Friday March 29, 2019 / 9:40 AM / NSE With Additional Comments From FBNQuest Research
Initial Reaction - FBNQuest
Fidelity Bank’s FY2018 PBT surprised negatively
relative to consensus forecast of N26.5bn. Relative to our forecast, PBT also
came in well behind our N27.4bn estimate. The bank’s PAT of N20.7bn implies a
2018 ROAE of 10.5%, which is in line with management’s guidance of 10.0%.
Q4 2018 PBT grew 69% y/y to N5.0bn, mainly driven by a -77% y/y reduction in loan loss provisions. Non-interest income also advanced by 35% y/y and surprised positively (+166%) relative to our forecast. The bank’s loan loss provisions of N4.2bn for 2018 implies a cost of risk of 0.5%, in line with our 0.5% forecast and well below management’s guidance of 1.25%.
Funding income declined by -20% y/y, largely a reflection of lower yields on earning assets. It missed our forecast by 41%.
Management has proposed a dividend per share of N0.11, much lower than our N0.25 dividend forecast (N0.18 consensus) and implies a yield of 4.9%.
Year-to-date, Fidelity shares have outperformed the ASI. The shares have gained +11.3% compared with the -1.9% return delivered by the NSE ASI.
We rate the stock Neutral. Our estimates are under review.
Fidelity Bank Q4 2018 results: actual vs. FBNQuest Capital Research estimates (N millions)