The Managing Director of Fidelity Bank Plc Mr Nnamdi Okonkwo has attributed the drop in the bank unaudited third quarter result for the period ended September 30, 2016 to the recessionary environment which is characterized by lower government revenues, rising inflation, lower consumer disposable income, significant tougher operating environment in all sectors and the impact of the headwinds on asset quality and foreign trade transactions.
However, the bank was able to grow it turnover by 10.7 percent to N39.9 billion, which was driven by a 22.6 percent growth in interest income. The Interest Income growth was largely driven by 25.6 per cent to N5.4 billion growth in Interest Income on Loans while Interest Income on Liquid Assets increased by 13.5 percent to N0.9 billion for the quarter, said Okonkwo.
He noted that growth in operating expenses was driven essentially by increased technology and advert costs. On the way forward, we continued with the disciplined execution of our medium term strategy and recorded decent growth on some key operational metrics while moderating the impact of the headwinds on other financial indices.
Detailed analysis of the 2016 unaudited third quarter financial performance shows that Profit before Tax (PBT) decreased by 28.7 per cent to N9.8 billion from N13.8 billion that was declared same period in 2015. the decline was largely due to a 102.0 percent growth in impairment charge which was N4.0 billion driven significantly by increased provisions made in the second quarter and third quarter of 2016, that stood at N4.1 billion and N3.2 billion respectively as a result of the impact of the devaluation of the local currency (naira) on our trade finance portfolio and some critical sectors affected by the weaker macroeconomic indices.
The bank explained that 95.7 per cent year on year (N1.3 billion) decline in dividend income on equity investments as well as a 8.9 per cent year on year growth in operating expense were also responsible for the decline in profit. Low cost deposits, according to the bank currently accounted for 78.4 per cent of total deposits, adding that savings deposits grew by 20.4 per cent from December 2015 as the bank continued to implement its retail banking strategy which is being driven by its electronic products and channels.
The bank said they have crossed the half a million customer base on subscribers to their flagship Instant Banking product:*770# (Mobile Phone USSD Technology) while they will be launching payment services to merchants using their Instant Banking product (*770#) in the fourth quarter of 2016.