By Peter Egwuatu

Fidelity Bank Plc has declared a N8.6 billion Profit-Before-Tax (PBT) in the financial year ended December 31, 2010 representing an increase of 321 per cent on the N2 billion achieved for the six months of financial year ended December 31, 2009.

Speaking at the bank’s 23rd Annual General Meeting (AGM) in Abuja on Thursday, Reginald Ihejiahi, Managing Director/CEO of the bank said, ‘the result was achieved even after a N3.5 billion loan loss expenses (net recovery) during the period.”

He further noted that the gross earnings increased by 61.4 per cent to N56.0 billion from N34.7 billion in 2009.

Ihejiahi stressed that “of a particular mention is the significant improvement in net interest income of N26.5 billion, a 98.6 percent increase from the N13.4 billion figure in 2009.”

According to him, “for every N100 interest income gained, the bank used only 34kobo to pay for the cost of deposit in 2010 compared to 48kobo in 2009. This, he said, was made possible by the bank’s aggressive branch network expansion strategy and deliberate focus on sustainable low cost deposits. Ihejiahi hinted that fees and commissions had continued to improve on the back of the linkage effect created by the rapidly expanding retail distribution capacity of the bank adding that this resulted in 110 per cent growth in fees and commissions to N8.5 billion in 2010 from N4.0 billion in 2009.

“At the same time, operating expenses grew by 84.8per cent to N29.8 billion due to inflationary pressure and impact of the cost of 18 new branches constructed and opened in 2010 and 13 others to be opened in the first quarter of 2011,” he added.

Similarly, the bank was able to reduce its cost-to-income ratio to 71.0 per cent in the 2010 financial year from 73.2 per cent recorded in 2009 financial year, though still higher than the bank’s target of 50 per cent.

The Fidelity Bank boss further explained that during the period, the bank grew its total assets by 10.5 per cent to N841.6 billion at the end of 2010 financial year from N435.6 billion achieved in 2009, stressing that total deposits stood at N326.7 billion as at December 31, 2010, which represents a growth of 13.4 per cent from N288.1 billion in 2009 December 31.

Low cost deposit constituted 72.2 per cent of total deposits compared to 58.4 per cent as at December 31, 2009. The key driver of this strong and efficient deposit growth is the 63 per cent growth in savings deposits and 24 per cent drop in high cost time deposits even as the cost of funds decreased substantially from an average of 8.6 per cent in the financial year ended December 31, 2009 to 4.1 per cent in the financial year ended December 31 2010 with a strong positive impact on net interest margin.

Speaking , Chairman of the Bank, Christopher Ezeh, expressed pleasure with the progress made in improving profit and operating performance in the bank’s business in the year 2010 compared to 2009.

He noted that efforts to rework the funding structure to a more sustainable and efficient deposit mix is showing a strong positive growth in demand and savings deposits, and the reduction in high cost deposits with a resultant improvement in net interest margin.