Fidelity Bank: Q2 result triggers upward review of earnings’ forecast

Shareholders of Fidelity Bank have been reassured of profitability on their investment in the deposit money bank and returns of investment, following remarkable second quarter 2017 unaudited result declared.

The result released by the Nigerian Stock Exchange (NSE) late on Tuesday, has triggered positive market reactions, as key market analysts have indicated upward reversal of consensus earnings’ forecast.

Fidelity Bank’s Q2 result showed that profit before tax (PBT) and profit after Tax (PAT) grew by 155 per cent y/y to N5.4billion and 110 per cent y/y to N7.7bn, respectively, driven by strong revenues, though provision spiked quarter on quarter (q/q).

According to the result, the key driver behind the strong y/y growth in earnings was a 20 per cent y/y growth in profit before provisions, just as flat loan loss provisions y/y buoyed the results.

In terms of the revenue contributions, both revenue lines contributed to the solid growth: both grew by c.20-21%. Further down the P&L, PAT expanded by 110% y/y to N7.7bn, thanks to a 67% y/y growth in other comprehensive income.

According to FBNQuest analysts, the bank’s results beat its forecast by wide margins and now calls for need for upward review of its earnings forecast “PBT beat by 148% because of positive surprises in non-interest income, funding income and opex, in that order. The strong positives on these lines offset a negative surprise in loan loss provisions.”

The analysts’ company reports that the positive surprise in the bank’s PAT, was greater 319 per cent, because of the strong other comprehensive income. “To put the strength of the results in proper context, Fidelity’s H1 PBT of N11.0bn is already ahead of consensus 2017 PBT forecast of N10.7bn.” the analyst company said.