applicablelawsandregulations;andReviewingandchallengingriskmanagementprocesses.
Members of the BoardAudit and Risk ManagementCommittee are:Mr.Simon Harford (Chairman),Chief John D.Edozien,Lt.Gen.JeremiahT.
Useni (rtd),Dr.Olubola Hassan,Mr.EmekaOnwuka,Mr.U.K.Eke and Mr.Uzoma Dozie.
The BoardCreditCommittee:The CreditCommittee is made up of non-executive and executive directors.The primary function of this
Committee is to consider all matters pertaining to the granting of credits by the Bank in accordance with approved policies and approval of
credits in excess of the limits delegated to the ManagementCreditCommittee,significant revisions to credit policies,and establish portfolio
distribution guidelines in conformity with government regulations.In achieving this objective,theCommittee ensures that the overall credit
policies are aligned with the Bank's RiskTolerance level.In addition, theCommittee performs the following functions: Reviewing the policies
and methodologies for assessing the Bank's credit risks and recommending appropriate exposure limits; and Reviewing large exposures and
impairedassets.
Members of the BoardCreditCommittee are:MaziClementOwunna (Chairman),Mr.ChrisOgbechie,Mr.Simon Harford,Mr.EmekaOnwuka,
Mr.UzomaDozieandMr.OladeleAkinyemi.
Audit Committee:This Committee is established in accordance with the provisions of section 359(3) to (6) of the Companies and Allied
MattersAct and in compliance with the provisions of the CBN Code of Corporate Governance for Banks Post Consolidation.The Committee
consists of three shareholder representatives and three non-executive directors. The Chairman of the Committee is a shareholder and a
CharteredAccountant.All members of the Committee are independent of the Bank's management.The Committee's primary functions are,
to review and ensure the effectiveness of accounting systems and internal controls; review the scope and planning of audit requirements;
make recommendations to the Board regarding the appointment,removal and remuneration of the external auditors;and to ensure that the
accountingpoliciesoftheBankareinaccordancewithlegalrequirementsandagreedethicalprinciples.
Members of the statutory Audit Committee are Mr. Nnamdi Nwakwesi (Chairman) - Shareholder, Mr. Kabir Alkali Mohammed mni -
Shareholder,Sir Enoch Iwueze - Shareholder,Lt.Gen.JeremiahT.Useni (rtd),Dr.Olubola Hassan and Mr.ChrisOgbechie.
34

MANAGEMENTCOMMITTEES
Assets and Liabilities Committee (ALCO): The primary functions of this Committee are the creation of a balance sheet structure to
allocate sources and utilization of funds in a manner that it improves the Bank's financial performance; maximizing the value of capital
overtime whilst controlling risk exposures; and managing the Bank's liquidity with respect to the composition of portfolio of liquid assets,
controlofcashflow,controlofshort-termborrowingcapacity,monitoringofundrawncommitments,andcontingencyfundingplans.
ManagementCreditCommittee (MCC): Primarily, the Management Credit Committee approves credits in line with the Bank's credit
policy. All credits exceeding the approval limit of the MCC are recommended to the Board Credit Committee for approval.The MCC also
regularly assesses the Bank's risk asset portfolio to determine the optimum mix;the amount of exposures per customer and related group of
customers;and approves the limits of inter bank placements.The MCC meets regularly to review watch-listed/non-performing accounts and
approvespecificprovisionstobemadeonnon-performingaccounts.
Personnel Management Committee(PMC): The Personnel Management Committee reviews and makes recommendations on
policies regarding Manpower Planning andCareer Development; recruitment, selection and training of staff; performance management and
staff appraisal;compensation,staff welfare and benefits schemes;Staff Movement andAudit;moderation of staff appraisal exercises and the
implementation of the existing staff personnel policies and guidelines. The PMC reviews cases of infraction on the Bank's policies and
procedures and applies adequate sanctions where necessary.
Risk Management Committee (RMC): Diamond Bank's Group Risk Management Committee shall have oversight and responsibilities
for all risk except credit, market and liquidity risks.Risk within the purview of the committee will include,but not be limited to,the following:
Operational Risk; Strategic Risk;Accounting andTaxation Risk; Legal Risk;Compliance Risk; Reputational Risk; HumanCapital Risk; Insurance
UnderwritingRisk;andInformationSecurityRisk.
IT SteeringCommittee:TheCommittee serves as aThinkTank for all InformationTechnology (IT) matters and determines IT strategy and
policiesandcoordinatestheimplementationofthesepolicies.
Budget and Revenue Sharing Committee: This Committee prepares budget outlines for all the units of the Bank; carries out a half
yearly review of the budget in order to prepare an updated budget for the remaining months of the year; and evaluates and approves extra
budgetary expenditure.
New Product Committee: Serves as a clearing house for new product proposals and in the process, determines and makes appropriate
recommendations to Executive Management concerning product name and features; co-ordinates activities for the introduction of new
products;and reviews existing products where necessary
Cost ManagementCommittee:TheCommittee periodically reviews the costs/expenses of the Bank and recommends appropriate cost
reduction/control measures; reviews and streamlines the acquisition of capital expenditure and bulk purchases of consumables with a view
toreducingcostwithoutcomprisingquality;andgenerallyreviewstheprocurementproceduresoftheBank.
Business Continuity and Security Committee: This Committee implements contingency response plans and strategies; and
formulatesandreviewsstrategiesandplansgearedtowardssafeguardingtheBank'spropertiesandpersonnel.
SHAREHOLDERRELATIONS
In a constant effort to improve stakeholder relations Diamond Bank has dedicatedCompany Secretariat and Investor Relations Units on hand
to resolve shareholders' issues. In addition to this, the entire staff of the Bank are available to resolve any issues which they can or
appropriatelyescalatetotherelevantunitsforresolution.
Stakeholders can readily obtain information on the Bank from our website and are also encouraged to express their opinions at General
Meetings and stakeholders' forums which are organised by the Bank from time to time.
35

FINANCIALREPORTINGANDACCOUNTING
The audit for the period under review was conducted by the firm of PriceWaterhouseCoopers which is independent of the Bank, has no
mutual business interest with the Bank and does not render non-audit services to the Bank. In keeping with the provisions of section 359
subsections (3) & (4) of the Companies and Allied Matters Act, the report of the Auditors is submitted to the Audit Committee which
examinesthereportandmakesrecommendationstotheshareholdersateachAnnualGeneralMeeting.
INTERNAL CONTROL AND COMPLIANCE
The entire staff and Management of the Bank are responsible for protecting the Bank against fraudulent transactions. However, the
Compliance &Audit Division is vested with internal control functions.This division is divided into three units,namely:Compliance,Corporate
Audit,andSecurity.
The Compliance unit is responsible for promoting compliance with statutory and regulatory requirements and the anti- money laundering
program of the Bank among other things.The primary function of the CorporateAudit Unit is to review all operational transactions entered
into by the Bank to ensure accuracy and avoid the processing of erroneous or fraudulent entries.The Security unit of the Bank is responsible
fordeveloping,implementingandmonitoringtheBank'sSecurityandLossPreventionpolicies.
In keeping with the Bank's strategy of strengthening its Corporate Governance structure and risk management capabilities through the
implementation of its Enterprise-wide Risk Management framework, some strategies were adopted to effectively manage the risk of non-
compliancewithlaiddownrules,regulationsandlaws.Theseincludethefollowing.
! Continuous identification and assessment of compliance risks presented by customers, products and services in the Bank, through a
properly implemented compliance risk management assessment exercise and monitoring information system that provides
managementwithtimely,informativereportsoncompliancewithlawsandregulationsatboththebusinessunitandtransactionlevels.
! Continuous training of the entire staff of the Bank onAnti-Money Laundering,Compliance andCorporateGovernance issues in line with
the Bank's policy on professional development geared towards improving competence across board.Training has been a veritable tool
that inculcates and synchronises the requisite compliance knowledge in staff on rules, laws and regulations across all levels and the
knowledge is expressed as a guide in doing the Bank's business, thereby eradicating the problem of non-compliance. This clearly
manifeststhecompliancecultureofthebankwhichstatesthatComplianceiseverybody'sbusiness.
! Disclosing and disseminating information required for regulatory compliance through monthly Newsletters that are broadcast on
SharePoint(TheBank'sintranetportal).
! Harmonising the compliance culture in all the subsidiaries of the Bank with a view to identifying deficiencies in standards and
formulating proposals for amendment where necessary to safeguard against losses arising from financial, operational, reputational,
legalandregulatoryrisksinprocessingoftransactionsandrelationshipmanagement.
! Consistent implementation of the provisions of theCode ofCorporate Governance for Banks which have been embedded in the Bank's
decisionmakingprocesses.
The Bank has upgraded the InternalControl structures of the Bank in conformity with international best practices.The focus of the Bank in the
new dispensation is on preventive control rather than detective control, emphasis is placed on processors owning the controls associated
with their processes, with this we aim to build quality and effective control from inception to conclusion of transactions and thus reduce
associated losses and costs.The Internal Control unit has unhindered access to all operations, records, property and personnel of the Bank.
Our strength is in our people,trained and motivated to meet the emerging challenges in the global economy and InformationTechnology to
ensuretheintegrityofourreportsandsafetyofinformationgenerated.
RELATEDCOMPANIES/PERSONSENGAGEDASSERVICEPROVIDERS/SUPPLIERSTOTHEBANKASAT31STDECEMBER2009
S/N NameofServiceProvider Natureofservice/supplies RelationshipDirector NatureofRelationship
1. ElpinaAssociatesLimited OfficeEquipment UzomaDozie Son
2. Mr.PascalG.Dozie Consultancy UzomaDozie Son
36

RISKMANAGEMENT
The effective management of risk is indispensable to the business of the Diamond Bank Group (the Group). We consider risk as the
quantifiable probability that the outcome of an action or event (internal or external) may result in adverse impacts that could severely
hamper the achievement of our strategic objectives. The Group remains committed to the objective of increasing shareholder value by
developing, continuously improving and fostering a sustainable business model that is consistent with its risk appetite and that will ensure
long-termsustainableprofitability.
EnterpriseRiskManagement(ERM)Vision
DiamondBank'sERMVisionis:
“Tobuildaworld-classriskmanagementculture”
RiskManagementPhilosophy&Culture
Diamond Bank undertakes all profitable transactions that it considers prudent and which meets its risk appetite and risk profile.The Bank
continuously evaluates the risk and rewards inherent in its business endeavours,from strategy development and implementation,to its day-
to-dayactivities.
Thus,itsriskcultureisguidedbythefollowingkeyelements:
! DiamondBankGroupconsiderssoundriskmanagementasthebedrockforbuildingastrongfinancialinstitution;
! Riskofficersareempoweredtoperformtheirdutiesprofessionallyandindependentlywithinclearlydefinedauthority;
! BusinessunitsformallyinvolveandviewtheRiskManagementfunctionasathoughtpartner;
! TheGroup strives to maintain a balance between risk/opportunities & revenue considerations with theGroup's risk appetite.Thus,
risk-relatedissuesareconsideredinallbusinessdecisions;
! TheBoardandManagementpromoteastrongcultureofadherencetolimitsandmanagingriskexposures;
! TheGroupavoidsproducts,marketsandbusinessesforwhichitcannotobjectivelymeasureandmanagetheirassociatedrisks;
! Thereisopenandfullreportingofriskstotheappropriatelevelsoncetheyareidentified;and
! TheGrouphaszerotoleranceforbreachofregulationsandlaws.
RiskManagementObjectives
ThefollowingarethekeyelementsofDiamondBank'sriskmanagementobjectives:
i) ToidentifytheGroup'smaterialrisksandensurethatriskmanagementplansareconsistentwithriskappetite;
ii) To optimise risk/return decisions by ensuring business units act as primary risk managers while establishing strong and
independentreview/challengestructures;
iii) Toprotectagainstunforeseenlossesandensurestabilityofearnings;
iv) Tomaximiseopportunities,earningspotentialandultimatelystakeholdervalue;and
v) To contribute to building a risk-smart workforce and environment that allows for innovation and responsible risk-taking by staff,
whileensuringcosteffectiveandlegitimateprecautionsaretakentoprotectshareholders'interests.
RiskManagementStrategy
Our strategy for managing risks is to sustain a robust Enterprise-wide Risk Management framework (which is process driven and IT enabled),
with emphasis on protecting theGroup from the adverse effects of risks while maintaining sustainable profitability and shareholder-value.
ScopeofRisks
Thescopeofriskswemanageincludesthefollowing:
i) Creditrisk;
ii) Operationalrisk;
iii) Marketrisk;
iv) Liquidityrisk;
v) AccountingandTaxationrisk;
vi) Legalrisk
a. Litigationrisk;
b. Contractrisk;
37

c. RegulatoryCompliancerisk;and
d. CollateralDefaultrisk;
vii) Strategicrisk
viii) HumanCapital risk;
ix) Compliancerisk;
x) Insuranceunderwritingrisk;
xi) Informationrisk;and
xii) Reputationalrisk
The Risk Management &Control function provides central oversight of risk management across theGroup to ensure that the full spectrum of
risks facing the Group are properly identified, measured, monitored and controlled to minimize adverse outcomes. Risk Management &
Control is however complemented by other departments in the management of certain important risks as illustrated below:
RISKAPPETITE
TheGroup'sRiskAppetiteisthelevelofrisktheGroupispreparedtoaccepttoachieveitsbusinessstrategyandobjectives.
TheBoardsetsandmonitorstheGroup'sRiskAppetiteandensuresthattheRiskAppetiteisfullyintegratedintostrategyandbusinessplans.
Thus,our risk appetite is defined by the extent to which we tolerate risks as described by our performance indicators,operational parameters
andprocesscontrols.
Ourriskappetiteisguidedbythefollowingbroadconsiderations:
! CapitalAdequacy:Thelevelofexcesscapitalthatwemaintaintoprotectagainstinsolvencyinextremeadversescenarios;
! StableProfitabilityandGrowth:Theextentofvariabilityinearningsthatwearewillingtoacceptonbehalfofourinvestors;
! Liquidity:ThebuffersthatwemaintaintoprotecttheGroupfromshorttermfundingproblems;and
! StrategicFocus:Thelevelofvarioustypesofbusinessesthatwearewillingtopursueinexecutingourbusinessmodel;
RISKMANAGEMENTGOVERNANCEFRAMEWORK
Diamond Bank's risk management framework is based on the “three lines of defence” model for risk management. Under this model,
responsibilities and accountabilities for risk management reside with all levels within the Group, from the Board of Directors down to the
lowestlevels.
BoardofDirectors
The Board sets theGroup's overall risk appetite,approves risk management strategy and is ultimately responsible for the effectiveness of the
riskmanagementprocessandsystemofinternalcontrols.
The Board oversees the risk management of the Group through its committees namely the Board CreditCommittee, the BoardAudit & Risk
Committee and the BoardGovernanceCommittee.
38

Diamond Bank Annual Report 2009

Diamond Bank Annual Report 2009

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Diamond Bank Annual Report 2009