Fidelity Bank Plc, has reported strong financial performance in the first quarter of 2021, with up-scaled indices in all the lender’s assessment scorecard.
According to the bank’s unaudited results released at the Nigerian Stock Exchange (NSE), the Profit Before Tax (PBT) grew by 53.9% from N6.6bn in 2020 to N10.1bn for the corresponding period of March 31, 2021.
Similarly, the net revenue rose by 13.4% from N30.3bn in Q1 2020 to N34.4bn in 2021 in the quarter under review.
Commenting on the results, the Managing Director, 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.
“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”.
A further analysis of the report indicated that the bank’s Gross Earnings increased by 7.7% YoY to N55.1bn on account of 66.7% growth in non-interest revenue to N12.1bn from N7.2bn in Q1 2020.
In absolute terms, the increase in NIR came from 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.
This is even as the Net Interest Margin remained unchanged at 6.3% compared to 2020FY as the drop in average funding cost offset the decline in average yields on earning assets.
The bank’s Average funding cost dropped to 2.5% from 3.6% in 2020FY 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, which translated to 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%.
The report showed that the Operating Expenses increased by N1.3bn (6.2%) to N23.0bn largely driven by N4.3bn growth in regulatory charges (NDIC & AMCON Charges). Excluding the increase in regulatory charges, total operating expenses would have dropped by 13.8% (6.1% QoQ) to N18.6bn from N21.6bn in Q1 2020 (Q4 2020: N19.8bn).
In addition, the Total Deposits increased by 3.1% YTD to N1,751.3bn from N1,699.0bn in 2020FY, 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.
Fidelity Bank’s 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.
The lender’s Net Loans and Advances increased by 7.6% YTD to N1,426.3bn from N1,326.1bn in 2020FY. 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 NPL ratio dropped to 3.6% from 3.8% in 2020FY.
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.