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Fidelity Bank Nets N5.9bn Q1 Profit, Despite 47.44% Impairment Charge Rise

Barely 24 hours to the annual general meeting where shareholders will consider its performance for the full year ended December 31, 2018, the board of Fidelity Bank Plc, on Thursday presented its unaudited financials for the first quarter ended March 31, 2019, showing that profit grew faster than earnings.
The profit rise despite the 106.76% rise in income tax expense, could have been more significant, but for the 47.44% increase in credit loss expense; even as fee and commission income rose 39.52%, while cost notched 11.4%; just as operating income soared by 348.56%.
Gross earnings rose by 11.81% from N43.33bn in the first quarter of 2018, to N48.44bn; despite the marginal 2.64% increase in interest and similar income from N37.68bn to N38.67bn; and expenses from N21.5bn to N22.9bn. Net interest income, therefore, stood at N15.77bn, down by 2.52% from N16.18bn.
Credit loss expense jumped to N1.04bn from N0.7m; resulting in net interest income after credit loss expense came to N14.74bn, down from N15.48bn, representing a drop of 4.78%.
Fee and commission income increased by 39.52% from N4.66bn to N6.5bn; fee and commission expense increased from N1.03bn to N1.14bn, up by 11.4%; just as other operating income stood at N2.49bn, compared to from N0.56bn; which was mainly the net foreign exchange gains of N2.25bn, up from N146m.
Net gains from financial assets at fair value rose by 78.62% from N0.44bn to N0.78bn; even as personnel expenses was constrained at N5.35bn from N5.07bn; depreciation and amortization increased to N0.99bn from N0.77bn. Other operating expenses by 11.56% from N9.28bn to N10.35bn; the bulk of which was the N2.191bn banking sector resolution cost, which climbed from N1.766bn; followed by the N1.299bn marketing, communication and entertainment cost which dropped from N1.35bn in 2018. Within the period, outsourced cost increased from N894m to N1.048bn.
Profit before tax climbed 33.96% up from N4.98bn to N6.67bn; and net profit by 28.36% to N5.94bn from N4.63bn; translating to earnings per share of 21 kobo, compared to 16 kobo in the corresponding first quarter of 2018.
On the balance sheet, total assets increased by a robust 26.39% to N1.87tr from N1.479tr, with loans and advances climbed to N966.254bn from N738.727bn; just as total liabilities increased by 28.31% from N1.3tr to N1.668tr, lifted by the N1.016tr customer deposits, which increased from N859.358bn. Shareholders inched 12.45% from N179.66bn to N202.03bn.
According to the segment analysis of the financials, revenue was driven primarily by retail banking, which contributed N22.325bn, compared to N21.352bn in the corresponding period of 2018; followed by N16.262bn, up from N14.256bn from corporate banking; while investment banking pooled N9.856bn, as against the previous N7.72bn in prior Q1. Net profit for the period was also helped by the retail banking, which contributed N3.136bn, up from N2.361bn; corporate banking added N1.624bn or N1.415bn; just as investment banking pooled N1.179bn, up from N851m.

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