Fidelity Bank’s profit wilts on high operating expenses

The operating expenses of Fidelity Bank, a commercial bank in Nigeria, gulped 82.5 percent of its profit in the first nine months of 2023, reaching N89.97 billion, a BusinessDay analysis shows.

Findings from the bank’s financial statement showed despite growth in its profit after tax to N91.75 billion.

The bank’s operating expenses increased by 40 percent.

Personnel expenses rose by 73 percent to N30.3 billion in the period under review.

Credit losses surged nine times year-on-year to N32.2 billion, impacting net income growth to 50.5 percent, bringing net interest income after credit loss expense to N162.8 billion by September 2023.

Interest expenses grew less than interest earnings at 31.8 percent to N129.9 billion over the same period.

However, other operating income, led by foreign exchange gains, grew by 323.7 percent to N27.5 billion – which was reinforced by N19.2 billion net gain from financial assets to cover major increases in personnel and other operating expenses.

Overall, gross earnings rose by 40 percent to N389 billion, with fees and commission income increasing to N36.43 billion.

Fees and commission expenses increased to N9.65 billion.

Loans and advances to customers for the period totalled N2.65 trillion, up from N1.98 trillion recorded in 2022.

Deposit from customers rose to N3.43 trillion from N2.29 trillion recorded in 2022.

Net cash flow from operating activities surged to N418.65 billion from N199.5 billion on the back of an increase in interest received.

Net cash flow from investing activities recorded a 556 percent increase in loss to N185.89 billion.

Net cash flow from financing activities increased to N43.16 billion from a loss of N76.05 billion recorded in 2022.

Cash and cash equivalents stood at N569.1 billion at the end of the period.

The bank’s third-quarter closing numbers showed that interest expenses stayed moderated relative to interest earnings. Interest income saw an increase of 39.4 percent.

The bank recorded N29.8 billion as its third-quarter profit from N11.7 billion recorded in the same quarter in 2022.