Fidelity Bank Investor Presentation Unaudited Financial Results for the 3 months ended March 31, 2020 www.fidelitybank.ng
Outline 1. Overview of Fidelity Bank 2. The Operating Environment 3. Financial Highlights 4. Financial Review 5. Q1 2020 Actual Vs. 2020FY 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: N2,247bn Issued And 28.96bn Fully Paid $5.8bn 7yr N30bn May 2022 NGN Bonds $400m Oct 2022 Eurobond Professional Staff 833 ATMs 2,823 Male: 54% 5.3 Million Operations Female: 46% 2.2m Cards Accounts & Contact Channels 2.6m Mobile 10,951 POS Customers 250 Branches Governance 5 Board Committees B- (Watch) 14 B- (Stable) Board Members Executive 8 Non-Executives: 8 Management A- NG (Watch) Team Executives: 6 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) 312.1 57.2 5.3 5.3 53.8 275.2 50.4 4.5 44.8 228.0 3.9 3.6 37.6 178.6 155.0 2016 2017 2018 2019 Q1 2020 2016 2017 2018 2019 Q1 2020 2016 2017 2018 2019 Q1 2020 Mobile/Internet Banking Cust. (#’000) Number of Debit Cardholders (#’000) Commentary 5 Sustained double-digit growth in savings deposits on the back of improved digital 2,629 2,206 2,225 banking penetration currently at 50%. 2,488 1,982 1,937 1,701 1,906 866 795 Retail loan growth moderating as the pandemic increases the sector’s risk profile 1,382 513 345 820 83.0% of customers transactions are now 1,763 1,693 184 done on electronic banking channels. 1,393 1,036 636 Digital banking now accounts for 28.4% of fee income. 2016 2017 2018 2019 Q1 2020 2016 2017 2018 2019 Q1 2020 Mobile Banking Internet Banking www.fidelitybank.ng 5
2. The Operating Environment www.fidelitybank.ng 3 6
The Operating Environment Moderate growth in credit FG slashes 2020 budget by to the Private Sector due N317.5bn to N10.28trn due to to rising risk declining oil price. Declining foreign reserves as oil prices Political risk is hit new low significantly reduced Naira is still under Yields are ticking up amid pressure due to rising market risks declining oil price Declining FDI on Increased uncertainty account of Covid-19 around the stability of and market outlook monetary policy rates Declining oil prices; spot Deposit growth may price is currently at $26.4 come under pressure per barrel. due to recent events Stable - Improving - Declining - www.fidelitybank.ng 7
3. Financial Highlights v v 8 www.fidelitybank.ng 8 3 8
Performance Highlights Total Interest Income up by 11.4% to N43.9 billion in Q1 2020 (Q1 2019: N39.4 billion) Revenue Operating Expenses up by 29.6% to N21.6 billion in Q1 2020 (Q1 2019: N16.7 billion) and Cost to Income Ratio dropped to 71.3% in Q1 2020 from 73.4% in 2019FY Efficiency Ratio PBT down by 1.4% to N6.6 billion in Q1 2020 (PAT came in at N5.9 billion) Cost of Risk was up to 0.7% in Q1 2020 from -0.1% in 2019FY NPL Ratio up to 4.8% in Q1 2020 from 3.3% in 2019FY Asset Quality Coverage Ratio was down to 115.2% in Q1 2020 from 169.1% in 2019FY FCY Loans accounted for 43.1% of Loans & Advances from 41.2% in 2019FY Capital Adequacy Ratio of 17.7%, based on Basel II computation Capital Adequacy Liquidity Ratio of 31.6% compared to regulatory minimum of 30.0% and Gross Loans to Funding Ratio stood at 66.0% (Adj.: 69.9%) in Q1 2020 from 68.2% in 2019FY Liquidity Total Equity at N242.4 billion compared to N234.0 billion in 2019FY www.fidelitybank.ng 9
Financial Highlights Total operating income increased by 24.2% to N30.3bn from N24.4bn in Q1 2019, however, PBT dropped by 1.4% YoY to N6.6bn due to 103.3% rise in loan loss provisions and 29.6% increase in total operating expenses. Growth in operating expenses was driven by the following cost lines NDIC|AMCON|Advert|Security|Staff which accounted for over 84.5% of the cost growth in Q1 2020. However, operating expenses declined by 10.3% QoQ compared to Q4 2019 which resulted in an improved cost-to-income ratio of 71.3% from 73.4% in 2019FY NIM came in at 6.6% due to significantly lower average funding cost which out-paced the decline in yields on earning assets. Average funding cost dropped to 4.4% from 6.3% in Q1 2019 (2019FY: 6.3%). We now report our FX balance sheet numbers using an FX Rate of N386.5/$USD, being the NAFEX rate as at the end of March 2020. Total deposits grew by 10.4% YTD to N1,352.3bn driven by strong growth across all deposit types. Local currency deposits increased by 10.1% to N1,031.4bn while foreign currency deposits increased by 11.2% to N320.8bn. Savings deposits grew by 13.4% YTD to N312.1bn from N275.2 in 2019FY. Savings deposits contribution to total deposits also improved to 23.1% from 22.5%, an attestation of our increasing market share in the retail segment. Risk Assets increased by 3.4% to N1,165.8bn from N1,127.0bn in 2019FY. However, the actual growth in risk assets was 0.9% while the impact of the currency adjustment accounted for 2.5% growth in the loan book. www.fidelitybank.ng 10
Financial Highlights Summary of Income Statement: YoY Change N ’million Q1 2019 Q1 2020 VAR % VAR Gross Earnings 48,423 51,159 2,736 5.7% Interest Income Loans 28,400 32,340 3,940 13.9% Interest Income Liquid Assets 11,030 11,586 555 5.0% Total Interest Income 39,430 43,926 4,496 11.4% Interest Expense Customer Deposits (16,521) (12,673) (3,848) -23.3% Interest Expense Borrowings (6,379) (6,653) 274 4.3% Total Interest Expense (22,900) (19,326) (3,574) -15.6% Net Interest Income 16,530 24,600 8,070 48.8% FX Income 3,022 1,965 (1,057) -35.0% Digital Income 2,153 1,624 (529) -24.6% Other Fee Income (Net) 2,695 2,126 (569) -21.1% Net Fee Income 7,870 5,715 (2,155) -27.4% Operating Income 24,400 30,315 5,915 24.2% Total Expenses (16,692) (21,628) 4,936 29.6% Net Impairment Losses (1,035) (2,103) 1,069 103.3% Profit Before Tax 6,674 6,583 (90) -1.4% 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 11
Financial Highlights Summary of Income Statement: QoQ Change Q2 2019 Q3 2019 Q4 2019 Q1 2020 VAR % VAR N ’million 55,232 57,400 54,460 51,159 (3,301) -6.1% Gross Earnings Interest Income Loans 33,685 36,475 38,147 32,340 (5,807) -15.2% Interest Income Liquid Assets 12,715 12,811 9,081 11,586 2,505 27.6% Total Interest Income 46,400 49,286 47,228 43,926 (3,302) -7.0% Interest Expense Customer Deposits (19,151) (19,862) (18,100) (12,673) (5,427) -30.0% Interest Expense Borrowings (6,880) (8,078) (4,318) (6,653) 2,335 54.1% Total Interest Expense (26,031) (27,939) (22,419) (19,326) (3,093) -13.8% Net Interest Income 20,369 21,347 24,809 24,600 (209) -0.8% FX Income 1,479 184 1,856 1,965 109 5.9% E-banking Income 2,316 2,622 1,825 1,624 (201) -11.0% Other Fee Income (Net) 3,887 4,138 2,524 2,126 (398) -15.8% Net Fee Income 7,683 6,944 6,206 5,715 (491) -7.9% Operating Income 28,052 28,291 31,015 30,315 (700) -2.3% Total Expenses (21,477) (19,709) (24,114) (21,628) (2,486) -10.3% Net Impairment Losses 1,803 (629) 448 (2,103) 2,552 -569.2% Profit Before Tax 8,378 7,953 7,350 6,583 (766) -10.4% 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 Statement of Financial Position: YTD Change 2019FY Q1 2020 VAR % VAR N ’million Total Assets 2,114,037 2,246,788 132,751 6.3% Earning Assets 1,474,252 1,522,752 48,500 3.3% Bank Placements 55,812 57,133 1,321 2.4% Treasury Bills 183,363 210,342 26,979 14.7% Bonds 108,103 89,450 (18,653) -17.3% Customer Loans (Naira) 662,214 664,643 2,430 0.4% Customer Loans (FCY) 464,760 501,183 36,423 7.8% Non-Earning Assets 639,785 724,036 84,251 13.2% Cash 31,658 35,735 4,077 12.9% Cash Reserve 343,346 408,889 65,543 19.1% Bal. with other Banks/Settlement Acct 179,932 197,141 17,209 154.0% Fixed Assets 38,392 38,430 38 0.1% All Other Assets 46,457 43,841 (2,616) -5.6% 1 Interest Bearing Liabilities 1,726,938 1,846,297 119,359 6.9% Demand 691,610 734,787 43,177 6.2% Savings 275,219 312,109 36,890 13.4% Time Deposits 258,384 305,366 46,982 18.2% Other Borrowings 76,308 50,478 (25,830) -33.8% On-lending Facilities 250,139 252,174 2,035 0.8% Debt Securities 175,278 191,383 16,105 9.2% All Other Liabilities 153,069 158,106 5,038 3.3% Equity 234,030 242,384 8,354 3.6% Please note: The Balance Sheet was converted at an exchange rate of N386.5/USD Cash Reserve excludes Special Cash Reserve held by CBN www.fidelitybank.ng 13
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