Fidelity Bank Plc has announced its unaudited results for the three months ended March 31, 2020. Gross earnings for the period grew by 5.7% to N51.1 Billion from N48.4 Billion in the previous quarter.
This performance follows the challenging business environment occasioned by the decline in economic activities and the attendant risks of the COVID-19 pandemic on various business sectors.
The financial results released on Monday through the Nigerian Stock Exchange (NSE) showed that while the bank declared a Profit before Tax (PBT) of N6.6 billion for the first quarter of 2020, Profit after Tax (PAT) declined by 1.4 percent to N5.8 Billion.
Net Assets on the other hand grew by 20 Percent to N242 Billion. This was higher than the N202 Billion filled in the first quarter of 2019. Commenting on the result, the bank’s Managing Director/CEO, Nnamdi Okonkwo stated that the result for the quarter showed the resilience of the bank’s business model in an increasingly challenging operating environment.
We have continued to show growth in key performance indices while increasing our cost of risk as we anticipate a tougher business environment, he explained.
In response to the coronavirus pandemic, Okonkwo noted that our bank has activated its business continuity procedures with over 80 percent of staff working remotely and customers largely transacting using our digital banking channels.
We will continue to monitor and pro-actively manage the evolving risks, sustain our business continuity plan whilst ensuring the safety of our staff and customers, he added.
On Digital Banking, Okonkwo said the results showed significant traction in terms of usage and adoption. According to him, “We now have 50 Percent of our customers enrolled on the mobile/internet banking products from 47.4 percent in 2019 Financial Year (FY), 83 percent of total transactions are now done on digital platforms and 28.6 percent of fee-based income now coming from digital banking.”
He disclosed that digital banking income for the quarter dropped by 24.6 percent due to the downward fee revisions for electronic transactions in line with the new bankers’ tariff. Okonkwo further revealed that the efforts aimed specifically at strengthening the bank’s grip on the retail market, is yielding significant results as savings deposits increased by 13.4 percent to N312.1Billion.
With this development, our bank remains on course to achieving the 7th consecutive year of double-digit savings growth. Savings deposits currently accounts for 23.1 percent of total deposits compared to 22.5 percent in 2019FY. Total Deposits, a measure of customer confidence in Fidelity Bank, increased by 10.4 percent to N1,352.3 Billion from N1,225.2Billion in 2019FY.
The bank recorded strong growth across all deposit products which reduced its funding costs by 200bps. Local currency deposits increased by 10.1 percent to N1,031.4 Billion while foreign currency deposits increased by 11.2 percent to N320.8Billion.
Net Interest Margin improved further to 6.6 percent from 6.2 percent in 2019FY as the drop in its average funding cost outpaced the compression in our average yields on earning assets. Average funding cost dropped to 4.4 percent from 6.3 percent in 2019FY resulting in a 15.6% (N3.6 Billion) decline in total interest expense which translated to a 48.8 percent increase in net interest income to N24.6Billion from N16.5Billion in Q1 2019.
According to the results, Non-Performing Loans (NPL) ratio increased to 4.8 percent from 3.3 percent in 2019FY reflecting the bank’s early conservative assessment of sectors that will be affected by the Covid-19 pandemic. Regulatory Ratios stood above the required thresholds with Capital Adequacy Ratio (CAR) at 17.7 percent and Liquidity Ratio at 31.6 percent.