Fidelity Bank Investor Presentation Unaudited Financial Results for the 9 months ended September 30, 2019 www.fidelitybank.ng
Outline 1. Overview of Fidelity Bank 2. The Operating Environment 3. Financial Highlights 4. Financial Review 5. 9M 2019 Actual Vs. 2019FY Guidance www.fidelitybank.ng 2
1. Overview of Fidelity Bank 4. Financial Review - SFP www.fidelitybank.ng 6 3 6 6
Overview of Fidelity Bank Ownership 32.0bn Authorized Shares Listings: 28.96bn Shares Total Assets: N1,971bn Issued And 28.96bn Fully Paid $5.5bn 7yr N30bn May 2022 NGN Bonds $400m Oct 2022 Eurobond Professional Staff 2,981 814 ATMs Male: 55% 5.0 Million Operations Female: 45% 2.1m Cards Accounts & Contact Channels 2.3m Mobile 7,071 POS Customers 250 Branches Governance 5 Board Committees B- (Stable) 14 B- (Stable) Board Members Executive 10 10 Management Non-Executives: 7 A- NG (Stable) Team Executives: 7 www.fidelitybank.ng 4
Overview of Fidelity Bank Retail And Digital Banking Evolution / Progress Report Number of Customer Accounts (#’m) Retail Risk Assets (N’bn) Savings deposits (N’bn) 248.9 66.0 5.0 228.0 57.2 4.5 3.9 47.2 178.6 44.8 3.6 3.3 155.0 37.6 119.1 2015 2016 2017 2018 9M 2019 2015 2016 2017 2018 9M 2019 2015 2016 2017 2018 9M 2019 Mobile/Internet Banking Cust. (#’000) Number of Debit Cardholders (#’000) Commentary Savings deposits on track for 6 th consecutive year of double digit growth. 2,328 2,091 1,982 1,937 1,906 Retail loans gradually picking up with the 720 1,701 launch of new digital lending products (FFL) 513 1,382 937 46.4% of customers now enrolled on 345 820 mobile/Internet banking products 1,608 184 1,393 274 1,036 636 82.0% of customers transactions are now 27 247 done on electronic banking channels. 2015 2016 2017 2018 9M 2019 2015 2016 2017 2018 9M 2019 Digital Banking now accounts for 31.5% of Mobile Banking Internet Banking Fee Income. www.fidelitybank.ng 5
2. The Operating Environment www.fidelitybank.ng 3 6
The Operating Environment Improving credit to the MPC maintains CRR at Private Sector – New 22.5% in Sep 2019 LDR Threshold Political risk is Declining Foreign significantly reduced Reserves post elections Declining yields due to Naira has been new LDR Thresholds relatively stable Monetary Policy 2019 GDP; Q1 = 2.10% Stability: MPR is Vs. Q2 = 1.94% currently at 13.5% Declining oil price; spot Growing deposits on price is currently at the back of improving $60.9 per barrel. macros Stable - Improving - Declining - www.fidelitybank.ng 7
3. Financial Highlights v v www.fidelitybank.ng 8 3
Performance Highlights Total Interest Income up by 12.2% to N135.1 billion in 9M 2019 (9M 2018: N120.4 billion) Revenue Operating Expenses up by 14.5% to N57.9 billion in 9M 2019 (9M 2018: N50.6 billion) and Cost to Income Ratio increased to 71.7% in 9M 2019 from 68.4% in 9M 2018 Efficiency Ratio PBT up by 14.7% to N23.0 billion in 9M 2019 (PAT came in at N21.5 billion) Cost of Risk was down at 0.0% in 9M 2019 from 0.5% in 2018FY NPL Ratio down to 4.8% in 9M 2019 from 5.7% in 2018FY Asset Quality Coverage Ratio was down to 102.4% in 9M 2019 from 110.7% in 2018FY FCY Loans accounted for 43.4% of Net Loans from 41.1% in 2018FY Capital Adequacy Ratio of 16.4%, based on Basel II computation Capital Adequacy Liquidity Ratio of 32.6% compared to regulatory minimum of 30.0% and Gross loans to funding ratio stood at 68.4% in 9M 2019 from 64.2% in 2018FY Liquidity Total Equity at N221.7 billion compared to N194.4 billion in 2018FY www.fidelitybank.ng 9
Financial Highlights Gross earnings increased by 16.3% to N161.4 billion due to double digit growth across key income lines: Credit Related Fees (132.3%), digital banking income (42.7%), trade income (31.8%), account maintenance fees (18.1%), interest income on liquid assets (14.0%) and N2.4 billion one-off asset disposal gain. Total interest income increased by 12.2% to N135.1 billion on account of 17.7% YoY (N211.6 billion) expansion in earning assets. Net interest margin (NIM) improved to 6.0% QoQ from 5.8% in H1 2019 as the growth in the yield on earning assets outpaced the growth in average funding costs. NIM now within guidance for the year. Total operating income increased by 9.3% to N80.7 billion while total operating expenses increased by 14.5% driven largely by NDIC|AMCON|Advert which accounted for 60.3% of the increase in operating expenses. PBT increased by 14.7% to N23.0 billion from N20.1 billion in 9M 2018, while PAT came in at N21.5 billion. Total customer deposits increased by 14.0% YTD to N1,116.4 billion from N979.4 billion in 2018FY on the back of an increase in both local and foreign currency deposits. www.fidelitybank.ng 10
Financial Highlights Domiciliary account deposits increased by 46.4% YTD to N263.2 billion and now accounts for almost 23.6% of total deposits from 18.4% in 2018FY. Savings deposits increased by 9.2% YTD to N248.9 billion in 9M 2019 from N228.0 billion in 2018FY and now accounts for 22.3% of total deposits. Net loans and advances increased by 26.4% YTD to N1,074.1 billion from N849.9 billion in 2018FY with a growth in both local currency loans (21.0%) and foreign currency loans (34.1%). Loan to funding ratio is now 68.4% from 64.2% in 2018FY which stood well above the new minimum LDR threshold of 65.0% effective December 31, 2019. Non-performing loans (NPL) ratio declined to 4.8% from 5.7% in 2018FY primarily due to 24.2% YTD increase in the gross loan book. However, absolute NPL (Stage 3 Loans) dropped by 4.9% QoQ to N53.9 billion compared to the N56.6 billion reported in H1 2019. Capital Adequacy Ratio (CAR) dropped to 16.4% but remains above of our internal guidance of 16.0% and the regulatory minimum of N15.0%. Only 40% of our Tier 2 Local Bond is considered in CAR computation. www.fidelitybank.ng 11
Financial Highlights Summary of Income Statement: YoY Change N’million 9M 2018 9M 2019 VAR % VAR Gross Earnings 138,745 161,383 22,639 16.3% Interest Income Loans 88,328 98,560 10,232 11.6% Interest Income Liquid Assets 32,071 36,556 4,485 14.0% Total Interest Income 120,399 135,116 14,718 12.2% Interest Expense Customer Deposits (45,448) (55,534) 10,086 22.2% Interest Expense Borrowings (16,783) (21,337) 4,554 27.1% Total Interest Expense (62,231) (76,870) 14,640 23.5% Net Interest Income 58,168 58,246 78 0.1% FX Income 4,410 4,685 275 6.2% Digital Income 4,968 7,091 2,123 42.7% Other Fee Income (Net) 6,357 10,721 4,363 68.6% Net Fee Income 15,736 22,497 6,761 43.0% Operating Income 73,904 80,743 6,839 9.3% Total Expenses (50,555) (57,878) 7,323 14.5% Net Impairment Losses (3,285) 139 (3,424) -104.2% Profit Before Tax 20,064 23,004 2,940 14.7% Please note: Gross earnings was calculated based on total fees & commission income Net fee income includes net gains/ (losses) from financial instruments www.fidelitybank.ng 12
Financial Highlights Summary of Income Statement: QoQ Change N’million Q1 2019 Q2 2019 Q3 2019 VAR % VAR 49,200 54,584 57,599 3,015 5.5% Gross Earnings Interest Income Loans 28,400 33,685 36,475 2,790 8.3% Interest Income Liquid Assets 11,030 12,715 12,811 96 0.8% Total Interest Income 39,430 46,400 49,286 2,886 6.2% Interest Expense Customer Deposits (16,521) (19,151) (19,862) 711 3.7% Interest Expense Borrowings (6,379) (6,880) (8,078) 1,198 17.4% Total Interest Expense (22,900) (26,031) (27,939) 1,908 7.3% Net Interest Income 16,530 20,369 21,347 978 4.8% FX Income 3,022 1,479 184 (1,295) -87.6% E-banking Income 2,153 2,316 2,622 306 13.2% Other Fee Income (Net) 2,695 3,887 4,138 251 6.5% Net Fee Income 7,871 7,683 6,944 (738) -9.6% Operating Income 24,401 28,052 28,291 239 0.9% Total Expenses (16,692) (21,477) (19,709) (1,768) -8.2% (1,035) 1,803 (629) 2,432 -134.9% Net Impairment Losses Profit Before Tax 6,674 8,378 7,953 (425) -5.1% Please note: Gross earnings was calculated based on total fees & commission income Net fee income includes net gains/ (losses) from financial instruments www.fidelitybank.ng 13
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