April 26, 2019/InvestmentOne Report
- Net interest income of N15.8billion, up 38.1% q/q; down 2.5% y/y
- Non-interest income of N7.8billion, down 35.7% q/q, up 87.4% y/y
- Profit before tax of N6.7billion, down 23.0% q/q; up 33.9% y/y
- Profit after tax of N5.9billion, down 31.8% q/q; up 28.3 y/y
Fidelity bank released its financial scorecard early yesterday morning. Rather disappointing performance q/q, but quite positive y/y.
Net interest income was up 38.1% q/q (-2.5% y/y) due to the 16.2% q/q (+2.6% y/y) rise in interest income. Net interest margin was down 140bps to 4.7% in Q1 2019. Nonetheless, we believe the 13.7% q/q jump in the bank’s net loan book and the 30bps decline in cost of funds helped support the income line.
Furthermore, non-interest income was down 35.7% q/q (+87.4% y/y), largely due to the 67.2% q/q decline in other operating income. Customer deposits were up 3.8% q/q and as such, we saw net fee and commission income up 16.3% q/q (+47.5% y/y).
Asset quality improved slightly as NPL ratio was down 70bps q/q to 5.0% (versus 6.4% in Q1 2018). However, impairment charges rose 11.3% q/q (47.4% y/y), but cost of risk was down 10bps q/q to 0.4%.
There was an improvement in cost to income ratio as it was down 270bps q/q to 68.4% as total expenses declined 22.6% q/q (+10.4% y/y). We believe the bank’s opex is set to rise in subsequent quarters as it takes on its regulatory charges.
Finally, with a CAR of 14.1% and ROE of 13.9%, we maintain our BUY rating on the bank, with target price of N2.36k, indicating an upside potential of 20.0% based on yesterday’s closing price of N1.97k.
FIDELITY BANK PLC Q1 2019 (YE: DEC) (N millions) | ||||
Q1 2019 | Q/Q
| Y/Y
| ||
Interest Income | 38,674 | 16.2%
| 2.6%
| |
Interest Expense | -22,900 | 4.7%
| 6.5%
| |
Net Interest Income | 15,774 | 38.1%
| -2.5%
| |
Non-interest income | 7,850 | -35.7%
| 87.4%
| |
Profit before provisions | 23,624 | -13.4%
| 16.0%
| |
Loan Impairment charges | -1,035 | 11.3%
| 47.4%
| |
Total Opex | -16,692 | -22.6%
| 10.4%
| |
PBT | 6,674 | -23.0%
| 33.9%
| |
Tax | -734 | -1768.2%
| 106.8%
| |
Tax rate
| 11.0%
| 1150.6bps
| 387.4bps
| |
PAT | 5,940 | -31.8%
| 28.3%
| |
Source: Company financials, Investment One Financial Services Research
Q1 2019 BANKS COMPARISON SHEET | ||||||||
NGN billion (unless stated otherwise) |
| ACCESS | ZENITH | GT BANK | UBA | FIDELITY | STERLING | |
Key Income Statement Figures | Gross Earnings | 160.1 | 158.1 | 110.3 | 131.7 | 38.7 | 36.5 | |
Net Interest Income | 56.8 | 86.1 | 58.2 | 58.1 | 15.8 | 14.9 | ||
Non-interest Income | 46.8 | 32.7 | 35.8 | 25.6 | 7.9 | 5.7 | ||
Total Expenses | -55.1 | -59.4 | -35.9 | -51.9 | -16.7 | -16.5 | ||
Loan Impairment Charges | -3.4 | -2.1 | -0.7 | -1.7 | -1.0 | -0.8 | ||
Profit Before Tax | 45.1 | 57.3 | 57.0 | 30.2 | 6.7 | 3.3 | ||
Y/Y PBT Growth
|
| 64.4%
| 6.1%
| 8.0%
| 13.6%
| -23.0%
| 3.1%
| |
Dividend (Kobo per share) | nil | nil | nil | nil | nil | nil | ||
EPS (kobo per share) | 139 | 160 | 174 | 82 | 21 | 11 | ||
Key Balance Sheet Figures | Total Assets | 6,427 | 5,877 | 3,556 | 5,115 | 1,870 | 1,133 | |
Total Liabilities | 5,851 | 5,098 | 2,929 | 4,572 | 1,668 | 1,025 | ||
Total Equity | 576 | 779 | 627 | 543 | 202 | 108 | ||
Key Ratios | Net Interest Margin | 5.6% | 8.9% | 9.9% | 7.0% | 4.7% | 7.4% | |
Cost of Fund | 4.4% | 3.0% | nil
| 4.0% | 7.3% | 6.6% | ||
Cost to Income | 53.2% | 50.9% | 38.6% | 62.1% | 68.4% | 80.0% | ||
NPL ratio | 10.2% | 4.9% | 7.0% | nil
| 5.0% | 8.9% | ||
Liquidity (bank level) | 47.6% | 66.7% | 47.7% | 50.0% | 37.2% | 39.4% | ||
Cost of Risk | 0.5% | 0.4% | 0.1% | 0.4% | 0.4% | 0.5% | ||
Capital adequacy ratio (bank level) | 19.1% | 25.0% | 22.3% | 24.5% | 14.1% | 12.9% | ||
ROE | 30.9% | 25.2% | 32.8% | 22.3% | 13.9% | 12.8% | ||
ROA | 2.9% | 3.4% | 5.8% | 2.3% | 2.7% | 1.2% | ||
Source: Company financials, Investment One Financial Services Research
