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Fidelity Bank Directors Offer Juicier Dividend, Despite Earnings, Profit Drag

Directors of Fidelity Bank Plc, last week presented its audited financials for the year ended December 31, 2020, with a marginal drop in gross earnings, driven by the fall in interest revenue, just as fee and commission income fell to N19.853bn from the N25.262bn reported in the corresponding period of 2019. Net profit, thereafter, slipped by 6.24%, even as profit level for the year under review would have been far better, but for the N16.853bn loan loss provision, compared to the previous year’s N5.292bn credit reversal.

That notwithstanding, the board proposed a dividend of N6.371bn, which translates to 22 kobo per share, from the 92 kobo Earnings Per Share, compared to the previous year’s 20 kobo each, from 98 kobo EPS. The dividend will be paid electronically to shareholders whose names appear on the register of members at the close of business on April 16, 2021, subject to approval by shareholders at the annual general meeting.

Gross earnings in the period under review stood at N206.204bn, as against the previous N218.011bn, a breakdown of which showed that retail banking raked in N91.113bn, from N97.398bn; followed by corporate banking, N70.767bn, down from N74.929bn; and investment banking N44.324bn, which dropped from N45.685bn. Interest revenue fell from N179.491bn in 2019 to N168.551bn, helped by the N72.625bn from retail banking, as against N80.246bn; ahead of the N67.004bn, earned from corporate banking from N69.733bn.

Other interest and similar income rose from N5.35bn to N8.202bn. Interest expense dropped from N101.786bn to N72.63bn, after retail banking accounted for N33.762bn, compared to N43.679bn in 2019; followed by the N26.254bn from corporate banking, which also dropped from N39.273bn. This resulted in an increase in net interest income from N83.055bn to N104.123bn.

Net interest income after credit loss expense4 stood at N87.265bn, a slight drop from the N88.347bn reported in the corresponding period of 2019.

Fee and commission income dropped to N19.853bn from N25.262bn, of which ATM charges stood at N3.371bn, down from N4.44bn; while account maintenance charge followed with N2.8bn, a drop from N3.295bn in the preceding year; while e-banking commission stood at N2.464bn, from N2.947bn. Fee and commission expense increased to N6.144bn from N5.268bn; resulting in net fee and commission income of N13.709bn from N19.994bn.

The bank recorded nil net losses on derecognition of financial assets, as against N4.705bn in prior year; other operating income rose to N9.598bn from N7.908bn, with net foreign exchange gains accounting for N8.189bn, as against the N3.401bn reported in 2019. Net gains from financial assets at fair value through profit and loss stood at N1.115bn from N801m. Net operating income stood at N111.687bn from N112.345bn.

Personnel expenses rose from N24.129bn to N25.367bn; depreciation and amortization rose to N6.207bn from N5.421bn; depreciation and amortization was flat at N52.059bn from N52.442bn; resulting in total operating expenses of N83.633bn, up from N81.992bn. Profit before tax, therefore, dropped from N30.353bn to N28.054bn; while the drop in income tax expense from N1.928bn to N1.404bn, left net profit at N26.65bn, as against the previous N28.425bn.

On the balance sheet, total assets rose to N2.758tr from N2.114tr, with customer loans and advances rising from N1.126tr to N1.326tr; just as total liabilities improved from N1.888tr in 2019 to N2.484tr, of which customer deposit increased from N1.225tr to N1.699tr. Total equity increased from N234.03bn to N273.533bn.

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