Fidelity Bank: Expect another strong profit advance

Fidelity Bank: Expect another strong profit advance

Fidelity Bank’s 2018 operation is expected to establish profit at a new peak, up on the 93% net profit lifting in 2017. The bank gained speed in earnings growth after an initial lull on the earnings track and has changed the full year profit outlook for the better.

At the end of the third quarter in September 2018, profit was already quite close to the full year figure for the preceding year. The full year earnings outlook for 2018 is positive for Fidelity Bank with renewed strength in earnings expected to be sustained for the second year after a big turnaround in 2017.

Revenue growth in 2018 isn’t likely to come anywhere close to the five-year best record of 18.4% in 2017 due to slacken performance of non-interest earnings. Management has however extracted increased profit margin from each naira of earnings through a firm hold on costs.

Gross earnings came to N139 billion for Fidelity Bank at the end of the third quarter operations, a year-on-year increase of 6.9%. Interest income accounted for all the increase in revenue with a growth of 9%, as non-interest income declined. Non-interest income was undermined mostly by a drop of 40% in other operating income to N3.53 billion.

Gross income is estimated to be in the region of N190 billion for Fidelity Bank for the 2018 operations. This will be an increase of 5.6% over the closing figure of nearly N180 billion in 2017. A significant slowdown in revenue growth is therefore expected for the bank in 2018 compared to the 18.4% star growth record of the bank in 2017.

The bank’s management countered the revenue slowdown with a firm hold on costs, which enabled it to improve profit margin at the end of the third quarter. The biggest impact in cost management happened in respect of loan impairment charges, which dropped a clear 55% to N3.28 billion over the review period. This enabled the bank to raise net interest income after credit loss expense by 18% to almost N55 billion at the end of the third quarter.

At N62 billion, interest expenses remained under control with a slightly higher increase than revenue. That permitted an increase of 8% in net interest income to N58.2 billion. This is an improvement from the position of the preceding year when interest cost grew well ahead of interest income.

Operating expenses moderated relative to revenue with a decline in personnel cost. The […]

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