Fidelity Bank posts earnings miss in Q1 2020 scorecard

Fidelity Bank Plc profit for the year sloped downward in the first quarter of 2020 as earnings per share dropped to 20 kobo from 21 kobo in the comparable period.

Despite tough operating environment, the Bank gross income surged though management had lower guidance for 2020.

Fidelity gross earnings surged 6.54% from ₦48.423 billion in the first quarter of 2019 to ₦51.159 billion.

In its unaudited financials submitted to the Nigerian Stock Exchange, lender’s reported after tax profit of ₦5.859 billion.

This means profit dropped 1.4% below ₦5.939 billion achieved in the comparable period in 2019.

Recall that at the 2019 earnings conference, the management had forecasted that lender’s performance would be affected by coronavirus pandemic.

Thus cut growth outlook for the year.

Listed on NSE’s main board, Fidelity Bank market capitalisation settled at ₦52.154 billion on 28,974,797,023 shares outstanding.

The share price traded at ₦1.80 on Tuesday, having dropped from ₦1.82 in the previous trading.

In the last 52-week, the bank’s share price had hit ₦2.40 and bottom at ₦1.80 kobo.

Meanwhile, the share had pitched at ₦2.04 in the last 7-day.

Speaking on the result, analysts stated that the decrease in profit performance was attributed to increase in personnel and other operating expenses.

A detail look into the Bank’s book revealed that credit loss expenses grew more than double from ₦1.035 billion to ₦2.103 billion.

Due to increase loan book, interest income expanded by 9.37% to ₦42.279 billion in Q1 2020. To this, analysts said it provides relief as core banking operation is not under pressure.

Meanwhile, it was ₦38.674 billion in the comparable period in 2019.

Despite the lower interest environment with yield on securities instrument traded downward, net interest income came strong at ₦24.6 billion as against ₦16.530 billion in Q1 2019.

This was as result of interest expenses payment that was net off the income generated.

Fidelity had paid providers of funds ₦22.9 billion in Q1 2019 compare to ₦19.326 billion expended on funds in the Q1 2020.

Unfortunately, the Bank fee and commission income hit southward. This is coming when its peers are strengthening bottom line with non-interest related income.

In its Q1 2020 unaudited financials, commission fee came at ₦5.571 billion as against ₦6.499 billion in Q1 2019.

Increase in related commission expenses worsen the Bank position. Commission expenses jerked up from ₦1.143 billion in Q1 2019 to ₦1.556 billion.

Other operating income sources also dropped off, from ₦2.494 billion in Q1 2019 to ₦1.662 billion a year after.

In Q1 2020, Fidelity Bank payroll expanded just as its other operating expenses skyrocketed.

Especially, the Bank personnel expenses increased by about 20% year on year. It clicked ₦6.389 billion compare to ₦5.347 billion in Q1 2019.

In addition to that, other operating expenses also surged by 33.45% year on year from ₦10.352 billion to ₦13.815 billion.

Thus, pretax profit was knocked down to ₦6.583 billion, representing 1.3% downward trend when compare to ₦6.674 billion in Q1 2019.

Fidelity Bank posts earnings miss in Q1 2020 scorecard by Julius Alagbe