Fidelity Bank plc has reported 7.6 per cent drop in profit before tax to N28.1billion in its audited result and accounts for full year ended December 31, 2020 from N30.4billion reported in 2019.
The Board has proposed a dividend per share of 22kobo subject to shareholders’ approval at the Annual General Meeting (AGM). The proposed dividend translates to an increase of 10 per cent from 20 kobo in 2019FY and a dividend yield of 9.4 per cent.
The lender on Wednesday in its profit and loss figures also reported Gross Earnings that dropped by 5.4per cent to N206.2billion from N218.0billion in 2019.
Other key financial parameters showed that Net Interest Income increased by 25.4per cent to N104.1billion from N83.1billion in 2019, while Net Revenue increased by 15per cent to N128.5billion from N111.8billion in 2019.
In the period under review, the bank reported 2,971 per cent impairment to N16.9billion from a write-back of N0.6billion in 2019.
However, the balance sheet position of Fidelity Bank showed Net Loans increased by 17.7per cent to N1,326.1billion from N1,127.0billion in 2019, while Total Deposits increased by 38.7per cent to N1,699.0billion from N1,225.2billion in 2019.
This brings total assets to N2.76trillion in 2020, 30.5 per cent increase over N2.11trillion reported in 2019.
MD/CEO of Fidelity bank, Nneka Onyeali-Ikpe stated that, “We are pleased with our financial performance, which clearly showed the resilience of our business model as core operating profit increased by 50.9per cent to N44.9billion from N29.8billion in 2019.
“We also saw a significant improvement in our efficiency indices as cost-to-income ratio moderated downward to 65.1per cent from 73.4per cent in 2019.
“However, Profit before Tax (PBT) dropped by 7.6per cent to N28.1billion as we proactively increased our provisions on risk assets to N16.9billion from a net write-back of N0.6billion in 2019. We took a conservative stance in recognition of the impact of the global pandemic, which has redefined business risks and opportunities in the new normal.
“Gross Earnings dropped by 5.4 per cent to N206.2billion due to a decline in interest & similar income as well as a drop in net fee income. Net fee income declined by N4.3billion largely due to the downward revision of fees in line with the new bankers’ tariff.
“Digital Banking income dropped by 18.8 per cent due to the revised banker’s tariff but it increased by 19.6 per cent QoQ on account of increased customer adoption as more services are migrated to our digital channels. We now have 52.8 per cent of our customers enrolled on the mobile/internet banking compared to 47.4 per cent in 2019, while 88.4 per cent of our customers’ transactions were done on the digital platforms.
“Net Interest Margin improved to 6.3 per cent from 6.2 per cent in 2019, largely due to 270bpts drop in average funding cost to 3.6 per cent from 6.3 per cent in 2019.
“This resulted in a 28.6 per cent drop in total interest expenses and 25.4 per cent increase in net interest income to N104.1bn despite a 31.3 per cent increase in interest bearing liabilities.
“Average yields on earnings assets dropped to 10.7 per cent from 13.8 per cent in 2019 largely due to a combination of lower yields in the market and downward review of lending rates especially on loans funded with the intervention funds, which represents 40 per cent of our local currency loan book .
“Operating Expenses increased by N1.6billion (2.0 per cent) to N83.6billion largely driven by N2.2billion growth in regulatory charges (NDIC and AMCON Charges). Over 50 per cent of our cost lines declined in 2020 as we harnessed the benefits of remote work ing which contributed to the drop in our cost-to-income ratio to 65.1 per cent.
“Total Deposits increased by 38.7 per cent to N1,699.0 billion from N1,225.2billion in 2019, which stood well-above our guidance for 2020FY. The increase was driven by double-digit growth across all product lines (Demand | Savings | Tenor). Local currency deposits grew by 49.6 per cent and now accounts for 82.5 per cent of total deposit while foreign currency deposits increased by 3.3 per cent and accounts for 17.5 per cent of total deposits. Also, low-cost deposits increased by 35.3 per cent to close at N1,307.7billion from N966.8billon, which explains the 38.6per cent drop in interest expenses on customer deposits.
“Retail Banking sustained its growth trajectory with 54.2 per cent (N149.2billion absolute) growth in savings deposits to N424.4billion from N275.2billion in 2019, making it the 8th consecutive year of double-digit growth in savings deposits.
“Net Risk Assets increased by 17.7 per cent to N1,326.1billion from N1,127.0billion in 2019. However, the actual growth in risk assets was 13.3 per cent while the impact of the currency adjustment (2019: N364.7/$ – 2020: N400.3/$) accounted for a 4.4 per cent growth in the loan book.
“Cost of risk came in at 1.4 per cent as we increased our loan provision buffers against possible headwinds. Non-Performing Loans (NPL) ratio is now 3.8 per cent from 3.3 per cent in 2019. Other Regulatory Ratios remained above the required thresholds with liquidity ratio at 37.8 per cent and capital adequacy ratio (CAR) at 18.2 per cent.
“We successfully issued 10-year N41.2billion Tier II Local Bonds due 2031 at 8.5per cent coupon. The transaction was a landmark achievement in the Nigerian domestic debt market as the largest corporate bonds ever issued by any Nigerian Bank. It also validates the continued investors’ confidence in our long-term aspirations and strong corporate governance. Our 2020 CAR does not include the newly issued bonds.”