Fidelity Bank surpasses expectations, records N9.7bn PBT in H1

Fidelity Bank Plc has released its half year financial result, showing a 13.6 per cent growth in Gross Earnings to N71.9 billion and a Profit before Tax (PBT) of N9.7 billion.

The result revealed that the bank’s Gross Earnings rose from N63.3 billion in H1 2014 to N71.9 billion in H1 2015. Its Net Fee Income also increased by 25.9 per cent to N15.2bn from N12.1 billion in H1 2014 and correspondingly, Operating Income increased by 14.1 per cent to N42 billion from N36.8 billion in H1 2014.

The bank’s Total Expenses also went up 13.8 per cent to N28.8 billion from N25.3 billion in the same period last year.

Fidelity Bank in the first six months of the year grew its Profit before Tax by 2.5 per cent to N9.7 billion from N9.4 billion in H1 2014, consequently, Profit after Tax increased by 2.5 per cent to N8.2

billion from N8.0bn in H1 of the previous year.

Managing Director and CEO of Fidelity Bank plc, Mr. Nnamdi Okonkwo, while commenting on the results, stated, “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.

“Despite these challenges we continued with the disciplined execution of our medium term strategy (albeit taking into consideration the weaker macro-economic environment).

Profit before Tax (PBT) increased to N9.7bn 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.”

According him, the bank’s Net Interest Income increased by 8.3 per cent y-o-y to N26.8 billion and 16.7 per cent q-o-q as it 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%. Net gains on financial instruments were N1.1bn in Q2 against a loss of N1.5bn in Q1 as we continued to optimize our balance sheet,” he added.

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.

He 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.

The Bank boss added that, 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 disclosed that Loan growth picked up in Q2 (5.8% YTD growth) with the conclusion of our N30 billion bond, saying, “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.

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,” Mr. Okonkwo enthused.