Fidelity Bank Plc delivered an outstanding financial performance for the half-year period ending June 30, 2024, reporting a remarkable pre-tax profit of N200.8 billion, representing a 163% year-over-year (YoY) growth from N76.3 billion recorded during the same period in 2023.
Lagos, Nigeria- This impressive leap in profitability further cements the bank’s position as a leading player in the Nigerian banking sector, showcasing robust operational efficiency, strategic financial management, and its focus on digital innovation.
In addition to the stellar profit growth, Fidelity Bank has also proposed an interim dividend of N0.85 per share, translating to a total payout of N27.2 billion to its shareholders.
This dividend, subject to applicable withholding tax, will be paid to shareholders listed on the bank’s register as of October 17, 2024. The declaration of this interim dividend underscores the bank’s commitment to delivering significant returns to investors, even in a challenging economic climate.
Key Drivers of Fidelity Bank Profit Growth
The bank’s profit surge was primarily driven by substantial gains from financial assets held at fair value and an increase in net interest income.
According to the financial report filed on the Nigerian Exchange Limited (NGX), Fidelity Bank’s net interest income soared by an astounding 202% YoY, reaching N326.4 billion in H1 2024 compared to N108.1 billion in the corresponding period of 2023. This growth reflects the bank’s improved efficiency in managing interest-bearing assets and liabilities.
Fidelity Bank also saw a significant increase in its gross earnings, which surged by 107.6% YoY to N512.8 billion.
The increase in earnings was largely driven by a rise in fee and commission income, which grew by 45.2% to N35 billion, showcasing the bank’s strategic efforts in expanding its revenue streams beyond traditional interest income. Net gains from financial assets held at fair value also contributed N34.6 billion, up from N23.4 billion in 2023, reflecting effective portfolio management.
With a focus on delivering value to shareholders, the bank’s earnings per share (EPS) rose significantly to N4.9 in H1 2024, up from N1.9 in the same period last year, representing a 157.8% increase in profit after tax (PAT), which stood at N159.8 billion.
This growth in EPS highlights the bank’s ability to consistently generate strong returns for its investors, further demonstrated by the proposed interim dividend payout of N27.2 billion.
Commenting on the bank’s performance, the management of Fidelity Bank attributed the impressive results to the diversification of its revenue portfolio, the continuous expansion of digital banking channels, and its strategic international operations. “Our focus on enhancing profitability through innovation in digital banking services and the expansion of our international reach has continued to yield positive results,” a statement from the bank read.
Despite the rise in profitability, the bank’s interest expenses increased by 78.9% to N146.8 billion, up from N82.1 billion in H1 2023. However, the bank managed to offset these costs with the significant growth in its net interest income, demonstrating improved operational efficiency and effective cost management.
Fidelity Bank’s balance sheet continues to reflect its robust growth trajectory and strong liquidity position. As of June 30, 2024, the bank’s total assets rose by 27% to N7.9 trillion, up from N6.2 trillion in the same period of 2023. This growth was largely driven by a sharp increase in cash and cash equivalents, which grew by an impressive 95.9% YoY to N801.7 billion.
Liabilities also grew by 25.9% YoY to N7.3 trillion, reflecting the bank’s ability to manage its debt obligations while sustaining healthy levels of liquidity. Additionally, the bank reported a 7.2% increase in net cash flow from operating activities, which totaled N1 trillion.
On the other hand, cash outflows from investing activities amounted to N617.2 billion, reflecting the bank’s continued investments in expanding its digital infrastructure and improving customer experience. Financing activities resulted in a modest cash outflow of N13.7 million, which indicates that the bank is maintaining a stable financial position with minimal external debt financing.
Fidelity Bank has been at the forefront of digital transformation in the Nigerian banking industry, leveraging technology to enhance customer experience and expand its reach across different markets.
The bank’s digital banking channels, including mobile apps and online banking platforms, have played a pivotal role in driving the growth of fee and commission income, which increased by 45.2% to N35 billion during the period under review.
In addition to its digital initiatives, the bank has also focused on expanding its international operations. This expansion has opened up new revenue streams, allowing Fidelity Bank to tap into global markets and diversify its income base. The bank’s international presence has provided it with a competitive edge, enabling it to offer cross-border banking services to its growing clientele.
Looking ahead, Fidelity Bank remains optimistic about its growth prospects, citing its strong liquidity position, efficient operations, and commitment to innovation as key factors that will drive future profitability. The bank plans to continue investing in digital banking solutions, as well as expanding its international footprint to enhance revenue generation.
The bank’s management has also expressed confidence in its ability to maintain a solid balance sheet, with a focus on sustaining strong asset growth and managing liabilities effectively. “As we move into the second half of 2024, we are confident that our strategic initiatives will continue to drive value for our shareholders and stakeholders,” the bank’s management stated.
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