Monday, April 10, 2017 9:02AM /NSE
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Nnamdi Okonkwo, Managing Director and CEO of Fidelity Bank Plc commenting on the results, stated that:
Though the macro-economic and business environment was challenging in 2016, our financial performance reflects the sound fundamentals of our evolving business model as we continued with the disciplined execution of our medium-term strategy which positions the business for improved and sustainable profitability.
We continued to improve the earnings capacity of the business as gross earnings increased by 3,5%, net interest income increased by 1.7%, and fee-based income increased by 9.9% while expense growth at 4.8% (including one-off costs explained below) was significantly below the average inflation rate of 15.7% in 2016.
Despite the growth in operational income by 4.0%, PBT declined by 21.1% due to a N4.8bn increase in Gratuity and Retirement costs in the 2016FY as the bank discontinued its legacy Gratuity and Retirement scheme. Excluding this one-off charge, PBT for the year would have been N15.8bn.
Our retail and electronic banking strategy continued to deliver impressive results as savings deposits grew by 30.1% to N155.0bn while customer enrollments on our flagship Instant Banking (*770#) and Online Banking products grew by over 200% leading to a 44.6% growth in net e-banking revenues to N7.5bn. This performance was driven by the upgrade of our core banking system which provides a superior architecture that enhanced our operational efficiency and deepened our electronic banking capabilities.
Total deposits grew by 3.0% to N793.0bn in December 2016. Demand deposits increased by 42.9% while low-cost deposits now account for 78.7% of total deposits which reflected in the drop in our average cost of deposits to 5.7%.
Risk assets grew by 24.2% to N718.1bn in December 2016 with the devaluation of naira accounting for 19.2% (N110.9bn). Foreign currency loans now constitute 44.4% of the loan book up from 40.4% in 2015 due to the currency devaluation. Cost of risk inched up to 1.2% due to increased impairment charge especially in Q2 and Q3, 2016 as we took a very prudent view of the impact of the currency devaluation, tougher operating environment, and declining business activities in selected sectors of our loan portfolio.
Though our non-performing loans (NPL) ratio increased to 6.6% largely due to a combination of naira devaluation and our conservative approach in appraising our risk assets portfolios, our other regulatory ratios (Liquidity Ratio / CAR) remained well above the set regulatory thresholds"