FIDELITY BANK PLC Q1'22 Earnings Release - Profits moderate despite 30% y/y earnings growth

Profits moderate despite 30% y/y earnings growth                                                        

Fidelity Bank recently released Q1 financial results, reporting Gross Earnings of ₦71 billion, in line with our forecast and 30% higher than the corresponding period of 2021. This impressive growth came thanks to a 44% y/y jump in Interest Income (II) to ₦62 billion as the bank saw a 49% improvement in income from loans and advances, with the interest rate on loans improving by 170bps y/y to 11.2% by our estimate. Meanwhile, the bank’s loan book also grew 28% y/y to ₦1.8 trillion, 10% higher than the FY’21 closing figure.

Non-Interest Revenue (NIR), on the other hand, shrank 38% y/y to ₦6 billion, after an ₦860 million loss on FX revaluation of foreign currency-denominated assets and liabilities meant that the bank went from a ₦6 billion other operating income figure in Q1’21, to just ₦1 billion in Q1’22.         

As expected, the bank’s Interest Expense for the quarter came in 124% higher y/y at ₦32 billion, after interest paid on term deposits more than tripled to c.₦19 billion. Further down the expense lines, the bank’s loan loss impairments for the first quarter were a positive surprise, coming in at only ₦205 million, 84% lower y/y, thanks to a ₦9.8 billion reversal in Stage 3 loans. Meanwhile, the bank posted a 7% y/y decline in Opex to ₦26 billion, despite AMCON charges rising 15% y/y to ₦8 billion; this was thanks to flat personnel expenses, as well as declines in occupancy costs. Overall, the bank declared PBT of ₦10 billion, 2% higher y/y, while PAT came in ₦9.5 billion, a 1% decline.