Earnings Update- FIDELITY BANK- 9M 2019.

Fidelity Bank Plc. continued its decent run in 2019, recording double-digit growth in gross earnings (+15.87%), driven by growths across its income streams; Interest income (+12.22%) and non-interest income (+13.06%). Although the average yield on earning assets remained flat at 13.80%, an increase in the value of earning assets pushed interest income to NGN135.12bn, while non-interest income benefitted from NGN2.42bn gains on disposal of fixed assets as well as an increase in fees and commission income (+27.83%). The bank also recorded an uptick in its cost of funds (6.70%, Vs. 6.20% in 9M:2018) owing to increased competition for cheap deposits; which led to a decline in its CASA mix to 78.76% (vs. 81.61% in 9M:2018). Consequently, the Net Interest Margin trended down by 70bps to 6.00%, the lower band of its 2019FY target. The growth in operating income (+14.53%) barely outpaced the growth in operating cost (+14.48%) as the cost to income ratio settled at 71.70%. Nonetheless, the bank recorded a PAT growth of 20.19% to NGN21.46bn. Given its aggressive asset expansion, we revised our growth forecast for 2019FY and our forecast lies thus; gross earnings (+14.16%), interest income (+17.14%), non-interest income (+11.30%), and interest expenses (+16.10%). Kindly find attached the full report.

Fidelity Bank Plc. continued its decent run in 2019, recording double-digit growth in gross earnings (+15.87%), driven by growths across its income streams; Interest income (+12.22%) and non-interest income (+13.06%). Although the average yield on earning assets remained flat at 13.80%, an increase in the value of earning assets pushed interest income to NGN135.12bn, while non-interest income benefitted from NGN2.42bn gains on disposal of fixed assets as well as an increase in fees and commission income (+27.83%). The bank also recorded an uptick in its cost of funds (6.70%, Vs. 6.20% in 9M:2018) owing to increased competition for cheap deposits; which led to a decline in its CASA mix to 78.76% (vs. 81.61% in 9M:2018). Consequently, the Net Interest Margin trended down by 70bps to 6.00%, the lower band of its 2019FY target. The growth in operating income (+14.53%) barely outpaced the growth in operating cost (+14.48%)
as the cost to income ratio settled at 71.70%. Nonetheless, the bank recorded a PAT growth of 20.19% to NGN21.46bn. Given its aggressive asset expansion, we revised our growth forecast for 2019FY and our forecast lies thus; gross earnings (+14.16%), interest income (+17.14%), non-interest income (+11.30%), and interest expenses (+16.10%). Kindly find attached the full report.