Fidelity Bank’s third quarter profit have surged 65.14 percent as the Nigeria’s lender’s assets quality improved on the back of an excellent risk management strategy.
For the first nine months through September 2017, Fidelity Bank’s net income moved to N14.45 billion from N8.75 billion the previous year.
Gross earnings were up 17.89 percent to N130.08 billion in the period under review, driven by a combination of increased yield on earnings assets.
Interest income and similar charges increased by 20.45 percent to N110.10 billion; thanks to improved interest income on loans and advances.
Fidelity is efficient amid a volatile and tough operating environment as net margins moved to 11.11 percent in September 2017 as against 9.57 percent the previous year.
“We are delighted with our 9 months financial performance which showed strong growth in key revenue lines and a corresponding decline in our operating expenses, despite the high inflationary environment”, said Mr. Nnamdi Okonkwo, Fidelity Bank CEO.
Fidelity’s total operating expenses declined by 2.6 percent to N47.5 billion, leading to its cost-income ratio dropping to 66.8 percent from 77.3 percent as at Full year 2016; thanks to drop in personnel costs, process improvement and digital banking initiatives which have continued to optimize the lender’s cost profile
The Nigerian lender’s risk management strategy has paid off as Non-performing loans (NPLs) ratio decreased to 5.9 percent in September 2017 from 6.6 percent as at September in 2016.
Impairment charges decreased by 8.0 4 percent to N7.32 billion while cost of risk decreased by 29 basis point to 1.30 percent in the period under review, signalling good asset quality.
Fidelity remains one of the most capitalized tier 2 lender as its capital adequacy ratio of 17.3 percent remain above regulatory threshold while a liquidity ratio of 34.40 percent allays fear about the lender’s liquidity management.
Fidelity has sold the most expensive emerging market bond as it seeks to shore up capital and improve on dollar liquidity.
Earlier in the month the mid-sized Lagos-based lender issued $400 million of five-year securities with a 10.75 percent and a repurchase of $256m of the bank’s outstanding $300m 6.875 percent notes due May 9, 2018.
There have been improved activities at the corporate Eurobond market as Banks like United Bank for Africa (UBA) and Zenith had raised bonds earlier in the year.
Corporate Eurobond issuances at Q2 year to date (YTD) OF $1 billion (N305.20 billion) were almost at par with 2016 issuances f N1.10 billion (N277.90 billion).
Nigerian government has also will raise $5.20 billion of Eurobond for the remaining part of the year in order to fund capital projects.
Fidelity’s total deposit fell by 2.26 percent to N774.38 billion as more customers favour investment in government securities due to very high returns compared to term deposits.
The Nigerian lender’s shares are up 71.4 percent year to date (ytd) compared with the 36.1 percent return on the index.