Fidelity Bank Nigeria Plc registered a record profit in the fourth quarter of 2017 as the lender continues to intensify its risk management strategy.
The Nigerian lender’s profit reached N18.57 billion in December 2017, marking 93.73 percent surge from the N9.74 billion recorded the previous year.
The bottom line (profit) growth is the highest since 2014 when BusinessDay started gathering data. See Chart.
The growth in profit was largely driven by the N9.5 billion growth in net interest income, N0.8 billion growths in net fee income and N1.5 billion reduction in total expenses.
Interest income grew by 22.40 percent to N150.74 billion in the period under review, thanks to a 24.21 percent increase in interest income on loans and advances to customers.
Fidelity Bank, with over 400,000 customers across the country, is efficient in curtailing costs and boosting profit as cost to income ratio (CIR) fell to the lowest in five years. See Chart.
CIR fell to 67.50 percent in December 2017 from 76.30 percent recorded in 2013. See Chart.
Fidelity Bank is able to turn each Naira invested in revenue in generating higher profit as net margins moved to 10.47 percent in December 2017 from 6.40 percent as at December 2016.
Net Interest Margin (NIM) increased to 7.3 precent in December 2017 from 6.4 percent in 2016 as the growth in the average yield on earning assets outpaced the increase in average funding cost.
Fidelity Bank risk management strategy has yielded fruit as there was an improvement in asset quality amid the exposure to oil and gas and 9 mobile (formerly Etisalat).
Non-performing Loans (NPLs) improved to 6.40 percent in December 2017 from 6.60 percent as at December 2016. NPLs in absolute figure increased by a mere 2.50 percent to N50.67 billion in December 2017 from N49.40 billion the previous year.
However, Fidelity Bank said it expects NPLs to move to 8.80 percent if it includes the exposure to 9 mobile in subsequent figures.
Analysts had forecast the gradually economic recovery would show face in the numbers of Nigerian banks when they release full year results. Experts say unpaid loans, interest income from short term securities and a rise in profit will help bolster capital buffers.
The gross domestic product of Africa’s largest oil producer expanded for three straight quarters last year after a 1.6 percent contraction in 2016, with year-on-year growth reaching 1.9 percent in the final three months of 2017.
An increase in crude prices and the introduction of the Investors and Exporters’ Window by the central bank that ended a crippling shortage of dollars helped attract more investment flows into the country, while improving liquidity for the nation’s lenders.
Fidelity Bank’s loans and advances to customers increased by 7.01 percent to N768.73 billion from N718.40 billion as at December 2016.
Fidelity Bank’s customer base has increased by over 64 percent in the last 4 years (2013) leading to triple digit growth in Savings deposits (114 percent).
The lender’s share price close at N2.55 2:00 pm as of Monday, valuing it at N73.88 billion.
BALA AUGIE
