Fidelity Bank Sets High Performance Record, Beats Analysts’ Estimates.

Fidelity Bank Sets High Performance Record; Beats Analysts’ Estimates.

Fidelity Bank Plc has set quite a steep performance record as the leading retail lender bolster earnings that beat consensus analysts’ estimates.

In its audited financial statement for 2019, profit before tax came stronger than consensus analysts’ estimates, jerked up by 21% to close at ₦30.4 billion.

The retail lender’s bottom line came strong despite tough operating environment that underscore year 2019.

Fidelity Bank, the leading financial supermarket with strong interest in retail lending, raised shareholders fund by 20.4% to ₦234 billion as against ₦194.4 billion in 2018.

The results reveals that its capital adequacy ratio berthed at 18.3% while liquidity ratio which rested at 35.1% beat regulatory benchmark.

Gross earnings increased by 14.0% to ₦215.5 billion which was driven largely by a 15.8% growth in interest and similar income.

Meanwhile, interest and similar income that was generated from the bank’s interest yielding assets accounted for 84.6% of total earnings in the period.

Supporting the bottom line, Fidelity bank income earned from non-interest yielding activities jerked up more than double from ₦1.6 billion to ₦33.2 billion in 2019.

This was attributed to double-digit growth across key sectors which includes 125.2% surge in credit related fees, 19.7% increase in trade income, 13.6% uptick in account maintenance fees in addition to 13.3% uptick in digital banking income.

Fidelity Bank digital banking has continued to gain traction driven by new initiatives in the retail lending segment and the enhancement of our existing digital products.

“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”, the bank stated.

The results show that net interest margin improved further to 6.2% from 5.8% in 2018 as the growth in our average yield on earning assets outpaced the increase in our average funding cost.

The improvement in the yield on earning assets to 13.6% in 2019 was driven by a 19.2% growth in our interest income on loans.

This came plus another 6.8% growth in interest income on liquid assets, which led to a 13.2% increase in net interest income.

On the back of increased in headline inflation which settled at 11.4% on the average in 2019, Fidelity Bank operating expenses expanded above the line.

Operating expenses increased by 13.7% to ₦82.0 billion driven by 58.4% upsurge in NDIC, AMCON, Technology and Advertisement cost.

This aided increase in the bank’s cost as proportion of income ratio which inched up to 73.4%.

Then, the bank reaped from its aggressive deposits mobilization efforts as total deposits taken increased by 25.1% to ₦1.225 trillion from ₦979.4 billion in the comparable period.

This sterling performance around deposits taken was driven by double-digit growth across all deposit types.

The bank audited financial statement shows that local currency deposits grew by 17.1%.  This accounts for 55.7% of the increase in total deposit while foreign currency deposits increased by 60.5%.

The numbers show that foreign currency accounts for 44.3% of the increase in total deposits in 2019.

Foreign currency deposits worth ₦288.6 billion constitutes 23.6% of total deposits, which is above 18.4% level achieved in 2018.

Fidelity Bank retail activities were bolstered by the management aggressive stance to reflate performance in 2019.

Retail banking however continued to deliver impressive results as savings deposits increased by 20.7% to ₦275.2 billion.

This makes it the 6th consecutive year of double-digit exponential growth on ascending order.

The audited statement shows that savings deposits accounts for about 22.5% of total deposits.

The management said this is an attestation of our increasing market share in the retail segment.

The bank retail loans grew by 42.9% to ₦53.8 billion driven by our new digital lending products and partnership with FinTechs.

The bank stated that as at December, 2019 it has disbursed 70,000 micro-loans on Fidelity FastLoan, its flagship digital lending products in partnership with Migo.

On the back of strong retail lending, Fidelity net risk assets increased by 32.6% to ₦1.127 trillion from ₦849.9 billion in the corresponding year in 2018.

In terms of risk assets concentration, its foreign currency loans increased by 33.1% and this accounts for 41.2% of the loan book.

On the local side, credit assets to the real sector increased by 32.1% and thus represent 58.8% of the total loan book.

Fidelity bank cost of risk was -0.1% due to the net write-backs of ₦600 million in the year.

The management stated that this include net losses on de-recognition of financial assets measured at amortized cost it had on impairment charges.

Thanks to efficient management, its non-performing loans (NPLs) ratio improved to 3.3% from 5.7% in the 2018.

This was due to the growth in the loan book and a 25.1% decline in absolute NPLs driven by loan write-offs of over ₦12 billion.

The bank capital adequacy ratio (CAR) berthed at 18.3%, liquidity ratio at 35.0% as key ratios beat regulators benchmark.

Speaking on the result, Nnamdi Okonkwo, MD/CEO of Fidelity Bank Plc said: “We closed the financial year with strong double-digit growth across key income and balance-sheet lines.

“This clearly showed that we sustained our performance trajectory and continued to increase our market share driven by significant traction in our chosen business segments”.

However, Fidelity Bank held that going into 2020, the management recognizes the negative impact of Covid-19 and the decline in oil prices on the global economy.

The bank also takes note of the pass-through effect on domestic economy.

“We will continue to take measures to ensure the safety of our staff, customers and other stakeholders during this period whilst activating our business continuity procedures to meet the unfolding scenarios in our operating environment.”, the management said

Analysts said Fidelity Bank sole ambition is to join Tier-1 Capital gang as it strives to deepen footprints in retail segment further.

Fidelity Bank Sets High Performance Record; Beats Analysts’ Estimates By Julius Alagbe