Fidelity Bank Beat Profit Estimates On Lower Operating Expenses

(Sundiata Finance) – Fidelity Bank Plc reported second quarter profit that beat estimates as the lender’s operating expenses were reduced to the barest minimum amid inflationary pressure.
For the first six months through June 2017, net profit rose 66 percent to N9.03 billion from N5.45 billion the previous year. Analysts had predicted N7 billion, according to a BusinessDay survey.
Gross earnings rose 22.13 per cent on a year-on-year basis, slightly higher than 18.22 per cent jump in the first three months of the year. Second-quarter gross earnings of about N85.82 billion broadly matched analysts’ predictions.
Fidelity’s interest income was up 28.05 per cent to N72.85 billion, thanks to 29.54 per cent increase in interest earned on loans and advances to customers.
Net interest income moved by 11.11 per cent to N34.70 billion on the back of 100bps expansion in net interest margins, as asset yield growth outpaced the increase in funding costs.
The Nigerian lender’s stellar performance amid a tough and volatile operating environment has boosted investor confidence as they continue to buy in to the banks’ stocks.
Fidelity’s shares have gained 60.71 per cent since the start of the year, compared to 32.11 per cent return on the NSE All Share Index.
While most lenders in Africa’s most populous and largest economy are groaning under rising operating expenses caused by rising inflation and regulatory charges, Fidelity was able to curb operating expenses, thanks to effective cost control measures.
Total operating expenses was down 3.05 per cent to N30.35 billion as at June 2017, from N31.45 billion the previous year. Staff costs were down 8 per cent to N11.07 billion.
Although Nigeria’s 16.05 percent inflation figure for the month of July is lower than the 16.10 percent recorded in June, it is behind the 6-9 band targeted by the Central Bank.
Fidelity is efficient as cost to income ratio improved to 67.74 per cent in June 2017 from 74 per cent in June 2016.
Net margin, another measure of efficiency, increased to 10.48 per cent in June 2017 as against 7.78 percent recorded in June 2016.
Fidelity has made it easy for small and medium scale enterprises to access loans and grow their businesses. The lender has disbursed a total of N2.2 billion out of the N220 billion earmarked by the central bank for Small and Medium Enterprises (SMEs).
SMEs are the wheels of the economy as 96 percent of Nigerian businesses fall into the category of small businesses. This compares to 53 per cent in the United States and 65 per cent in Europe, according to a report by the World Bank.
Fidelity’s total deposit liabilities to customers fell by 4 percent to N761.06 billion in the period under review from N792.97 billion as at June 2016.
The Nigerian lender’s capital adequacy ratio of 18.40 percent gives it the room to pursue organic growth.
ts risk management strategy paid off as Non-performing loans (NPLs) fell to 5.80 percent in June 2017 from 6.60 percent as at December 2016.
Fidelity’s shares closed at N1.35 as at close of trading on Thursday, valuing it at N39.16 billion. (BusinessDay)

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