Top Nigerian lender, Fidelity Bank Plc has recorded a strong financial result in the first quarter of 2021, with significant growth in profits for the period ended 31 March 2021.
Details of the unaudited results, made available to the Nigerian Stock Exchange (NSE) shows that Profit before Tax (PBT) grew by 53.9% from N6.6bn in 2020 to N10.1bn in the corresponding period ended March 31, 2021. Similarly, Net Revenue in the period increased by 13.4% from N30.3bn in Q1 2020 to N34.4bn in 2021, just as the bank recorded growth in other performance indices.l
According to the report, Fidelity Bank’s Gross Earnings grew 7.7% Year-on-Year (YoY) to N55.1bn following a 66.7% growth in Non-Interest Revenue (NIR) to N12.1bn from N7.2bn in Q1 2020. “In absolute terms, the increase in NIR came from Forex (FX) related income, digital banking income and account maintenance charge etc. as total customers’ induced transactions across all our service channels increased by 30.4% YoY and 17.1% QoQ.”
Further analysis of the Report indicates that Net Interest Margin remained unchanged at 6.3% compared to previous year as the drop in average funding cost offset the decline in average yields on earning assets. Average funding cost dropped to 2.5% from 3.6% in 2020 due to a combination of improved deposit mix and a slight moderation in average borrowing cost. This led to 26.2% decline in total interest expenses, and a 17.1% increase in net interest income to N28.8bn, despite a 4.3% increase in interest bearing liabilities.
” We refinanced our 7-Yr N30.0bn Tier II Bonds issued in 2015 at 16.48% p.a. with cheaper 10-Yr N41.2bn Tier II Bonds priced at 8.5% p.a., which led to a 61bpts drop in average borrowing cost to 4.5%. Operating Expenses increased by N1.3bn (6.2%) to N23.0bn largely driven by N4.3bn growth in regulatory charges (NDIC & AMCON Charges).” The report noted.
Retail Banking continued to deliver impressive results as savings deposits increased by 4.1% YTD to N441.6bn and we are on course to achieving the 9th consecutive year of double-digit growth in savings deposits. Savings deposits was responsible for 32.9% of the absolute growth in total deposits and now accounts for 25.2% of total deposits compared to 25.0% in 2020.
Net Loans and Advances increased by 7.6% YTD to N1.43tn from N1.33tn recorded in 2020. However, the actual growth was 6.8% while the impact of the currency adjustment (2020FY: N400.3/$ – Q1 2021: N407.6/$) accounted for a 0.8% YTD growth in the loan book. Cost of risk came in at 0.4% and the Non-Performing Loans (NPL) ratio dropped to 3.6% from 3.8% in 2020FY.
“Total Deposits increased by 3.1% Year-to-date (YTD) to N1.75tn from N1.69tn in the preceding year, driven by 5.5% increase in low cost deposits (Demand: 6.2% | Savings: 4.1%). Foreign currency deposits increased by 15.7% YTD (N46.9bn) and now accounts for 19.7% of total deposits from 17.5% in 2020FY, 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.” The report read.
Other Regulatory Ratios remained above the required thresholds with liquidity ratio at 33.9% and capital adequacy ratio (CAR) at 18.4% from 18.2% in 2020FY.
Commenting on the results, the MD/CEO of Fidelity Bank, Nneka Onyeali-Ikpe, said the bank would continue with the growth trajectory while adhering to its business model. In her words: “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.”