Regulatory induced costs squeeze Fidelity Bank’s HI profits

Fidelity Bank of Nigeria plc has had profit squeezed by regulatory induced costs imposed by the Central Bank of Nigeria (CBN), as half-year profit (H1) fell 15.72 percent, analysis of the financial statement reveals.

For the first six month of the year, Fidelity Bank’s pre-tax profit reduced by 15.72 percent to N9.43 billion, compared with N11.19 billion in the same period of the prior year HY 2013, while gross earnings remained flat at N63 billion.

The profit after tax (PAT) also slowed as it shrank by 11.51 percent to N8.07 billion in HY 2014, compared with N9.06 billion in the earlier period.

It must be noted that based on BusinessDay analysis, the bank has been recording slow growth since last year.

Cost-to-income ratio moved to 40.68 percent in 2014, compared to 38.97 percent in 2014, while net margin, another measure of efficiency and profitability, declined to 12.76 percent in 2014, from 14.47 percent last year.

It means the bank should put its technology, distribution platforms and sales force to better use in order to improve efficiency and boost bottom-line performance.

Loans-to-deposit ratio in the review period increased to 57.21 percent from 52.10 percent last year, signifying the bank’s aggressiveness to lending.

Total assets were up by 8.80 percent to N1.05 trillion in HY 2014, to N1.05 trillion compared with N965.1 billion as of HY 2013.

In order to move services closer to the people, the bank plans to establish 26 new branches across the country in addition to 13 it had established in 2013.

Fidelity Bank began operations in 1988, as a merchant bank. In 1999, it converted to commercial banking and then became a universal bank in February 2001.

The bank’s market price closed at N2 on July 30, 2014, on the floor of the Nigerian Stock Exchange, while market capitalisation was N57.92 billion.

BALA AUGIE