Fidelity Bank Plc records 6.2% decline in profit, posts N26.65bn for FY’ 20 due to pandemic induced stress

• Gross earnings fell 5.4% y/y to N206.2bn; Proposes 0:22k in final dividends

Charles Abuede

Fidelity Bank Plc saw its profits hit by a tepid economic performance in the face of pandemic-induced stress that saw many businesses crumble in the year 2020 where the Nigerian lender recorded a 6.2 per cent year on year decline in its profit after tax (PAT) to N26.65 billion in full-year 2020 from N28.43 billion in the previous year; while its gross earnings declined 5.4 per cent year on year to N206.20 billion from N218.01 billion in the last financial year.

The tier-2 lender in its audited full-year 2020 financial statement filed to the Nigerian Stock Exchange (NSE) revealed that in a clear demonstration of resilience and stability, it capped the remarkable year with the show of growth in core operating profit by posting 50.9 per cent year on year to N44.9 billion in 2020 from N29.8 billion in 2019, increased net revenue by 15 per cent from N111.8 billion in the past year and other key financial indices. Also, the profit before tax (PBT) changed by 7.6 per cent year on year to N28.05 billion from N30.35 billion in the past year.

At the operational level, customer deposit rose by 38.7 per cent from N1.225 trillion to N1.699 trillion in 2020 while its total assets grew by 30.5 per cent from N2.114 trillion in 2019 to N2.758 trillion a year after. This signifies stronger confidence in the bank’s operational and financial capabilities as the bank’s management booked higher impairment charges on credit losses to shield lender from any headwinds; a positive move for the Bank especially in the current era of Covid-19 and its attendant effect on business risks.

Commenting on the healthy result amidst the stewing business environment where the global health pandemic has forced the bank to take several measures in a bid to grow profit and maintain healthy books and balance sheets, Nneka Onyeali-Ikpe, Fidelity Bank Chief Executive, said:

“We are pleased with our financial performance, which clearly showed the resilience of our business model as core operating profit increased by 50.9 per cent to N44.9 billion from N29.8 billion in 2019. We also saw a significant improvement in our efficiency indices as cost-to-income ratio moderated downward to 65.1 per cent from 73.4 per cent in 2019.

“However, Profit before Tax (PBT) dropped by 7.6 per cent to N28.1 billion as we proactively increased our provisions on risk assets to N16.9 billion from a net write-back of N0.6 billion in 2019, she said adding that the bank “took a conservative stance in recognition of the impact of the global pandemic, which has redefined business risks and opportunities in the new normal”.

“As seen in recent years, the bank’s digital retail banking approach has continued to yield positive results. Though Digital Banking income dropped by 18.8 per cent due to the revised banker’s tariff, it increased by 19.6 per cent quarter on quarter on account of increased customer adoption as more services were migrated to the bank’s digital channels.” She revealed.

The Fidelity bank chief also noted that during the year under review, 88.4 per cent of Fidelity Bank customers’ transactions were done using the digital products and more than 81 per cent of the total transactions were done on its digital platforms. Thus, the progress of its digital banking played a significant role as over 52.8 per cent of customers are now enrolled on the bank’s mobile or internet banking platform compared to 47.4 per cent in 2019.

Meanwhile, the Board of Directors recommend a dividend of 22 kobo per ordinary share of 50 kobo each amounting to N6,371,768,852 for approval at the Annual General Meeting (AGM). The proposed dividend is subject to Withholding Tax at the applicable tax rate, which will be deducted before payment.