Fortis Microfinance Bank records double digit growth in earnings

Fortis Micro Finance Bank (Fortis MFB) Plc has recorded double digit growth in earnings amid a mid a tough and unpredictable macroeconomic environment.

The lender is increasingly taking banking service to those in the hinterland that were before now excluded as evidenced in the contribution of interest income on loans to gross earnings.

For the year six months through June 2017, Fortis MFB’s net income   surged by 152.81 percent to N677.55 million from N268.15 million the previous year.

Interest income was up 41.89 to N2.54 billion the period under review from N1.79 billion as at June 2016.

The top line growth was driven by increase in interest income on loans and advances as the lender is aggressive about extending credit facilities to owners of small and medium businesses across the country.

The Bank has been leveraging on the Money Mobile License, through the Fortis Mobile Limited, to deepen financial inclusion while ensuring that the rural farmers are banked.

Fortis MFB has made a tremendous headway in women empowerment as it has granted loans to 300,000 women across the 19 states of the federation.

Empowering women as a vehicle of economic growth and development and poverty eradication cannot be overemphasized as the Nigerian government through the Government Enterprise and Empowerment Programme has set aside N1.6 billion exclusively for women.

Analysts however say microfinance banks in Africa’s most populous nation and largest oil producer have not delivered on their mandate of providing financial services to the poor given the high exclusion rate.

According to EFInA Access to Financial service in Nigeria 2014, only 2.6 million adults have microfinance bank account.

Experts have identified the problems of microfinance banks to include severe undercapitalization, extremely high proportion of Non-Performing Loans (NPLs), insider lending, lack of transparency, inexperience and supervision, and high over costs.

Despite the aforementioned challenges, Fortis MFB remained efficient as net margin increased to 25.26 percent in the period under review as 11.71 percent the previous year.

Cost to Income ratio, (CIR), a measure of efficiency, fell to 41.81 percent in June 2017 from 58.16 percent as June 2017.

A lower CIR figure means a bank is efficient while increasing profit.

Experts in the Microfinance industry have urged operators to embrace digital financial services to deepen their operations and compete favorably with the operators of the conventional commercial banks.

“Digital finance would encourage efficiency and effectiveness in microfinance banking by reducing the cost of operations, cost of disbursing and processing funding, as well as reaching the unbanked members of the society in the rural areas as a result of infrastructure challenges”, Kenneth Okakwu, Director-General LAPO Institute, Benin-City, Edo state and Kimanthi Mutua, Founder/Chief Executive Officer of the K-Rep Group , Kenya.

Further analysis of the financial statement of Fortis (MFB) shows total assets increased by 4.03 percent to N21.71 billion while shareholders fund rose by 16.73 percent to N4.73 billion as at June 2017.

The lender’s total loans and advances spiked by 7.60 percent to N18.11 billion while deposits from Customers were flattish at  N8.47 billion.

Fortis Micro Finance Bank became the first Microfinance Bank in the country, second in Africa and 16th in the world to secure the SMART Campaign revered Client Protection Principle (CPP) certification after a rigorous rating exercise by MicroRate, USA, according to its directors at the 2015 Annual General Meeting of the Bank in 2016.

BALA AUGIE