One of the financial institutions in Nigeria, Fidelity Bank, has continued to show why it is a big force to be reckoned with in the industry.
The Bank recently announced a 13.6 per cent growth in Gross Earnings to N71.9 billion and a Profit Before Tax, PBT, of N9.7 billion.
A breakdown of the analysis shows that;
* Gross Earnings increased by 13.6% to N71.9bn from N63.3bn in H1 2014
* Net Fee Income increased by 25.9% to N15.2bn from N12.1bn in H1 2014
* Operating Income increased by 14.1% to N42.0bn from N36.8bn in H1 2014
* Total Expenses increased by 13.8% to N28.8bn from N25.3bn in H1 2014
* Profit before Tax increased by 2.5% to N9.7bn from N9.4bn in H1 2014
* Profit after Tax increased by 2.5% to N8.2bn from N8.0bn in H1 2014
* Net Loans increased by 5.8% to N572.8bn from N541.7bn in Dec 2014
* Deposits declined by 2.9% to N796.6bn from N820.0bn in Dec 2014
* Total Equity increased by 3.1% to N178.6bn from N173.1bn in Dec 2014
* Total Assets increased by 0.5% to N1,192.7bn from N1,187.0bn in Dec 2014.
Commenting on the result, Managing Director and CEO of Fidelity Bank Plc, Nnamdi Okonkwo, disclosed that, “Business operations in H1 2015 were challenged by a difficult operating environment due to heightened political risks in Q1, weaker government revenues arising from lower crude oil prices, a tighter monetary policy environment and currency devaluation concerns which all translated to a significantly lower GDP growth rate.”
He further said that, “Despite these challenges, we continued with the disciplined execution of our medium term strategy (albeit taking into consideration the weaker macro-economic environment).” “PBT increased to N9.7 billion despite significantly increased loan provisions anchored on our conservative view of selected sectors. We are pleased with the year-on-year (y-o-y) and quarter on quarter (q-o-q) growth in our profitability given the reduced level of business activities in H1 2015,” he added.
According to Okonkwo, net Interest Income increased by 8.3% y-o-y to N26.8 billion and 16.7% q-o-q as we increased yields on earning assets faster than the growth in funding costs.
“This increased our NIM to 6.6% in H1 2015 placing us closer to our 2015 target of 7.0%. the net gain on financial instruments was N1.1bn in Q2 against a loss of N1.5bn in Q1 as we continued to optimize our balance sheet,” he explained.
“Net Fee Income increased by 25.9% y-o-y to N15.2 billion but declined by 25.6% q-o-q due to lower FX Income on the back of trading restrictions in the market.
“Our retail strategy continued to deliver increased revenues as electronic banking income increased by 65.2% y-o-y to N2.0 billion and 37.4% q-o-q driven by the increased migration of customers to our electronic channels and improved customer experience,” the bank boss noted.
He further explained that, “Operating Expense grew by 13.8% y-o-y to N28.8 billion and 8.4% q-o-q on the back of increased staff remuneration and promotions, regulatory costs (NDIC/AMCON) and advert costs.
“However, Cost-Income Ratio declined to 69.2% in H1 2015 from 74.2% in the 2014FY as revenue growth outpaced the increase in operating cost.”
He said, “Loan growth picked up in Q2 (5.8% YTD growth) with the conclusion of our N30 billion bond. Cost of Risk increased to 1.1% (slightly above our guidance) as we improved our coverage ratio, NPL Ratio remained within our guidance at 3.7% due to the growth in the loan book.
“Total Deposits declined by 2.9% YTD to N796.5 billion and 0.1% q-o-q as tighter monetary policy and the CRR harmonization increased effective funding costs.
“With Private Sector Depositors accounting for 87% of our deposits, we sterilized an additional N21 billion due to the CRR harmonization. Though Interest expense increased by 9.1% y-o-y, it declined by 1.9% q-o-q due to the diversification of our funding sources.”
Okonkwo assured that, “We remain focused on the execution of our medium term strategic objectives in the Retail/SME/E-Banking and Niche Corporate Banking segments and look forward to delivering another positive set of results in the next quarter.”
Meanwhile, Fidelity Bank Plc Senior Management held a Conference Call with Investors/Analysts on the H1 2015 Unaudited Financials on Monday, July 27, 2015 at 15.00 hours Lagos Time / 15:00 BST / 14:00 GMT.
It was an opportunity for the management to relate with investors and entertained questions from them.
