Fidelity bank's revenue hits N155 billion, profit increases by 21%

According to its audited financials, which were seen by PREMIUM TIMES, United States' Global X Management-backed Fidelity Bank reported a net profit for the period from January through June that was 21.7% higher than a year ago. On Tuesday, the bank announced a binding agreement to fully acquire Union Bank UK.

The commercial lender's revenue increased by 37.9% to N154.8 billion, a level never before seen since it began serving clients as a merchant bank in 1988, fueling the earnings surge. This growth was driven by interest income.

Following the news, its shares, which are traded on Lagos's Custom Street, already rose 4.6% to N3.18 per unit at 11:13 WAT on Wednesday. Additionally boosting activity in the stock, the board also declared an interim dividend of N0.10 per unit in a separate document.

Based on the estimated 29 billion outstanding shares, the anticipated cash payout signifies the first time Fidelity Bank would ever pay an interim dividend, and it will commit N2.9 billion to that purpose.

Interest and other similar income for the period increased by 48.5%, rising to N126.3 billion.

Over one-fourth of its total loans to oil and gas were provided by its loan portfolio, which for the time period totalled N2 trillion.

However, fees and commissions, the company's second-largest source of income, contributed much less, at N16.1 billion. Of particular note in this category is the commission on e-banking activities, which made as little as N1.1 billion in contributions at a time. Peers including FBN Holdings, Zenith Bank, GTCO, Access Holdings, and UBA are large consumers of e-channels revenue; some of them have even based their hopes for a revenue boost on it.

Other operating income decreased from N10.5 billion to N2.5 billion, and there was a net foreign exchange loss of N1.5 billion as opposed to gains of N8.4 billion in the prior year.

This July, Fidelity Bank acquired the Benin, Kano, and Kaduna power distribution companies after activating the call on the three companies' collateralized shares and starting the process to take over their boards. This acquisition could help the bank expand its asset base, which it has been eager to do in order to meet the requirements for becoming a tier-1 bank by 2025.

The bank's long-term issuer failing status was improved by the international rating agency Fitch in June from "B-" to "B."

Pre-tax earnings during the time period increased by 21.6% to N25.1 billion, while post-tax earnings rose at roughly the same rate to N23.3 billion.

The 15% net profit margin, a measure of how much revenue has been converted to profit, shows the effect of intense cost pressure on gross earnings.

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