Culled—Proshare
3/11/2016/Research
The microeconomic challenges that influenced business outlook in 2015 financial are largely unresolved in 2016 as bearish macroeconomic indicators had shown. Nigerian Banks are still facing headwinds within a tougher operating environment.
The recessionary environment, shortage of FX, technical devaluation of currency and floating of Naira, increase in MPR by 200bpts to 14% in the face of growing inflation and sustained negative GDP growth- this had impacted and still impacting both top-line and bottom-line of banks across the board.
As a result of these mounting challenges, Fidelity Bank Plc sustained mixed performance outlook, with modest top-line growth of 3% to close at N110.35billiion while the bank sustain negative growth in its bottom-line. The bank posted 28.7% decline in PBT to close at N9.84billion.
The unimpressive bottom-line performance could be traced to significant surge in impairment losses by 102% to the tune of N7.96billion. This gives us much concern about qualities of risk assets of the bank as cost of risk up to 1.5%.
Also, we observed that the NPL ratio had gone up to 4.5% from 3.4% recorded in half-year earnings report. Though, NPL ratio still closed below regulatory threshold of 5%. The Non-performing Loan has climbed from N26.00bilion to N34.00billion.
Summarily, below are the key takeaways from the Half-year 2016 presentation as presented by the management of the bank;
- The impairment losses is due to weakness in macro economics
- Key exposures have been restructured adequately
- 60% to 70% of exposures in oil &Gas sector have been restructured
- The bank is currently meeting 15% of its FX obligations to customers
- All assets are in good shape despite decline in liquid assets
- The bank is not expected to exceed the 1.5% cost of risk
- The bank recorded N7.2billion impairment charges in last two quarters
- Increase in provisioning and decline in dividend income impact bottom-line
- The restructured loans suggests better prospect and positive outlook
- Exposure to Oando and Transcorp portfolio had been restructured
- The bank maintains modest FX liquidity posture
