Fidelity Bank Plc, one of Nigeria’s highly diversified financial institutions, has announced its unaudited results for the half year ended June 30, 2016, disclosing that its deposit base grew to N829.9 billion from N769.6 billion in 2015 Financial Year (FY). This represents a 7.8 per cent increase for the period under review.
During the year under review, the bank’s net loans rose impressively by 23 per cent from N578.2 billion to N711.0 billion, in line with its growing interest in extending support to critical sectors of the economy. According to the lender’s financial statement for the period under review, Fidelity posted a decline of 2.6 per cent and 35 per cent in its gross earnings and Profit Before Tax (PBT) respectively.
Whereas total assets increased by 13.5 per cent to N1,397.9 billion from N1,231.7 billion in 2015, total equity remained flat at N183.5 billion. While total expenses rose by 10 per cent to N31.7 billion from N28.8 billion in H1 2015, operating income increased to N43.6 billion from N42 billion in the preceding year, representing a 3.6 per cent rise.
Commenting on the result, Managing Director/Chief Executive Officer, Fidelity Bank Plc, Nnamdi Okonkwo, stated that the company’s financial performance was reflective of the general slowdown in business activities due to fall in lower government revenues, which is a direct fallout of the free fall in international oil prices.
According to him, rising inflation rate, lower disposable income and tougher operating environment for most sectors of the economy as well as the impact of the devaluation on asset quality has all together impacted financial performance.
“Despite the headwinds above, we continued with the disciplined execution of our medium term strategy and recorded decent growth on key operational metrics – deposits, loans, net interest income, electronic banking income and operating income,” Okonkwo explained.
Net Interest Margin (NIM) declined from 6.9 per cent (2015 FY) to 6.5 per cent in H1 2016 despite a drop in its funding cost from 6.2 per cent (2015FY) to 4.2 per cent H1 2016.
“This was due to a 2.0 per cent drop in the average yield on its earning assets driven by lower yields on liquid assets and a reduction in lending rates for some sectors of the economy, which ultimately resulted in aggregate yields on earning assets declining faster than funding costs,” said the bank Chief Executive.
But more importantly, risk assets grew by 23 per cent (N132.9 billion) from December 2015 with the 40 per cent devaluation of the local currency (naira) accounting for 15.6 per cent (N89.9 billion) of the bank’s loan growth. Foreign currency loans currently constitute 43.7 per cent of total loans up from 38.1 per cent in Q1, 2016 due to the currency devaluation.