Fidelity Bank plc has released its audited financial statements for the six months (H1) ended June 30, 2021, showing 72.4 percent increase in profit before tax (PBT) to N20.6 billion, from N12 billion recorded in H1 2020.
The bank’s H1 scorecard at the Nigerian Exchange Limited (NGX) shows gross earnings increased by 6.2 percent year-on-year (YoY) to N112.3 billion on account of 27.8 percent growth in non-interest revenue (NIR) to N23.8 billion from N18.1billion in H1 2020.
The result’s key ratios show: Cost to Income Ratio: 64.8 percent compared to 65.1 percent in 2020FY; Cost of Risk: 0.3 percent compared to 1.4 percent in 2020FY; Net Interest Margin: 5.3 percent compared with 6.3 percent in 2020FY; Return on Equity: 14.2 percent compared with 10.5 percent in 2020FY: Non-performing Loans Ratio: 2.8 percent compared with 3.8 percent in 2020FY; Capital Adequacy Ratio: 18.8 percent compared with 18.2 percent in 2020FY, and Liquidity Ratio: 33.3 percent compared with 37.8 percent 2020FY.
The bank said NIR was driven by strong growth in Commission on Banking Services (57.7%), Account Maintenance Charges (50.6%), Digital Banking Income (49.4%) and Trade Income (33.7%), among others as total customer induced transactions across all the bank’s distribution channels increased by 58 percent YoY and 21.2 percent QoQ.
Total Deposits increased by 16.5 percent year-to-date (YtD) to N1.980 trillion from N1.699 trillion in 2020FY, driven by increased deposit mobilisation across all deposits types (Demand, Savings, Tenor).
Nneka Onyeali-Ikpe, MD/CEO, Fidelity Bank, commenting on the results, stated: “We sustained our impressive financial performance with double-digit growth in profit as increased customer transactions drove non-interest revenue while improved operational efficiency continued to moderate cost – to – serve.”
She said, “Digital Banking gained further traction as we now have 55.1percent of our customers enrolled on the mobile/internet banking products and 89.3percent of customer-induced transactions were done on digital platforms.
“Net Interest Margin came down to 5.3percent as the drop in average yields on earning assets surpassed the decline in average funding cost. Average yields on earning assets dropped by 130basis points (bps) to 9.4percent from 10.7percent in 2020FY while average funding cost declined by 43bps to 3.2percent from 3.6percent in 2020FY.
“In absolute terms, net interest income increased by 4.1percent due to 1.7percent YoY increase in total interest income and 1.2percent decline in total interest expenses. Though average cost of deposits has remained low at 2.7percent, interest rates on deposits are ticking up with the gradual recovery of business activities and market yields.
“Operating Expenses dropped by N4.6billion (9.8percent YoY) to N42.2billion. We recorded N7.2billion drop in key expense l ines as we deepen our operational efficiency through process improvement and cost optimisation.
“Foreign currency deposits increased by 23.1percent YTD ($149m) and now accounts for 18.5percent of total deposits from 17.5percent in 2020FY, as we continue to harness the benefits of our renewed drive in the Diaspora Banking space.”
“Net Loans and Advances increased by 15.8percent YtD to N1.535trillion from N1.326trillion in 2020FY. However, the actual growth was 14.7pe5cent while the impact of the currency adjustment (2020FY: N400.3/$ – H1 2021: N410.6/$) accounted for a 1.1percent YTD growth in the loan book. Cost of risk came in at 0.3percent and the non-performing loan (NPL) ratio (Stage 3 Loans) dropped to 2.8percent from 3.8percent in 2020FY. Other regulatory ratios remain well above the minimum requirement: capital adequacy ratio (CAR) at 18.8percent from 18.2percent in 2020FY,” she noted further.
The bank looks forward to sustaining the current momentum in second half (H2) by optimizing its balance sheet and lowering cost-to-serve which will translate to improved earnings while the bank remains committed to its medium to long-term strategic objectives.