By Jeph Ajobaju, Chief Copy Editor
Fidelity Bank grew gross profit 53.9 per cent to N10.1 billion in the first quarter of 2021 (Q1 2021), despite operational challenges posed by coronavirus, a nod to the drive by new boss Nneka Onyeali-Ikpe, who hailed the feat as “impressive”.
Unaudited results released on the Nigerian Stock Exchange (NSE) shows Profit Before Tax (PBT) grew 53.9 per cent from N6.6 billion in Q1 2020 to N10.1 billion by March 31, 2021.
Net revenue rose 13.4 per cent from N30.3 billion to N34.4 billion.
“We commenced the year showing impressive double-digit growth in profitability and improved performance across key efficiency indices whilst ensuring our business model continued to deliver strong positive results in line with our guidance for the 2021 financial year,” said Onyeali-Ikpe, who became managing director/chief executive officer in January.
Gross earnings
Gross earnings increased 7.7 per cent year-on-year (YoY) to N55.1 billion on account of 66.7 per cent growth in non-interest revenue (NIR) to N12.1 billion from N7.2bn in Q1 2020.
NIR increase sources included foreign exchange (FX), digital banking, and account maintenance charge as total customer-induced transactions across all service channels rose 30.4 per cent YoY and 17.1 per cent quarter-on-quarter (QoQ).
Net interest margin remained unchanged at 6.3 per cent compared to financial year (FY) 2020 as the drop in average funding cost offset the decline in average yields on earning assets.
Average funding cost dropped to 2.5 per cent from 3.6 per cent in FY 2020 due to a combination of improved deposit mix and a slight moderation in average borrowing cost.
Fidelity Bank said this led to 26.2 per cent decline in total interest expenses, which translated to 17.1 per cent increase in net interest income to N28.8 billion despite 4.3 per cent increase in interest bearing liabilities.
“We refinanced our 7-Yr N30.0bn Tier II Bonds issued in 2015 at 16.48 per cent p.a. with cheaper 10-Yr N41.2bn Tier II Bonds priced at 8.5 per cent p.a., which led to a 61bpts drop in average borrowing cost to 4.5per cent,” the bank explained.
Total deposits
Operating expenses rose 6.2 per cent, from N1.3 billion to N23.0 billion, largely driven by N4.3 billion growth in regulatory charges.
Excluding the increase in regulatory charges, total operating expenses would have dropped by 13.8 per cent (6.1per cent QoQ) to N18.6 billion from N21.6 billion in Q1 2020 (Q4 2020: N19.8 billion), according to the bank.
Total deposits jumped 3.1 per cent year-to-date (YTD) to N1,751.3 billion from N1,699.0 billion in FY 2020, propelled by 5.5 per cent increase in low cost deposits (Demand: 6.2 per cent | Savings: 4.1 per cent).
Foreign currency deposits increased 15.7 per cent YTD (N46.9 billion) and now accounts for 19.7 per cent of total deposits from 17.5 per cent in FY 2020, “as we harness the benefits of our renewed drive in Diaspora Banking as well as the recent CBN Naira-for-Dollar Incentive Scheme for diaspora remittances to Nigeria.”
Retail banking continued to deliver impressive results as savings deposits rose 4.1 per cent YTD to N441.6 billion and the bank said it is “on course to achieving the 9th consecutive year of double-digit growth in savings deposits.”
The results also show that savings deposits accounted for 32.9 per cent of the absolute growth in total deposits and now accounts for 25.2 per cent of total deposits compared to 25.0 per cent in 2020.
Regulatory ratios
Net loans and advances increased 7.6 per cent YTD to N1,426.3 billion from N1,326.1 billion in FY 2020.
However, the bank added, actual growth was 6.8 per cent while the impact of the currency adjustment (FY 2020: N400.3/$ – Q1 2021: N407.6/$) accounted for a 0.8 per cent YTD growth in the loan book.
Cost of risk came in at 0.4 per cent and NPL ratio dropped to 3.6 per cent from 3.8 per cent in FY 2020.
Other regulatory ratios remained above the required thresholds with liquidity ratio at 33.9 per cent and capital adequacy ratio (CAR) at 18.4 per cent from 18.2 per cent in FY 2020.
Fidelity Bank has over six million customers serviced across its 240 business offices and various other digital banking channels, according to its profile.
“We are committed to sustaining our growth trajectory and achieving the long-term strategic aspirations of the bank as we look forward to delivering another set of good results in the next quarter,” it said.
