FIDELITYBK: Triple-digit growth in interest income bolsters FY'24 earnings

Fidelity Bank Plc (NGX: FIDELITYBK"”TP: N18.91) delivered an impressive triple-digit bottom-line growth in its audited FY'24 results. Profit Before Tax (PBT) and Profit After Tax (PAT) surged by 210.0% YoY to N385.2 billion, while 179.6% YoY N278.1 billion. The robust performance was driven by a 106.9% YoY increase in interest income, which contributed approximately 91.0% of the bank's gross earnings (N1.04 trillion), alongside improved non-interest revenue (NIR).

In detail, FIDELITYBK benefited from a robust interest-earning asset (IEA) base of N4.97 trillion and an asset yield of 17.6% to generate an interest income of N950.6 billion. The bank effectively repriced its assets in line with the prevailing interest rate environment, with interest income from loans & advances to customers growing by 72.4% YoY and accounting for 78.0% of total interest income. With the growth in interest income significantly outpacing the 76.1% uptick in interest expense, Net interest income (NII) came in stronger, reaching N629.8 billion (+127.1% YoY). Consequently, net interest margin (NIM) expanded by 2.6ppts to 10.5% in the period. However, NIR recorded a relatively modest growth of 31.2% YoY to reach N143.4 billion, primarily driven by a net fee & commission income of N70.3 billion (+86.1% YoY). Collectively, FIDELITYBK's operating income rose by 100.0% YoY to print at N773.1 billion.

With a robust operating income, the cost-to-income ratio (CIR) moderated to 42.9% (from 50.4% in FY'23), masking the impact of the 70.0% surge in operating expenses. Elsewhere, impairments were lower at N56.4 billion (-16.3% YoY), while NPLs improved to 2.5% (vs 2.9% in FY'23), highlighting the bank's healthy asset quality.

Income tax expense jumped by 4.3x to N107.1 billion, implying an effective tax rate of 27.8%. Notably, the bank reported a windfall tax of N13.3 billion, which is linked to realized foreign exchange revaluation gains in the 2023 and 2024 financial years. Notwithstanding, FIDELITYBK reported a PAT of N278.1 billion and an Earnings Per Share (EPS) of N6.65 kobo. The bank declared a final dividend of N1.25, which brings FY'24 total dividend to N2.10. 

Furthermore, the newly injected capital from the rights issue and public offer program is now reflected in the bank's books. Share capital and share premium increased from N16.0 billion and N113.7 billion in FY'23 to N25.1 billion and N280.5 billion, respectively. Despite the bank's higher equity base, ROE printed higher to 41.7% (vs. 26.5% in FY'23), while ROA edged higher to reach 3.7% (vs. 1.9% in FY'23).

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