FIDELITY BANK PLC FY'21 (Unaudited) Earnings Release - Loan book growth, lower Opex drive record profits

Fidelity Bank recently released its unaudited results for the 2021 financial period, reporting Gross Earnings of ₦244.6 billion, an 18% y/y improvement. This outsized earnings growth, which beat our forecast of ₦224.5 billion, due to a 14% y/y jump in Interest Income (II) to ₦202.2 billion. Unlike other banks, Fidelity’s II growth was actually driven by a 25% improvement in income from loans and advances, which also grew 25% y/y to ₦1.65 trillion. However, the bank’s Interest Expense rose 48% y/y on the back of higher cost of funds which we estimate at 4.9% for the FY’21 period (FY’20: 3.9%).

The bank also reported a 38% y/y growth in Non-Interest Revenue (NIR) to ₦33.7 billion, thanks to a 48% y/y rise in Commissions and fees. Interestingly, NIR actually declined by 29% q/q in Q4, as the bank reported declines across all line items in the quarter. 

On the expenses side, the bank reported a 1% y/y decline in Opex to ₦82.4 billion, despite AMCON charges rising 29% y/y to ₦15.3 billion; this was thanks to an 11% y/y drop in Staff costs to ₦22.5 billion. Furthermore, Impairments dropped 67% y/y to ₦5.5 billion, thanks to a decline in net impairments on loans and an increase in write-backs on previously written-off loans. Ultimately, the bank declared a PBT of ₦40.6 billion, a 45% y/y rise and a PAT of ₦38.1 billion (+43% y/y), yielding an EPS of ₦1.32.