BusinessDay

Fidelity Bank eyes tier one status as half-year profit hits 7-yr high

Fidelity Bank recorded a significant uptick in profit on the back of a simultaneous increase in interest income for the period ended, June 2022.

The tier-2 bank recorded the highest first-half profit of N23.3 billion in June 2022, a 20 percent increase from N19.3 billion for the period ended June 2021.

Also, net interest income surged 50 percent to N75.6 billion, the highest in seven years from N50.3 billion in the first half of 2021.

Analyst at CSL Research said in a report, “interest income grew 52.9 percent year on year, which according to the bank’s management, was driven by expansion in earning assets and improved yields on government securities.”

Fidelity bank reported its net interest income after credit loss expense at N73.6 billion, indicating a 53 percent increase from N48 billion.

The bank’s gross earnings grew to N155 billion in the first half of 2022, up 27 percent from N122.3 billion in the corresponding period of last year.

Fee and commission income increased to N16.1 billion in June 2022, indicating a 24 percent increase from N13 billion in June 2021.

“The Fee and Commission Income lines that showed a year-on-year increase were ATM charges, account maintenance charges, commission on fidelity connect, commissions on off-balance sheet transactions, letters of credit commissions and fees, other fees and commission, telex fees, collection fees, and remittance fees,” CSL Research said in a note.

Loans and advances to customers increased to N2 trillion in June 2022, up 25 percent from N1.6 trillion in December 2021.

Deposits from customers climbed 15 percent to N2.3 trillion in the first half of 2022 from N2 trillion in the first half of 2021.

Total assets rose to N3.7 trillion in June 2022, up 12 percent from N3.3 trillion in December 2021.

Read also: In support for CBN’s FX repatriation push, Fidelity Bank sensitizes customers

Net cash flows from operating activities rose to N229.64 billion in June 2022 from a negative of N31.4 billion in June 2021.

“We are delighted with our H1 2022 performance which showed strong growth across key performance indices,” Nneka Onyeali-Ikpe, Fidelity Bank’s chief executive officer, said.

“With improved efficiency and customer experience around our network, customer transactions have grown considerably as we optimise our balance sheet and build up a large stock of stable low-cost deposits.”

In 2021, Onyeali-Ikpe announced plans to make the bank one of the tier-1 banks by 2025 and achieve a 7.5 percent total market share of deposits in the same year.

Net cash flows used in investing activities increased to a negative N83.8 billion in the first half of 2022 from N34 billion in the first half of 2021.

Net cash flows from financing activities recorded a negative N67.1 billion in June 2022 from a positive cash flow of N28 billion in June 2021.

At the beginning of the year, fidelity bank cash and cash equivalents stood at N219.2 billion while N296.4 billion was recorded in June 2022.

However, cash and cash equivalents dropped just 1 percent to N296.4 billion from N299.4 billion.

Ratios above requirement

Fidelity bank recorded Non-performing loans (NPL) ratio that dropped to 2.7 per cent from 2.9 per cent in 2021 FY, which led to a decline in cost of risk to 0.2 per cent from 0.5 per cent in 2021 FY as asset quality continue to improve.

Other Regulatory Ratios were above the required thresholds with liquidity ratio at 47.0per cent and capital adequacy ratio (CAR) at 19.8 per cent compared to the minimum requirement of 15 per cent.

The audited half-year results and dividend recommendation as Fidelity Bank explained the rationale behind its bid to acquire 100 per cent equity stake in Union Bank UK Plc; a spin-off and former subsidiary of Union Bank of Nigeria (UBN) Plc.

Fidelity Bank had entered into a binding agreement to acquire 100 per cent in Union Bank UK Plc, a transaction that will make the London-based retail and wholesale banker a subsidiary of Fidelity Bank.

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