Lower impairment charges, digit income push Fidelity Bank’s pre-tax profit up 30.6% in 2018

Lower impairment charges, digit income push Fidelity Bank’s pre-tax profit up 30.6% in 2018

Alabingo Finance Report| In spite of the tough operating environment, Fidelity Bank posted a 30.6 per cent growth in pre-tax profit to N25.1 billion in 2018 financial year, bolstered by significant drop in impairment charges on non-performing loans and higher revenue, which was strengthened by interest income on liquid assets and electronic banking income.

The bank’s gross earnings was higher by 4.8 per cent to N188.9 billion, on the back of interest income on liquid assets which was up 16.9 per cent, electronic banking income 16.4 per cent and account maintenance charge 11.4 per cent.

And while Net fee income increased by 9.2 per cent to N31.8 billion in 2018, compared to N29.2 billion in the corresponding period in the previous year, operating income rose 4.3 per cent to N97.2 billion and total operating expenses increased 8 per cent to N72.1 billion, underpinned on technology-related cost, energy cost and regulatory charges.

The lender made significant cut in its impairment Charge by 62.7 per cent to N4.2 billion from N11.3 billion in 2017 with its non-performing loan ratio trending down to 5.7 per cent, instead of 6.4 per cent in 2017.

Fidelity Bank NPL ratio is only 0.7 per cent higher than the 5 per cent benchmark set by the regulator, while the country’s banking industry average currently stands at about 13 per cent.

“We had a loan write-off of N15.3bn with over 75 per cent coming from Telecoms, General Commerce and Transport Sector,” the bank stated in its Investors presentation for 2018 financial year.
Consequently, its Profit after Tax was up 29 per cent to 22.93 billion at the end of last financial year.

It succeeded in cutting Cost of Risk down to 0.5 per cent in 2018, compared to 1.5 per cent in the previous year, but it spent more last year as Cost to Income Ratio inched up to 71.1 per cent during this period.

Net loans grew 10.6 from to N849.9 billion (2017: N768.7 billion), while total deposits rose 26.3 per cent to N979.4 billion (2017: N775.3 billion). And its total assets expanded 24.7 per cent to N1.72 trillion in 2018.

Fidelity Bank Capital Adequacy Ratio stood at 16.7 per cent at the end of last financial year, higher than the Central Bank 15 per cent threshold.

Also, its Liquidity Ratio was 39 per cent compared to regulatory minimum of 30 per cent.

“We are delighted with our 2018FY numbers 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,” Nnamdi Okonkwo, Managing Director, Fidelity Bank, enthused about the result.

He added, “We restated our 2017FY income statement by reclassifying N3.3bn from interest & similar income to net gains from financial assets at fair value through profit/loss in compliance with IAS 1.82(a). We also recognized an additional N1.1bn previous year AMCON charges on the Income Statement resulting in a decline in 2017FY PBT to N19.2bn from an initial N20.3bn.”

Shareholders will be getting a final dividend of 11 kobo per share this year.

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