Fidelity Bank plc’s slow earnings growth in the first quarter of the year means the Nigeria lender has succumbed to the Central Bank of Nigeria (CBN) tightening policy as banks in Africa largest economy grapple with slump in oil price and a weak naira.
For the first three months of through March 2015, its net income increased by a mere 5.54 percent to N4 billion from N3.79 billion the same period of the corresponding year (Q1) 2014.
Earnings per share (EPS) increased by 5.76 percent to 55k as against 52k as of March 2014.
Its interest income increased by a single digit 3.23 percent to N27.11 billion in 2015 from N26.26 billion in 2014, as the lender suffers from drop in T bills significantly due to increase in cash reserve requirements (CRR).
Net interest and similar expense also responded to the hike in interest rate by the CBN as it moved by 10.25 percent culminating in a 4.03 percent dip in net income to N12.38 billion.
The CBN devalued the naira and raised interest rates by 100 basis points to 13 percent from 12 percent, as it sought to stem losses to its foreign reserves from defending the currency hit by weaker oil prices.
Analysts say Nigeria lenders may not be able to replicate the impressive earnings growth of the last quarter of 2014, as restrictions in foreign trading will stunt growth and also hurt liquidity.
Banks are under severe pressure as oil that accounts for 90 percent of foreign earnings and two third of government revenue fell by 40 percent since November last year.
Fidelity Bank is aggressive about lending as loan-to-deposit ratio increased to 68.57 percent in 2015 compared with 56.70 percent in 2014.
Loans and advances to customers spiked by 28.22 percent to N546.88 billion in 2015, as against N426.50 billion in 2013, while customer deposit increased by 6.01 percent to N797.54 billion.
The strong loan and deposit base of the bank means it is developing and intensifying its risk management strategy and also improving on its quality loan portfolios.
Its asset base strengthened as total assets grew by 14.42 percent to N1.19 trillion in 2015 from N1.04 trillion in 2014.
The bank’s share price closed at N1.90 on the floor of the exchange, while market capitalisation was N55.05 billion.
BALA AUGIE
