Initial View - Fidelity Bank Plc - Expansion in net interest income and net write back drives FY 19 Earnings
- Fidelity Bank Plc released its FY 19 audited result earlier today, recording a PBT and PAT growth of 21% YoY and 24% YoY respectively. Supporting the growth in earnings were increases in interest income which outweighed a sharp increase in interest expense. Further supporting the bottom line was a net-write back of N587 million (relative to an impairment charge of N2 billion in 2018.
- Compared to the unaudited result released on January 31st 2020, both PBT and PAT were lower by 6.2% and 3.5% respectively - stemming from additional provisioning of N5 billion. Meanwhile, the bank proposed a dividend of N0.20/share, higher than our expectation of N0.18/share and 2018 dividend of N0.11/share. Based on last closing price, the declared dividend translates to a dividend yield of 11.8%.
- Despite interest expense increasing by 18% YoY due to higher interest expense on deposits (precisely term and savings deposits), net interest income increased by 13.2% YoY to N05 billion. This mirrors a rise in interest income, as the bank’s customer loans increased by 33% YoY to N1.1 trillion. NIM expanded by 40 bps YoY to 6.2% following a faster growth in asset yield. Elsewhere, Non-interest revenue rose by 2.2% YoY to N28.7 billion due to higher fee income from credit related fees (+125% YoY) and ATM charges (+24% YoY).
- Contrary to the full year numbers, quarterly numbers showed a poor performance as PBT declined by 7.6% QoQ despite the net-write back of N449 million during the quarter. For context, while the bank recorded a higher net interest income (+16.2% QoQ) - a fallout of lower interest expense (-19.8% QoQ); moderation in NIR (-10.6% QoQ) together with a sharp increase in Opex (+22.4% QoQ) led to a decline in PBT.
- Asset quality improved over the year with NPL ratio down to 3.3% (2018: 5.7%). The decline mirrors a N12 billion write-off in NPL and faster growth in gross loans (+30% YoY). Capital adequacy ratio was also better, printing at 18.3% (2018: 16.7%). Our last communicated FVE of N90, translates to a BUY recommendation on our rating scale. FIDELITY trades at a current P/B of 0.22x, a discount to 1-year average of 0.25x
- More analysis to follow.
- Fidelity Bank Management would be hosting a conference call on Wednesday, 25th March 2020 at 4:00Pm. Click to register for the call.
ARM Securities Limited is a full-service brokerage house that offers best-in-class brokerage services to local as well as foreign private and institutional investors. Formerly known as Hamilton Hammer, the Company commenced operation in 1994 and was acquired by ARM Investment Managers in 2008--an acquisition which has successfully re-positioned the company as a recognized brokerage firm in Nigeria. The Company is a dealing member of the Nigerian Stock Exchange (NSE) and is regulated by Securities and Exchange Commission (SEC). ARM Securities research team provides insightful commentaries on the Nigerian economy and its equity and debt markets using an approach which incorporates a thorough understanding of the fundamentals of the industries and companies under coverage. The research therefore adopts an integrated methodology of top-down analysis and bottom-up stock selection, which focuses on publicly quoted companies on the Nigerian Stock Exchange that are judged to offer the highest potential for earnings growth. In addition, its analysts provide periodic commentaries on a range of topical global and local issues which provide investing clients with a holistic view of the opportunities and risks in today’s financial market landscape.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.