Feature: Highlights of Fidelity Bank Plc Earnings Report

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In Fidelity Bank’s Full-Year 2023 Financial Results, published on April 15, 2024, a remarkable 65% increase in Gross Earnings to N555.83 billion was reported. This surge was propelled by a substantial 55% growth in interest income, coupled with a 562% rise in other operating income and a notable 44% increase in fee and commission income. The positive momentum extended to the overall performance, as Profit After Tax (PAT) soared by 99% to N99.46 billion compared to the previous year, and Earnings Per Share (EPS) witnessed a robust 93% growth to N3.11. This report highlight Fidelity Bank’s excellent operational performance and the breadth of its income sources.

Established in 1987, Fidelity Bank Plc, a Nigerian commercial bank, started as a private limited company with a Merchant Banking License. In 1999, it converted to a commercial bank, became a public limited company, and obtained a Universal Banking License in 2001. Acquiring FSB International Bank and Manny Bank in 2005, Fidelity Bank now ranks among the top 10 banks in Nigeria. The bank operates 250 business offices, 833 ATMs, and 10,951 point-of-sale terminals as part of its extensive branch network.

In Fidelity Bank’s Full-Year 2023 Financial Results, unveiled on April 15, 2024, a remarkable 65% increase in Gross Earnings to N555.83 billion was reported. This surge was propelled by a substantial 55% growth in interest income, coupled with a 562% rise in other operating income and a notable 44% increase in fee and commission income. The positive momentum extended to the overall performance, as Profit After Tax (PAT) soared by 99% to N99.46 billion compared to the previous year, and Earnings Per Share (EPS) witnessed a robust 93% growth to N3.11.

These findings highlightFidelity’s excellent operational performance and the breadth of its revenue sources.

Gross earnings accelerate by double digits
During the reporting period, Fidelity Bank exhibited remarkable financial performance, with gross earnings surging by 65% to N555.83bn. This growth was primarily propelled by a robust 55% increase in interest income, reaching N459.53bn. Additionally, fee and commission income surged by 44% to N49.60bn, while other operating income experienced an astonishing 562% rise to N46.70bn. Net interest income recorded a substantial 82% increase to N277.4bn, driven by a 55.5% rise in interest income. This uptick was facilitated by a reduction in the average funding cost by 20 basis points to 4%, attributed to an improved deposit mix favoring low-cost funds, which constituted 97% of total deposits, up from 84% in FY’2022. Consequently, the Net Interest Margin (NIM) expanded to 8% from 6% in FY’2022.

Operating expenses climbed by 61% to N194.90bn, primarily due to regulatory charges, staff costs, technology expenses, and maintenance. Nonetheless, robust revenue growth resulted in an improvement in the cost-to-income ratio to 54% from 67% in FY’2022, signaling enhanced operational efficiency and sustainable profitability.

Furthermore, FX revaluation gains surged by 1545% to N44.09bn from N2.68bn in FY’2023, bolstering the overall financial performance of the institution. Profit after tax also witnessed a significant uptick, rising by 99% to N99.46bn, while Earnings per Share increased by 93% to N3.11 in FY’2023.

Fidelity Reinforces its Financial Stability
In FY’23, the financial institution demonstrated robust financial growth despite a 58% rise in total liabilities to N5.80tn, compared to N3.67tn in FY’2022. Total assets increased by 56% to N6.23tn from N3.99tn in FY’2022. Cash reserves surged by 21% to N364.18bn, while loans and advances to customers grew by 46% to N3.20tn.

Total deposits surpassed N4.00tn, with customer deposits expanding by 56% to N4.00tn from N2.60tn in FY’2022. This growth was primarily driven by an 81% increase in low-cost funds, while tenured funds declined by 75.1%, leading to improved margins. Foreign currency (FCY) deposits rose by 94.1%, now constituting 34.3% of total deposits, compared to 27.5% in FY’2022, while local currency (LCY) deposits increased by 41.0%.

Savings deposits grew by 47% to N880.9 billion, representing 21.9% of total deposits. Net loans and advances increased by 46% to N3.10 trillion from N2.10 trillion in FY’2022, with actual growth at 7.90% and the impact of Naira depreciation contributing 38% to the growth in the loan book.

The non-performing loan ratio (NPL) slightly rose to 3.5% from 2.9% in FY’2022, and the cost of risk increased to 2.6% from 0.3% in FY’2022, reflecting a conservative approach with increased impairment buffers to maintain healthy asset quality in 2024.
Regulatory ratios remained comfortably above minimum requirements, with the liquidity ratio at 45.3% compared to 39.6% in FY’2022 and the capital adequacy ratio (CAR) at 16.2% versus the minimum requirement of 15.0%.

Conclusion
In summary, Fidelity Bank’s financial performance underscores its strategic agility and resilience. Despite challenges in funding costs and credit losses, the bank’s adept management led to a notable increase in profit margins, reflecting a well-executed financial strategy.

Looking ahead, Fidelity Bank’s MD/CEO-Nneka Onyeali emphasized the importance of monitoring evolving risks in Nigeria’s banking landscape. Additionally, the proposed dividend of 60 kobo per share, up from 50 kobo in FY’2022, highlights the bank’s commitment to value creation and shareholder returns, making it an attractive investment opportunity.

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