Fidelity Bank Plc has reported a profit before tax (PBT) of N9.8 billion for the nine months ended September 30, 2016, showing a decline of 28.7 per cent from the N13.8 billion recorded in the corresponding period of 2015.
Similarly, profit after tax (PAT) fell from N11.445 billion to N8.753 billion.
However, the bank reported gross earnings of N110.3 billion, showing a marginal increase of three per cent from N107 in the period under review.
Its deposit base also grew by 3.4 per cent to N795.6 billion, from N769.6 billion.
Commenting on the financial results, the Managing Director/Chief Executive Officer of the Bank, Nnamdi Okonkwo said the bank’s performance was indeed reflective of the recessionary environment characterised by lower government revenues, rising inflation, lower consumer disposable income, significantly tougher operating environment in all sectors and the impact of these headwinds on asset quality and foreign trade transactions.
“We continued with the disciplined execution of our medium term strategy and recorded decent growth on some key operational metrics while moderating the impact of the headwinds above on other financial indices,” he said.
Explaining the decline in PBT, Okonkwo said: “PBT declined largely due to “a 102.0 per cent year-on-year (YoY) growth in impairment charge (N4.0 billion) driven significantly by increased provisions made in the second quarter (Q2) and third quarter (Q3) of 2016 (N4.1 billion and N3.2 billion respectively) due to the impact of the devaluation of the local currency (naira) on our trade finance portfolio and some critical sectors affected by the weaker macroeconomic indices.”
He added that a 95.7 per cent (N1.3 billion) decline in dividend income on equity investments as well as a 8.9 per cent growth in operating expense were also responsible for the decline in profit.
According to him, growth in operating expenses was driven essentially by increased technology and advert costs.
“The interest income growth was largely driven by 25.6 per cent (N5.4 billion) growth in interest income on loans while interest income on Liquid assets increased by 13.5 per cent (N0.9 billion) for the quarter”, Okonkwo said.
Okonkwo noted that the bank has continued to take a very prudent view of the impact of the currency devaluation, tougher operating environment and declining consumer disposable income on selected sectors of its loan portfolio.
“We are still focused on keeping our non-performing loan (NPL) ratio below 5.0 percent in this very challenging operating environment. Our other regulatory ratios (Liquidity Ratio / CAR) remained above the set thresholds, though Capital Adequacy Ratio improved from 16.4 percent in Q2 2016 to 16.8 per cent in Q3, 2016, we expect CAR to revert to 18 percent+ once we adjust for the excess non-distributable reserves (N23bn) in our 2016FY audited accounts,” he said.