Fidelity Bank Plc recently held an investor call, following the release of its full-year 2018 audited results. Here are highlights from the conference call.
The U-turn on dividends
In response to a question on why the bank opted for a 13.9% payout ratio (amounting to N0.11), rather than the 30-50% as forecast, management stated that the decline was due to the macro environment and a bid to maintain capital adequacy ratios.
They, however, stated that between 30-50% of profits would be paid as dividends in the 2019 financial year.
Investors were enraged last week when the bank made a U–turn. From an initial dividend of N0.22 per share, a notice announcing N0.11 was released.
Management also stated that it would strive to keep Non Performing Loans (NPLs) at below 6% for the 2019 financial year. NPLs had gradually declined in the last three years, from 6% in 2016 to 6.4% in 2017 and 5.7% in 2018.
Proposed NHF Bill
In response to a question on a proposed National Housing Fund (NHF) bill which mandates banks to contribute 10% of their profit before tax, MD of the Bank Nnamdi Okonkwo said that it was a bit premature to comment on the bill, since it had not been signed into law by the President.
Management also expressed the belief that it does not expect any significant deterioration in the exchange rate.
Possible areas of loan growth
Management also stated that it expects to see loan growth in its traditional areas of play namely, manufacturing, retail trade and oil and gas.
Reasons for weakness in first and last quarters
In perhaps the most interesting takeaway from the call, management shed light on why the bank’s second and third quarters tend to be the strongest. For the fourth quarter of the year, most businesses would have been conducted by November, especially in the trading sector.
Retail, however, tends to pick up in December due to improved transactional volumes.