Amid the economic turbulence characterized by a drop in oil price, rising inflation and foreign currency restrictions, Fidelity Bank Plc has defiled all odds by recording a strong profit position to end 2015 financial year.
Analysts say the stellar performance by the Nigerian lender validates its risk management strategy and aggressive market penetration.
For the year ended December 2015, Fidelity Bank’s net income increased by 0.79 percent to N13.90 percent from N13.79 billion as at December 2014.
The stellar growth in PAT was driven by a 93.01 percent reduction in income tax expense to N120 million in 2015 from N1.71 billion in December 2014.
The lender’s gross earnings grew by 7.93 percent to N146.89 billion as against N136.09 billion.
Interest income also followed the same upward trajectory as it increased by 16.15 percent to N121.15 billion in December 2015 compared with N104.30 billion at December 2014.
The growth in at the top lines can be attributed year on year rise in loan growth and appropriate pricing of risk assets. Also increase in inter-bank placements, Treasury bills and Government bonds are a major driver of growth at the top lines.
“Our financial performance for the 2015 FY reflects the disciplined execution of our medium term strategy and the resilience of our evolving business model despite the extremely challenging environment,” said Nnamdi Okonkwo Managing Director and Chief Executive Officer of the bank
Indeed 2015 was a horrendous year for lenders in African’s largest economy as the Central Bank imposed rules and restriction to stabilize naira and protect a reserve that is hard hit by a sharp fall in oil price.
These shortages of dollars are causing liquidity squeeze for lenders and manufacturers are hard hit as they cannot source dollars to import raw materials.
The introduction of the Treasury Single Accounts (TSA) by the regulator is impacting on banks’ deposit base.
Fidelity Bank’s total operating expenses increased by 17.10 percent to N64.10 billion on the back of the mandatory AMCON charge and huge overhead costs. Cost to income ratio rose to 76.40 percent to in December 2015 from 74.20 percent in December 2014.
Analysts say it is usual for banks to have high operating expenses given the economic consequences of the catastrophic power failures that leaves them relying heavily on generator to run offices across the country.
It is believed that at banks, where each branch needs its own generator, fuel accounts 6 percent of total costs.
Fidelity remains aggressive about lending as loans to deposit moved to 75.1 percent in December 2015 as against 66.10 percent in December 2014. Loans to customers jumped by 6.10 percent to N578 billion while deposits from customers reduced by 6.10 percent to N769 billion.
The bank has a total asset of N1.23 trillion in the period under review, share price stood at N1.34 on the floor of the exchange. Market capitalization stood at N38.53 billion.
“In the 2016 FY, we will focus on, redesigning our systems and processes to enhance service delivery cost optimization imitative to reduce expenses by 5 percent, proactive risk management, increased customer adoption,” said Okonkwo.