FIDELITY BANK: THE FLIP SIDE OF FIDELITY.

Fidelity Bank PLC appears set by nine months to September to taste the flip side of fidelity. After all, fidelity sometimes demand you clean up your stable while none is watching or applauding.
According to the figures to September released recently, the major thing against the bank is its provision for loan loss which more than doubled to N3940m from N1898m thus significantly depressing profit growth to only 2.99%.
Of course, the potential was there to increase at a much faster rate since firstly, growth in other income streams pushed gross earnings growth ahead of interest income increase and equally important, as interest expense growth stopped short of that of interest income.
Gross earnings had risen by 11% to N106570m from N96023m as net income from trading instruments broke out of its 2014 loss yolk to chip in N497m profit; as other operating income rose by 23.5% to NN7733m and even net commission managed 1.11% increase to N13650m. All in addition to 10.2% rise in interest income to N84690m.
The nine month closing was to be helped too by only 10.6% increase in other operating income to N44756m from N40473m.
But then loan loss 107.5% jump had the day as profit before tax rose to N13789m from N13389m. Thus Fidelity bank tasted the flip side of fidelity as its profit margin eased to 12.9% from 13.9% although representing an improvement on full year 2014 11.4%.
SO:
* Any further improvement in fortunes will depend on third quarter's provision for loan loss.
* It has to be acknowledged that loans and advances increased by 11.9% within the period.

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