Despite cost pressure, Fidelity Bank nets N92bn in 9 months 

Fidelity Bank Plc faced increased pressure from costs in the third quarter, which lowered quarterly profits from N46.4 billion in the second quarter to N29.8 billion in the third to close the nine months of operations with a bottom line of N91.8 billion.

The bank’s interim financial report for the third quarter ended September 2023 shows that pressure from the side of costs as well as a slowdown in revenue accounted for the lower profit record in the third quarter.

The key strengths that propelled more than two and half times leap in after tax profit to N62 billion at half year softened in the third quarter. 

Cost increases were led by credit loss expenses of N12.3 billion for the third quarter – more than seven times the corresponding figure of N1.7 billion last year. The third quarter loan loss charges account for 38 percent of the closing nine-month figure of N32.2 billion.

Loan loss expenses have so far multiplied roughly six times over the closing figure of N5.4 billion for the entire 2022 financial year. 

Fidelity Bank also incurred net foreign exchange losses of N7.2 billion in the third quarter, down from net gains of N32.2 at half year. 

The foreign exchange gain had driven a jump of 13 times in other operating income to N33 billion at half year while the loss in the third quarter led to other operating loss of N5.5 billion for the third quarter.

There were also net losses of N4.3 billion from financial assets in the third quarter against an exceptional growth in net gains from financial assets to N23.4 billion at half year. 

Also, personnel expenses surged upward in the third quarter at an increase of 88.2 percent to N13 billion, accounting for 42.9 percent of the closing staff cost of N30.3 billion for the nine months of operations. 

Despite the drop in the quarterly profits in the third quarter, the N29.8 billion profit for the quarter is still a major improvement from N11.7 billion the bank posted in the same quarter in 2022. The figure is equally better than the N15.6 billion profit it reported for the first quarter operations.   

Revenue growth remained good for the bank at an increase of 31.1 percent in gross earnings to N141.7 billion for the third quarter. That is however a significant slowdown from an increase of 59.6 percent to N247.1 billion at the end of half year. 

The bank’s third quarter closing numbers show that interest expenses stayed moderated relative to interest earnings. Interest income gained speed from an increase of 39.4 percent at half year to 54.4 percent to stand at N324.8 billion at the end of September 2023. 

Interest expenses grew less rapidly than interest earnings at 31.8 percent to N129.9 billion over the same period, slowing down from an increase of 35.5 percent at half year. The cost saving powered a leap of 74.3 percent in net interest earnings to about N195 billion, an accelerated growth from 42.6 percent increase at half year.

However, pressure came from credit losses that multiplied close to nine times year-on-year to N32.2 billion at the end of the third quarter. The incursion lowered the growth in net income after loan loss charges to 50.5 percent to close at N162.8 billion at the end of September 2023.

Other operating income, led by foreign exchange gains, grew by 323.7 percent to N27.5 billion – which was reinforced by N19.2 billion net gain from financial assets to cover major increases in personnel and other operating expenses.

Fidelity Bank’s closing after tax profit of N91.8 billion at the end of the third quarter is an increase of 162.5 percent from the corresponding figure of roughly N35 billion in 2022.