Tuesday, May 01, 2018
/10:30 AM / FBNQuest Research
Event: Fidelity Bank reports Q1 2018 results
revisions to consensus 2018E PBT forecast expected
Positives: PAT up
28% y/y driven by a lower effective tax rate of 7.1% (vs. 11.0% in Q1 2017).
profits declined by 21% q/q due to q/q decline in funding and non-interest income.
Fidelity Bank’s Q1 2018 results which were published
this afternoon showed that PAT was up by 28% y/y to N4.2bn. However, the
double-digit growth was only because of a lower effective tax rate of 7.1%
compared with 11.0% in Q1 2017. Moving up the P&L, PBT growth was more
modest at 3% y/y.
The low-single digit earnings growth was underpinned
by a 4% y/y increase in pre-provision profits to N20.8bn. Although both revenue
lines grew y/y, non-interest income which was up by 13% y/y was the stronger of
the two. Funding income grew by only 3% y/y. Loan loss provisions also declined
by -6% y/y. Sequentially, PBT advanced by 23% q/q because loan loss provisions
fell by 82% q/q.
However, PAT declined by 35% q/q because of a tax
credit of N341m in Q4 2017. A negative result of -N429m in other comprehensive
income (OCI) compared with N2.1bn in Q4 2017 also contributed to the q/q
decline in PAT.
Compared with our forecasts, PBT and PAT missed by 29%
and 26% respectively. Fidelity Bank’s funding income has been at a quarterly
run-rate of c.N18.1bn. As such, given the weakness of funding income in Q1
2018, we expect this line to come under scrutiny by analysts and investors on
the bank’s conference call which is billed to hold this Wednesday.
Fidelity’s Q1 PBT tracks well behind consensus 2018E
PBT forecast of N22.6bn. Consequently, we expect to see downward revisions to
consensus 2018E PBT forecast. Although Fidelity’s Q4 2017 results which were
published earlier today were quite strong, we expect the market’s reaction to
be diffused by the subdued Q1 2018 results.
Having rallied strongly in 2017 (+192.9% vs +42.3%
ASI), Fidelity Bank shares have underperformed the NSE ytd (+3.6% compared with
the +7.9% return on the index).
We rate Fidelity Bank shares Underperform.
Fidelity Bank Q1 2018 results: actual vs. FBNQuest Capital Research
estimates (N millions)
Source: NSE; FBNQuest Capital Estimates
declares N4.63bn PAT in Q1 2018 Results,(SP:N2.55k)
Reports Q4 2017 Results – Loan Loss Provisions Spiked By 462% YoY
Declares N18.86bn PAT in 2017 Audited Results(SP:N0.84k)
Fidelity Bank Plc at ''B-''; Outlook Stable
Plc Made Board Changes
SKYEBANK, WEMABANK and
FIDELITYBK Dropped by Over 4% After Today’s Trading
Plc Announces Board Meeting Date and Closure of Trading Window
AYE Organisation partner to host 2017 NWG Conference in Lagos
Plc Q3 2017 Results Review: Dividends to Support Solid Total Return
Bank Q2’17 Result - PBT and PAT Grew by 63% YoY and 255% YoY Respectively
declares N14.45 billion PAT in Q3''17 Result,(SP:N1.44k)
Fidelity Bank Successfully Issues $400 Million Eurobond
Fidelity Bank Plc Announces Results of Its Invitations to
Purchase Notes for Cash
Fidelity Bank Plc Announces Closure of Trading Window