No Interim Dividend Payout For Shareholders Of Nigeria’s Fidelity Bank, As Net Profit Slips17.22%

Five months after end of the period, the board of Fidelity Bank Plc has released its long-awaited half-year result showing that despite the 45.98% growth in gross earnings, net profit dropped by N27.522bn or 17.22%, as effects of the significant leap in foreign currency revaluation gains and drop in credit loss expense was wittled down by a huge derivation loss and growth in other operating expenses.

Consequently, the directors did not recommend an interim dividend this year, breaking a tradition it started in 2022 when it paid a modest 10 kobo per share, joining the mostly first tier banks that have continued. The bank has however sustained its tradition of paying year-end dividend to shareholders.

According to the result, gross earnings rose by N235.843bn from N512.864bn in the similar period of last year to N748.707bn, lifted by the N557.914bn interest and similar income calculated using effective interest rate method, up from N363.959bn; just as other inerest and similar income dropped marginally from N109.277bn to N101.772bn; while interest and similar expense stood at N239.268bn from N146.83bn. Net interest income rose to N420.418bn from N326.406bn.

Credit loss expense dropped from N35.929bn to N13.656bn, resulting in net interest income after credit loss expense of N406.762bn from N290.477bn. Fee and commission income increased to N53.352bn from N35.055bn, with fee and commission expense almost doubled from N3.858bn to N6.318bn.

The bank recorded net gain on derecognition on financial assets stood at N693m, compared to the previous N83m loss; other operating income jumped to N2.021bn from N1.148bn.

Foreign currency revaluation gains soared from N3.425bn in the first two quarters of 2024 to N33.649bn this year; net gains from financial assets at fair value though profit or loss fell from N478m to N336m; derivative loss stood N59.776bn, as against the previous N34.212bn loss. Personnel expenses jumped to N40.929bn from N26.752bn; while depreciation, amortisation and impairment increased to N9.197bn from N4.651bn; while other operating expenses ballooned to N200.063bn from N128.579bn.

Profit before tax, therefore fell from N200.872bn to N180.529bn; while the income tax expense of N45.383bn, from N41.038bn translated to a net profit of N132.312bn,  down from N159.834bn in the corresponding period of last year. This left earnings per share for the period at N2.64, slide from the previous N4.99, the difference of which resulted from the bank’s ongoing capital raising exercise to enable it meet the new minimum capital requirement for banks as directed by the Central Bank of Nigeria (CBN).

On the balance sheet, total assets rose to N10.051tr at the end of the half-year from N8.821tr on December 31, 2024, driven by the N4.854tr customer loans and advances, up from N4.387tr. Total liabilities grew to N9.075tr from N7.923tr, helped by the N7.204tr customer deposits, which rose from N5.937tr.

A breakdown of the numbers showed that revenue and profit were mainly driven by the retail banking segment which accounted for N458.452bn and N88.059bn respectively, followed by investment banking’s N175.135bn contribution, even as profit sagged to N18.055bn, owoing to its huge N48.848bn operating expense; while corporate banking contributed N29.032bn to net profit and N115.121bn to revenue for the period.

This was similar to 2024H1 when retail banking also contributed N314.992bn and N122.501bn; followed by investment banking’s N107.509bn revenue and N11.027bn profit; and the N90.362bn earnings income from corporate banking that yielded N26.305bn to the bottomline.