Fidelity Bank gross earnings increased significantly to N247.10 billion in the first half of 2023, representing 20% year-on-year growth when compared with N154.843 billion the bank reported in the equivalent period in 2022. Lagos Bureau Chief, KEHINDE IBRAHIM reports
AMID huge global and domestic economic challenges, Nigeria’s banking sector has remained stronger than the overall national economy, with rising profits and capital adequacy liquidity ratios remaining above regulated limits.
In an increasingly uncertain macroeconomic environment, Fidelity Bank Plc has remained appealing in the banking sector. This is evident in its half year 2023 financial results which showed a better-than-expected performance amid the headwinds in the economy.
Fidelity Bank profit rose by about 166% in the first half of the financial year 2023 to about N62 billion, from N23 billion in the comparable year in 2022. The strong feat recorded in the period was driven by the combined effects of revaluation gain on financial assets and foreign currency positions.
As a result, the bank saw a spike in earnings per share to 193.73 kobo from 80.47 kobo 12 months earlier. A review of the bank’s financial statement showed that a high interest rate environment supported its margin and foreign exchange reforms boosted its trading gains. The bank reported N32.163 billion gain as a result of the naira devaluation in June 2023.
“Net foreign exchange gains represent unrealised gains from the revaluation of foreign currency-denominated assets and liabilities held in the non-trading books”, Fidelity Bank said in the report.
Gross earnings increased significantly to N247.10 billion in the first half of 2023, representing 20% year-on-year growth when compared with N154.843 billion the bank reported in the equivalent period in 2022.
In 12 months, Fidelity Bank has expanded its loan book amidst the resumption of the Central Bank of Nigeria’s 65% loans to deposit target requirements.
Net interest income printed higher at about N108 billion, according to details from its financial scorecard submitted to the regulators. The feat was 43% above N75.638 billion the tier-2 lender reported in the first half of 2022.
In the period, the bank saw an improvement in its non-interest revenue, supported by a strong growth in fee and commission income, up by more than 50% year on year to N24.146 billion.
Fidelity Bank’s earnings boost was majorly driven by a significant surge in its other operating income line. The tier-2 bank reported that other income grew to N33.049 billion in 12 months from N2.5 billion.
The bank also saw an additional push from financial asset revaluation, rising to N23.448 billion from N866 million in the comparable period. Fidelity Bank explained in its result that net gains on debt instruments financial assets it reclassified from other comprehensive income amounts.
In the stock market, the bank’s valuation rose to N248 billion, according to data from the Nigerian Exchange. Fidelity Bank Loses 25% of Its Market Value #Fidelity Bank Profit Rises by 166% to N62 Billion.
In the full year 2022 results, Fidelity Bank’s gross earnings increased to N337,050 billion as of December 31, 2022, significantly higher than the N250,776 billion recorded at the end of 2021. Also, Fidelity Bank’s Net Interest Income climbed to N152 billion in the year under review, up from N94.879 billion the previous year.
Also, its profit before income tax stood at N53.677 billion in the year under review, higher than N25.215 billion the previous year. Fidelity Bank’s profit after tax for the year under review stood at N46.724 billion, higher than the N23.104 billion it realised in 2021. Additionally, its total assets increased to N3.989 trillion in 2022, up from N3.278 trillion in 2021.
While its loans and advances to customers in the year under review stood at N2.116 trillion in the year under review, up from N1.658 trillion the previous year, customers’ deposits grew to N2.580 trillion, higher than N2.024 trillion the previous year.
Owing to this, the Board of Directors of the bank have proposed a final dividend of 40 kobo per share which in addition to the 10 kobo per share earlier declared as interim dividend amounts to N0.50 per Ordinary Share of 50 kobo (2021: Dividend of N0.35 per Ordinary Share of 50 kobo each amounting to N10,136,904,992.20) from the retained earnings account as of 31 December 2022.
On the back of an impressive first half 2022 results, Fidelity Bank had declared an interim dividend payment of 10 Kobo per 50 Kobo ordinary share, subject to appropriate withholding tax, to shareholders whose names appear in the Register of Members as at the close of business on September 12, 2022. The interim dividend payment was the first in the bank’s 34 years history. Fidelity Bank had reported a remarkable 21.6 per cent growth in its half-year 2022 profit to N25.1 billion.
Since she assumed the position of the Managing Director/Chief Executive Officer of Fidelity Bank Plc in 2021, Nneka Onyeali-Ikpe has made it clear that her target is to deliver a financial institution that meets all stakeholders’ expectations, even as she continues to push the bank to rise to be among the tier-one banks in the country.
In August 2022, Fidelity Bank intimated the public of its proposed acquisition of Union Bank United Kingdom as part of its expansion plans and in line with regulatory stipulations. The bank’s plans to acquire a 100 per cent stake in Union Bank UK marked its first foray into the international market.
Commenting on the transaction, Onyeali-Ikpe stated, “This transaction aligns with our strategic plan of expanding our service touchpoints beyond the Nigerian market and providing straight-through services that meet and exceed the needs of our growing clients.”
Indeed, the Nigerian banking sector is evolving, with the changes being driven by competition, accelerated adoption of technology and the move by banks to meet the banking lifestyle of an evolving demography.
This has seen a lot of banks, including Fidelity, embrace innovative means to satisfy their customers.
It also organised the Fidelity International Trade and Creative Connect (FITCC), which is the largest trade exhibition by Nigerian-based businesses in the United Kingdom in recent times. It was a major move in increasing Nigeria’s foreign exchange earnings.
At the end of the maiden edition which held in London, it recorded pipeline deals of over $200 million, more than 100 exhibitors from Nigeria with product offerings ranging from processed food to fashion, fintech and the arts and over 2,000 attendees over two days.
“In collaboration with our strategic partners, we have created this platform to connect Nigerian exporters with UK buyers. This inaugural edition of the FITCC hosts more than 100 exhibitors from Nigeria with product offerings ranging from processed food to fashion, fintech and the arts.
“Fidelity Bank is a leading financial institution in Nigeria and a market leader in supporting small and medium scale enterprises and export-oriented businesses. This event is therefore an extension of the support that we provide to the business ecosystem in Nigeria as work to help them compete favourably on the global stage,” Onyeali-Ikpe said in her welcome remarks at the event.
It is expected that the impressive financial would continue to attract investors to the bank even as it continues to meet the expectations of its customers.
The NGX Limited, in a statement, said the reclassification became necessary because Fidelity Bank shares have been trading above the N5.00 mark since February 2023
Relying on rule 15.29 of the Rulebook of the Exchange, 2015 (Dealing Members’ Rules) NGX Limited noted that equities priced above N5 per share for at least four of the most recent six months of trading, or new security listings priced above N5 per share at the time of listing on NGX are classified as medium price stock.
“Fidelity Bank traded above the N5.00 mark on February 20, 2023 and has remained above the N5 mark up until close of business on 30 June 2023.
“This indicates that Fidelity Bank has been trading above N5 for at least four months in the last six months. Therefore, it should be reclassified from small price stock to medium price stock,” the NGX pointed out.
The development was an acknowledgement of Fidelity Bank’s robust contribution to the bountiful harvest that bargain hunters have enjoyed in the 62-year-old stock exchange in recent times, buoyed the bank’s corporate strategic plan.
“This is a good development. If a company performs well, it will surely be rewarded to earn investors’ confidence. The NGX did very well by recognising and rewarding Fidelity Bank for the impressive performance of its stock”, said Sam Ndata, Doyen of Nigerian Stockbrokers and non-executive director at UIDC Securities Limited.
As a confirmation of the strategic steps the bank had applied to grow its operations since the coming on board of Mrs Nneka Onyeali-Ikpe as the Group Managing Director/Chief Executive Officer (GMD/CEO) in January 2021, the upper level Tier-2 lender has sustained the tempo of its growth trajectory in the past two years, making it an investors’ toast among its peers.
In 2022, the bank posted a five-year record growth of 113 percent year-on-year in profit before tax of N53.7 billion. On the back of the impressive performance, it paid a 50 kobo dividend which the shareholders applauded.
The growth trajectory was sustained in the first quarter of this year (Q1 2023), with gross earnings up 42 per cent to N101 billion, signaling robust results in its awaited Q2 and half-year performance.
“Fidelity Bank is moving up in terms of performance. They have joined those paying interim dividends and they have also dipped their hand into big money tills for huge investment. They have borrowed big to be able to handle bigger contracts and be able to reap big.
“The reclassification is welcomed and I hope they will not disappoint us. If they are able to meet expectations, the benefit will be for Nigeria,” said Prince Anthony Omojola, National Co-ordinator, Independent Shareholders Association of Nigeria (ISAN), in a note.
Fidelity Bank shares rose to 32 percent this year making it the nation’s best-performing bank share as of half year (June 30). On the back of this strong position, it plans to establish presence in at least five African countries after finalising the acquisition of the London unit of rival Union Bank of Nigeria Plc in January 2023.
“The strategy is for us to move our footprint outside Nigeria and be able to compete favorably with our peers. In the next three years, we should be able to be in six countries by doing at least two every year. We are interested in countries within west, east and southern Africa,” Onyeali-Ikpe told Bloomberg. The lender plans to use the 13.8 billion naira it raised in a private placement earlier this year for the acquisitions,
Commenting on the afrocentric expansion strategy of Nigerian banks, a stockbroker and Head of Securities Trading at Planet Capital, Dr Paul Uzum, said the decision to diversify from an economically unstable Nigerian environment will give the the banks a pan-African outlook, with a more robust balance sheet resulting in high earnings per share (EPS) and dividend per share (DPS).
Onyeali-Ikpe set a target for Fidelity to become one of the country’s top five banks by 2025, in earnings and assets. It is currently Nigeria’s sixth-largest lender, with N4 trillion in assets. It expects capital adequacy ratio at 19.1 percent this year, will also use retained earnings to expand its operations outside the shores of Nigeria, a move that will boost investors’ confidence in the 36-year-old lender.
It is expected that the impressive financials would continue to attract investors to the bank as it adjusts to the challenges of the economy which impact top and bottom lines.
Based on their annual reports, Fidelity Bank, FCMB, and Stanbic IBTC led the list of top-performing Tier-2 banks during the 2022 financial year.
Findings showed that, collectively, six Tier-2 banks accumulated a total of N1.27 trillion in gross earnings, with Fidelity Bank leading the pack with N337.05 billion, while Stanbic IBTC stood out in terms of profit, recording a profit after tax of N80.81 billion during the period.
Reacting to the reclassification of Fidelity Bank stock, the National Co-ordinator, Progressive Shareholders Association of Nigeria, Mr Boniface Okezie, applauded the development and commended the bank for its continent-focused expansion programme. He said the bank had paid its dues in the industry and should be ready to reap from what it had sown.