- Net interest income of N54.9billion, up 38.7% q/q; down 0.7% y/y
- Non-interest income of N14.9billion, down 50.8% q/q, down 56.6% y/y
- Profit before tax of N27.6billion, up 31.9% q/q; up 6.8% y/y
- Profit after tax of N16.9billion, down 5.6% q/q; up 1.7 y/y
April 1, 2019/InvestmentOne Report
Fidelity Bank published its Q4 2018 financial scorecard on Friday, and as expected, the results revealed a 43.2% q/q decline in net interest income despite higher interest rates witnessed during the period. The decline can largely be attributable to more expensive funding costs, as the bank’s Cost of Funds (CoF) was up 140bps q/q to 7.6%, while Net Interest Margin (NIM) was down 60 bps q/q to 6.1%.
In contrast, non-interest income was up 122% q/q to N12.2billion on the back of higher foreign exchange gains, which translated into 5x q/q increase in other operating income. This was not enough to offset the 34.4% q/q increase in credit losses to N930million and the 20.5% q/q increase operating expenses to N21.6billion, as PBT and PAT both came in at N5.0billion and N5.1billion, down 28.7% q/q and 19.2% q/q respectively.
FY2018 Performance
Full year results were impressive despite a marginal increase in net interest income, to N69.6billion, as net loans were up 10.6% y/y to N849.9billion even as NIM decreased 90bps to 6.1%. We believe the 40bps y/y increment in CoF may have weighed in on the income line. The bank restated its FY 17 income statement by reclassifying N3.3billion from interest similar income to net gains from financial assets at fair value through P&L.
Similarly, non-interest income came in positive, up 9.2% y/y, as net fee and commission income rose 17.2% y/y. It appears the bank seems to be gaining some traction from e-banking activities, which surged 61.7% y/y to N2.8billion, accounting for 15% of fee and commission income. Resultantly, profit before provisioning was up 4.3% y/y.
Asset Quality
Impairment charges were down 62.7% y/y to N4.2billion, reflective of improving asset quality. Non-performing loans (NPL) ratio improved, declining 70bps y/y to 5.7% as gross loans went up 11.2% and absolute NPLs remained flat y/y. Hence, Cost of Risk (CoR) was down 90bps y/y to 0.5%.
Bottom-line
PBT and PAT were up 25.5% and 6.9% y/y to N28.7billion and N22.9billion respectively. PBT was above our estimates of N24.4billion on lower than anticipated impairment charges, while PAT was in line with our estimates as higher than expected effective tax (8.6% vs 7.8%) brought the PAT to our projection level of N20.7billion.
The 8.0% y/y increase in opex was line with our expectations, coming in at N72.3billion versus our estimate of N72.1billion. The increase was driven by higher AMCON and Depreciation charges in 2018. However, Cost-to-Income ratio improved to 74.2%, on the back of improved income levels mentioned above.
Finally, the bank declared a final dividend of N0.11k. This implies a dividend yield of 5.3% (versus 4.1% in FY 2017) based on Friday’s closing price of N2.06. Regulatory ratios still remain above regulatory benchmarks, with Capital adequacy and liquidity ratios coming in at 16.7% and 39.0% respectively.
UNITED BANK FOR AFRICA PLC Q4 2018/FY 2018 (YE: DEC)(N millions) |
| ||||
| |||||
Q4 2018 | Q/Q
| Y/Y
| FY 2018 | Y/Y
| |
Interest Income | 33,283 | -17.5%
| -10.2%
| 153,682 | 4.2%
|
Interest Expense | -21,864 | 8.0%
| -3.7%
| -84,095 | 6.1%
|
Net Interest Income | 11,419 | -43.2%
| -20.3%
| 69,587 | 2.1%
|
Non-interest income | 12,215 | 122.0%
| 45.0%
| 31,845 | 9.2%
|
Profit before provisions | 27,271 | 6.5%
| 19.8%
| 101,432 | 4.3%
|
Loan Impairment charges | -930 | 34.4%
| -76.7%
| -4,215 | -62.7%
|
Operating Expenses | -21,572 | 20.5%
| 11.9%
| -72,128 | 8.0%
|
PBT | 8,662 | 22.8%
| 191.1%
| 25,089 | 9.6%
|
Tax | 44 | -105.7%
| -87.1%
| -2,163 | 49.7%
|
Tax rate
| -0.5%
| -1151.2bps
| 1095.0bps
| 8.6%
| 230.7bps
|
PAT | 8,706 | 38.7%
| 162.5%
| 22,926 | 6.9%
|
Source: Company financials, Investment One Financial Services Research
FY 2018 BANKS COMPARISON SHEET |
|
|
| ||||||
NGN billion (unless stated otherwise) |
| ZENITH | GTB | STANBIC | ACCESS | UBA | FIDELITY | STERLING | |
Key Income Statement Figures | Gross Earnings | 630.3 | 434.7 | 222.4 | 528.7 | 494.0 | 188.9 | 152.2 | |
Net Interest Income | 295.6 | 222.4 | 78.2 | 173.6 | 205.6 | 69.6 | 55.3 | ||
Non-interest Income | 180.0 | 125.8 | 102.6 | 138.2 | 102.6 | 28.2 | 27.0 | ||
Total Expenses | -225.5 | -127.8 | -95.601 | -194.0 | -197.3 | -72.1 | -67.0 | ||
Loan Impairment Charges | -18.4 | -4.9 | 2.9 | -14.7 | -4.5 | -4.2 | -5.8 | ||
Profit Before Tax | 231.7 | 215.6 | 88.2 | 103.2 | 106.8 | 25.1 | 9.5 | ||
Y/Y PBT Growth
|
| 16.2%
| 9.1%
| 44.1%
| 32.0%
| 2.4% | 30.6% | 17.1% | |
Dividend (Kobo per share) | 250 | 245 | 150 | 25 | 65 | 11 | 0 | ||
EPS (kobo per share) | 615 | 654 | 704 | 331 | 220 | 79 | 32 | ||
Key Balance Sheet Figures | Total Assets | 5,996 | 3,287 | 1,664 | 4,954 | 4,870 | 1,720 | 1,103 | |
Total Liabilities | 5,140 | 2,712 | 1,424 | 4,464 | 4,636 | 1,526 | 1,005 | ||
Total Equity | 856 | 576 | 240 | 491 | 503 | 194 | 98 | ||
Key Ratios | Net Interest Margin | 8.9% | 9.2% | 5.2% | 5.3% | 6.1% | 6.1% | 6.6% | |
Cost of Fund | 3.1% | 3.1% | 4.0% | 5.5% | 4.2% | 7.6% | 7.4% | ||
Cost to Income | 49.3% | 36.6% | 52.9% | 62.2% | 63.9% | 74.2% | 81.4% | ||
NPL ratio | 5.0% | 7.3% | 3.9% | 2.5% | 6.4% | 5.7% | 8.7% | ||
Liquidity (bank level) | 72.0% | n/a | n/a | 50.9% | n/a | 39.0% | 42.2% | ||
Cost of Risk | 0.9% | 0.3% | 0.7% | 0.7% | 0.3% | 0.5% | 1.0% | ||
Capital adequacy ratio (bank level) | 25.0% | 23.4% | 24.7% | 19.9% | 25.0% | 15.4% | 13.3% | ||
ROE | 23.8% | 30.9% | 34.5% | 19.0% | 15.2% | 10.5% | 9.5% | ||
ROA | 3.4% | 5.6% | 4.8% | 2.1% | 1.7% | 1.5% | 0.8% | ||
Source: Company financials, Investment One Financial Services Research
