N5.29bn Loan Loss Reversal Lifts Fidelity Bank’s Profit By 24%

Directors Propose N0.20 Dividend Per Share
Directors of Fidelity Bank, on Monday, published its audited numbers for the full-year ended December 31, 2019, highlights of which that profit grew faster than gross earnings, following which shareholders would receive a dividend of 20 kobo per share, the highest in the history of the institution. This was helped in part by the N5.292bn credit loss reversal, compared to the N4.215bn credit loss expense reported for the year ended December 2018.

Gross earnings for the period increased by 14.03% from N189.005bn in 2018, to N215.514bn, the lion’s share of which was the N97.398bn earned from its retail banking business segment; followed by N72.432bn from corporate banking, while investment banking contributed 45.685bn. Interest income climbed 18.65% from N153.685bn to N182.344bn, including other interest and similar income of N5.35bn, which rose from N3.769bn. Interest expense rose by 18.07% to N99.289bn, compared to the previous year’s N84.095bn; resulting in net interest income of N83.055bn, as against the N73.356bn reported in the corresponding period of 2018.
Net interest income after credit loss expense stood at N88.347bn, up from N69.141bn.
Fee and commission income improved from N20.41bn in 2018 to N25.262bn, with ATM charges pooling N4.44bn, ahead of the N3.295bn in accounts maintenance charges; N3.141bn from the commission on travellers’ cheques, and N2.947bn earned from e-banking activities. Fee and commission expense climbed to N3.346bn from N5.268bn. The bank reported a new line item- net loss on derecognition of financial assets measured at amortised cost of N4.705bn.

Other operating income fell from N11.144bn in 2018 to N7.908bn; personnel expenses rose marginally from N23.91bn to 24.129bn; depreciation and amortization dropped slightly to N5.421bn from N6.247bn. Other operating expenses for the period rose from N41.971bn to N52.442bn, resulting in profit before tax of N30.353bn, from N25.089bn, representing an increase of 20.98%. Income tax expense dropped from N2.163bn to N1.928bn; following which net profit for the year jumped from N22.926bn to N28.425bn; with retail banking accounting for N18.907bn; followed by corporate banking, N5.096bn; while the balance N4.422bn came from investment banking.
Total assets for the year grew by N394.154bn, or 22.92% from N1.719tr to N2.114tr, significantly driven by the 32.6% growth in customer loans and advances from N849.88bn to N1.126tr, which may be the impact of the Central Bank of Nigeria’s Loan to Deposit Ratio, which rose first to 60% and now 65% from December 31, 2019.

Total liabilities increased from N1.525tr to N1.88tr, helped by customer deposits of N1.225tr, up from N979.413bn, representing an increase of N245.8bn or 25.09%; while total equity increased from N194.416bn to N234.03bn.
According to Fidelity Bank’s Chief Executive, Nnamdi Okonkwo expressed delight with the performance, “we are delighted at the results which clearly showed that we sustained our performance trajectory and continued to increase our market share driven by significant traction in our chosen business segments,” he said.

On Digital Banking he said the results were enhanced by new initiatives in the retail lending segment and the deepening of the bank’s existing digital products. According to him “We now have 47.4% of our customers enrolled on the mobile/internet banking products, 82.0% of total transactions now done on digital platforms and 31.1% of fee-based income now coming from our digital banking business”.
He further revealed that the efforts aimed at strengthening the bank’s foothold of the retail market is yielding significant results with savings deposits rising by 20.7% to N275.2bn making it the 6th consecutive year of double-digit growth.
“Savings deposits now account for about 22.5% of total deposits, an attestation of our increasing market share in the retail segment” stated Okonkwo.

Just as was seen with deposit growth, there was also a corresponding increase in the bank’s retail assets. Specifically, Retail loans grew by 42.9% to N53.8bn driven by the bank’s new digital lending products and partnership with Fintechs. As of December 2019, the bank had disbursed over 70,000 micro-loans on our flagship digital lending product (Fidelity FastLoan) in partnership with Migo.
Conversely, there was a remarkable improvement in Non-performing loans (NPLs). The bank’s NPL ratio dropped to 3.3% from 5.7% in the 2018FY due primarily to the growth in the loan book and a 25.1% decline in absolute NPLs resulting from the loan write-offs of over N12bn.https://investdata.com.ng/2020/03/n5-29bn-loan-loss-reversal-lifts-fidelity-banks-profit-by-24/#more