Fidelity Bank Profit After Tax Declines 11% in Q1 2016

Fidelity Bank Plc has recorded a profit before tax (PBT) of N4.0 billion and profit after tax (PAT) of N3.6 billion for the first quarter ended March 31, 2016. The PBT showed a decline of 14.6 per cent from N4.7 billion posted in the corresponding period of 2015 while the PAT fell by 10.5 per cent as against N4.0 billion posted in 2015.

However, the bank increased customers’ deposits by 1.9 per cent to N784.5 billion from N769.6 billion, while net loans increased by 2.1 per cent from N578 billion to N590.1 billion. Total equity rose by 1.3 per cent to N187 billion, from N183.5 billion, while total assets grew by 4.0 per cent from N1.232 trillion to N1.284 trillion.

Reacting to the results, analysts at FBN Quest said although loan loss provisions fell by 28 per cent, a 16 per cent spike in operational expenses resulted in PBT declining by 15 per cent.

“A negative result of N3.5 billion in other comprehensive income (OCI) amplified the decline in PAT. Moving back to the pre-provision profits, although funding income grew by 30 per cent, a 35 per cent decline in non-interest income was responsible for the single-digit growth in pre-provision profits. We note that the Q1 quarter marks the third consecutive quarter of decline on the non-interest income line,” they said.

According to FBN Quest, compared with their forecasts, PBT missed by 15 per cent because profit before provisions came in around 11 per cent lower than what they had modelled.

“A 96 per cent decline in net foreign exchange gain to N180 million ( N4.1 billion in Q1 2015) was a major driver behind the weakness in non-interest income, most likely due to issues surrounding forex supply which continue to impact banks’ results. We would be looking to management to get more clarity on this line on the bank’s conference call. We would not read too much into the 28 per cent decline in impairment charges at this time, given that these results are not audited,” they said.

Meanwhile, the Nigerian equities market opened the month on a positive note yesterday as the Nigerian Stock Exchange (NSE) All-Share Index appreciated by 3.2 per cent to close at 25,865.50. Nestle Nigeria Plc, Dangote Cement Plc and Nigerian Breweries Plc were responsible for the growth recorded as they rose 10.3 per cent, 5.0 per cent and 5.0 per cent respectively.