Fidelity Bank Plc, one of Nigeria’s most capitalised financial institutions, has released its third quarter result for the period ended September 30, 2015, posting an increase of 11.0 percent and 1.8 percent in its gross earnings and profit respectively. Gross earnings grew from N96.0 billion in the nine-month period to N106.6bn in the third quarter of 2015. Profit after Tax (PAT) went up by 1.8 percent to N11.4bn as against N11.2bn made in the comparable period of last year. While total equity increased by 4.2 percent to N180.3bn from N173.1bn as at December 2014, operating income stood at N62.0bn, a 9.7 percent rise compared to N56.5bn in the nine-month period.

Commenting on the result, Managing Director and Chief Executive Officer, Fidelity Bank Plc, Nnamdi Okonkwo, stated that business operations during the period under review were constrained by regulatory and economic pressures arising from currency devaluation concerns, tight monetary stance, and implementation of the Treasury Single Account (TSA). This situation, Okonkwo explained, had culminated in negative earnings in the banking sector. He however, expressed great optimism in the new business model which the bank adopted and which resulted in a year-on-year (y-o-y) growth in both fund and fee based income resulting in a 3 percent growth in profitability.

“Despite these challenges we continued with the disciplined execution of our medium term strategy. Profit before Tax (PBT) increased to N13.8bn despite the decline in our total assets due to the TSA implementation,” Okonkwo said.

The bank’s net interest income increased by 10.8 percent y-o-y to N40.6bn but declined by 4.8 percent quarter-on-quarter (q-o-q) due to the reduction in its earning assets. Okonkwo, however, pointed out that the bank continued to increase yields on earning assets faster than growth in funding costs, which improved its NIM (Net Interest Margin) to 6.9 percent in third quarter of 2015. This growth put the bank in pole position to attain its 2015 target of 7.0 percent.

According to the bank chief, Net Fee Income increased by 7.7 percent y-o-y to N21.4 billion but declined by 4.2 percent q-o-q due to lower Foreign Exchange (FX) Income on the back of trading restrictions in the market. Alluding to the impact of the bank’s current retail strategy in driving revenues, Okonkwo stated: “Electronic banking income increased by 128.4 percent y-o-y to N4.5bn and 115.4 percent q-o-q.” He added that this was driven essentially by the deployment of the bank’s innovative online banking application, increased migration of customers to alternate electronic channels as well as a rise in international card transactions.

Mr. Okonkwo explained that total expenses grew by 10.3 percent y-o-y to N44.8bn and 6.3 percent q-o-q driven by cost lines like staff remuneration, regulatory costs (NDIC/AMCON) and branding/advertisement costs. Cost-Income Ratio declined to 71.6 percent in 9M 2015 from 74.2 percent in the 2014 FY as revenue growth outpaced the increase in operating cost, he said, adding that Net Loans, on the other hand, grew marginally by 1.1 percent YTD to N547.7bn but declined by 4.4 percent q-o-q. “This is as a result of customer pay-downs, amplified by the re-alignment of their respective business model and a cautious approach to asset creation in consonance with the weaker macro environment,” Okonkwo said.

He noted that the Cost of Risk amounted to 1.0 percent while the bank improved its coverage ratio. NPL Ratio remained within the bank’s guidance at 3.7 percent. Total Deposits declined by 6.6 percent YTD to N765.8bn and 3.9 percent q-o-q due to regulatory initiatives like the implementation of the TSA which impacted the bank’s deposit base by about N75bn during the quarter.

Despite all these challenges, Okonkwosaid that Fidelity Bank is committed to keeping its promise to its customers. In September, the bank unveiled its new corporate identity that portrays its positive personality with a view to positioning the brand in a highly competitive market.

“Our new corporate identity,” Okonkwo said, “is inspired by our past with our eyes set on the future and always staying true to our vision. Our new identity comes with a renewed brand promise . . . ‘your aspiration may prove to be a tough job but someone’s got to do it’.”

•Photo shows Fidelity Bank MD/CEO, Nnamdi Okonkwo.

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