CardinalStone Earnings News - Fidelity Bank Plc. H1'17 results - Earnings outperforms estimate, soars 65.6 YoY

CardinalStone Earnings News - Fidelity Bank Plc. H1'17 results - Earnings outperforms estimate, soars 65.6 YoY
(Source: CardinalStone Research, Date: 30-Aug-2017)

August　2017

Good afternoon,

Fidelity Bank Plc. (FIDELITYBK) H1'17 results - Gross earnings increased by 22.1% YoY to N85.8 billion, outperforming our estimate of N80.5 billion (+6.6% deviation). After tax earnings rose by 65.6% YoY to N9.0 billion, beating our estimate of N8.5 billion (+6.3% deviation). On a quarterly basis, PAT increased by 9.4% QoQ to N4.7 billion in Q2'17, driven by the 86.6% QoQ growth in non-interest income.

Other highlights:

Net Interest income rose by 11.1% YoY and 9.6% QoQ to N34.7 billion and N18.1 billion in H1'17 and Q2'17 respectively. Consequently, Net interest margin (NIM) increased to 7.4% in H1'17 from 6.4% in FY'16.

Impairments charges was flat, rising marginally by 0.3% YoY to N4.8 billion in H1'17. On a quarterly basis however, Impairment charges surged by 441.3% QoQ to N4.1 billion in Q2'17. Non-performing loans (NPLs) however moderated by 80bps　to 5.8% in H1'17.

Customer deposits moderated by 4.0% to N761.1 billion in H1'17 as customers moved funds tomoney market securities due to currently attractive yields. Net loans however increased marginally by 0.2% to N720.2 billion in H1'17.

Net assets and total assets increased modestly by 0.9% and 0.8% to N187.1 billion and N1.3 trillion respectively in H1'17. FIDELITY's capital adequacy ratio (CAR) remain significantly above regulatory threshold, as it improved by120bps to 18.4% in H1'17.

N'billions	H1'17	H1'16	YoY	CSP Est.	% Variance
Gross Earnings	85.8	70.3	22.1%	80.5	6.6%
Interest income	72.9	57.0	27.8%	67.1	8.5%
Interest expense	(38.2)	(25.8)	48.0%	(35.6)	7.2%
Net interest income	34.7	31.2	11.1%	31.5	10.0%
Loan Loss Expenses	(4.8)	(4.8)	0.3%	(3.6)	32.0%
Non-interest income	13.2	12.5	5.9%	13.4	-1.4%
Operating Expenses	(30.9)	(31.5)	-1.9%	(32.0)	-3.6%
Profit before income tax	10.2	6.1	66.7%	9.3	9.9%
Income tax expense	(1.2)	(0.7)	75.5%	(0.8)	47.9%
Profit for the year	9.0	5.5	65.6%	8.5	6.3%
	H1'17	FY'16	YoY	CSP Est.	% Variance
Net loans	720.2	718.4	0.2%	745.0	-3.3%
Total Assets	1,308.7	1,298.1	0.8%	1,363.0	-4.0%
Deposits	761.1	793.0	-4.0%	805.6	-5.5%
Total Liabilities	1,121.6	1,112.7	0.8%	1,173.5	-4.4%
Net Assets	187.1	185.4	0.9%	189.5	-1.3%

　

The quarterly breakdown of FIDELITY's result is shown below;

N'billions	Q2'17	Q1'17	QoQ
Gross Earnings	45.0	40.8	10.1%
Interest income	36.6	36.2	1.1%
Interest expense	(18.5)	(19.7)	-6.1%
Net interest income	18.1	16.6	9.6%
Loan Loss Expenses	(4.1)	(0.8)	441.3%
Non-interest income	8.6	4.6	86.6%
Operating Expenses	(15.3)	(15.6)	-1.8%
Profit before income tax	5.4	4.8	10.7%
Income tax expense	(0.7)	(0.5)	22.0%
Profit for the year	4.7	4.3	9.4%