By InvestAdvocate

Lagos (INVESTADVOCATE)-Fidelity Bank Plc on Monday said its pretax profit  for the period ended December 31, 2017 grew 83.5 percent to N20.30 billion from N11.06 billion recorded a year ago.

Post tax profit of the bank increased 93.7 percent to N18.85 billion from N9.73 billion posted in the corresponding period of 2016.

Gross earnings appreciated to N179.89 billion from N152.05 billion declared in 2016 end, the lender said in a filing with the Nigerian Stock Exchange (NSE).

Nnamdi Okonkwo, MD/CEO of Fidelity Bank Plc commenting on the results, stated that:

“The 2017FY was a landmark year for Fidelity Bank as we returned to the international capital markets and issued a very successful $400 million Eurobond, commenced the interim audit of our financials to improve our governance process and delivered a strong set of results through the disciplined execution of our medium-term strategy.

We are delighted with our 2017FY performance which showed strong growth in key revenue lines, a corresponding decline in our operating expenses (despite the high inflationary environment) and significant traction in our chosen business segments. We were able to sustain our performance trend on a quarterly basis through the following: disciplined balance sheet management, strategic cost reduction, increased focus on the Corporate|Commercial|SME segments and continued execution of our retail and digital banking strategy.

Gross earnings increased y-o-y by 18.3% to N179.9 billion primarily driven by the following: increased yield on earning assets to 15.4% which led to a 22.4% increase in interest income to N150.7bn and a 3.3% increase in net fee and commission income to N25.8 billion driven primarily by the following products: Trade Finance (61.6% growth), Account Maintenance Fees (49.8% growth) and FX Income (20.9% growth). Digital banking now accounts for over 25% of our fee-based income as customers adoption of our mobile/internet platforms improved to 35% in the 2017FY and led to a 21.0% reduction in vault cash holding.

NIM remained strong at 7.3% for the 2017FY despite the reduction in yields on liquid assets from the third quarter. Nonetheless, the growth in the yield on our earning assets has continued to outpace the increase in funding costs; our average yield on earnings assets stood at 15.4% compared to an average funding cost of 7.2%.

The implementation of the initiatives from our Business Process Review Project and Digital Banking focus continued to impact positively on our operational efficiency as total operating expenses declined by 2.3% to N65.7 billion leading to our cost-income ratio dropping to 67.5% from 77.3% in the 2016FY. The combination of the strong net revenue growth of N7.7 billion (9.9% growth) and the decline in total expenses by N1.5 billion (2.3%) translated to a N9.2 billion (83.5%) increase in Profit before Tax (PBT) to N20.3 billion from N11.1 billion in the 2016FY.

Total deposits declined by 2.2% to N775.3 billion from N793.0 billion due to the high yields on fixed income instruments and specific one-off deposit payments. However, our retail banking strategy continued to deliver impressive results as savings deposits increased by 15.2% to N178.6bn and now accounts for 23.0% of total deposits from 19.5% in the 2016FY. This has improved our low-cost deposits ratio to 77.0% of total deposits.

Risk assets increased by 7.0% to N768.7 billion from N718.4 billion in the 2016FY. However, actual real growth in risk assets was 3.0% while the impact of the change in currency conversion rate (N305.9 to N333.1) was 4.0%. Cost of risk increased to 1.5% based on increased provisioning in the Telecommunications and Downstream Sectors. Non-Performing Loans (NPL) ratio improved to 6.4% from 6.6% in the 2016FY despite a 2.5% growth in the absolute NPL numbers, 2017FY coverage ratio (including regulatory risk reserves) improved to 109.4% compared to 83.0% in the 2016FY.

Other regulatory ratios remained above the required thresholds with Capital Adequacy Ratio (CAR) at 16.0% and Liquidity Ratio at 35.9%.

We estimate the transition to IFRS 9 in 2018 will reduce our shareholders’ equity by approximately N28.2 billion, however the impact on our capital adequacy ratio will be very marginal because the bank has over N28.8 billion available in regulatory risk reserves.

We remain focused on the execution of our medium term strategic objectives and targets while we look forward to sustaining the momentum and delivering another strong set of results for the 2018FY,” according to an emailed statement made available to InvestAdvocate