Fidelity Bank Records Sky-High Earnings Jump in Q1-2021

Fidelity Bank Records Sky-High Earnings Jump in Q1-2021

Fidelity Bank Plc. records sky-high earnings jump in the first quarter (Q1) of 2021 amidst gradual economic recovery in Nigeria market as analysts project a better outturn in profitability for the year.

According to financial statement submitted to the Nigerian Exchange, the bank Q1 pretax profit jumped 53.9% to N10.134 billion from N6.583 billion in the comparable period in 2020.

Gross earnings increased by 7.7 per cent year-on-year to N55.1 billion on account of 66.7 per cent growth in non-interest revenue to N12.1 billion from N7.2 billion in Q1-2020.

Jumped at about 29%, the bank total asset printed at N2.893 trillion from N2.246 trillion in the comparable period in 2020 as a result of increased loans and advances to customers which surged to N1.426 trillion from N1.165 trillion.

It would be recalled that Fidelity Bank total asset printed at N2.758 trillion as at financial year 2020.

Commenting on the performance, Fidelity Bank Chief Executive Nneka Onyeali-Ikpe said, “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.

“In absolute terms, the increase in nominal interest rate came from foreign exchange related income, digital banking income and account maintenance charge among others.

“Net interest margin remained unchanged at 6.3 per cent compared to 2020 full year as the drop in average funding cost offset the decline in average yields on earning assets,” she said.

Read Also: Fidelity Bank Scores Buy Rating on Positive Earnings Outlook

According to her, average funding cost dropped to 2.5 per cent from 3.6 per cent in 2020 due to a combination of improved deposit mix and a slight moderation in average borrowing cost.

“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 a 4.3 per cent increase in interest bearing liabilities.

“We refinanced our seven-year N30 billion Tier-II bonds issued in 2015 at 16.48 per cent p.a. with cheaper 10-year N41.2 billion tier II bonds priced at 8.5 per cent p.a., which led to a 61bpts drop in average borrowing cost to 4.5 per cent,” she added.

Onyeali-Ikpe said that operating expenses increased by N1.3 billion (6.2 per cent) to N23 billion largely driven by N4.3 billion growth in regulatory charges.

The bank CEO hinted that if the increase in regulatory charges is excluded, total operating expenses would have dropped by 13.8 per cent to N18.6 billion from N21.6 billion in Q1 2020.

Onyeali-Ikpe added that retail banking continued to deliver impressive results for the bank as savings deposits increased by 4.1 per cent year-to-date to N441.6 billion, saying the bank is on course to achieving the ninth consecutive year of double-digit growth in savings deposits.

The bank’s financials indicated that savings deposits drove 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.

Other regulatory ratios remained above the required thresholds with liquidity ratio at 33.9 per cent and capital adequacy ratio at 18.4 per cent from 18.2 per cent in 2020.

“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,” Fidelity Bank CEO said.

Fidelity Bank Records Sky-High Earnings Jump in Q1-2021