FIDELITY Bank has demonstrated commitment to returning value on investors’ funds going by the bank’s performances in the second quarter financial statement released by the Nigerian Stock Exchange, NSE.
Fidelity Bank’s remarkable first half performance for the period ended July 24 2015 which has elicited upward review of analysts forecast on the bank , showed 20 per cent year on year growth in profit before provisioning.
Fidelity Bank’s Q2 2015 result further showed that PAT grew 39 per cent y/y to N4.3billion despite PBT coming in flat y/y at N4.96billion.
The growth on the PAT line was down to base effects, as in the prior year Fidelity had reported a negative result of –N1.2billion on the other comprehensive income line in Q2 2014 against N39million in Q2 2015.
Although profit before provisions was up by 20 per cent y/y, a 4.9x expansion in loan loss provisions and a 15% y/y rise in opex resulted in PBT coming in flattish y/y.
Fidelity’s sizable impairment charges is similar to the high levels of loan loss provisioning reported by a number of the banks that have reported their Q2 2015 results and confirms our view of a worsening asset quality position for most banks due to the weak macro conditions.  Funding income, which advanced by 22 per cent y/y, was the stronger of the two, helped by relatively high yields, a 5 per cent q/q expansion in the loan book and a 3 per cent q/q decline in deposits.
Sequentially, PBT grew by 5 per cent q/q. In contrast, PAT declined by 14 per cent q/q mainly because of a significant reduction in other comprehensive income.  FBN capital market in its comment on Fidelity bank’s Q2 financial report noted “Compared with our forecasts, PBT and PAT beat by 38% and 41% respectively because the profit before provisions result came in better than we were expecting and opex surprised positively by 4%”
The analyst’s report further noted that Fidelity Bank’s H1 PBT of  N9.7bn appears to be tracking ahead of consensus 2015 PBT of N14.8bn. “Consequently, we would expect to see modest upward revisions to consensus estimates.  At current levels on our published forecasts, Fidelity Bank is trading on a 2015 P/B multiple of 0.2x, implying a discount of 66% to the 0.7x P/B multiple that our universe of banks is trading on”.

READ ALSO  Fidelity Bank posts N34.4bn gross earnings