Good day, ladies and gentlemen, and welcome to the Fidelity Bank H1 2025 earnings call. All participants will be in listen-only mode. There will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing star and then zero. Please note that this call is being recorded. I would now like to turn the conference over to Nneka Onyeali-Ikpe. Please go ahead. Please go ahead, ma'am.
On this call with me today. Good day. My name is Nneka Onyeali-Ikpe, MD/CEO of Fidelity Bank PLC. I am pleased to welcome you to our H1 2025 earnings call. On the call with me today are the following executive and principal officers of our bank: Kevin Ugwuoke, Executive Director, Risk Management; Ken Opara, Executive Director, Lagos and Southwest; Stanley Amuchie, Executive Director, Chief Operations and Information Officer; Pamela Shodipo, Executive Director, South; Abolore Solebo, Executive Director, Corporate Banking; Safiyanu Garba, Executive Director, North; Victor Abejegah, Chief Financial Officer; Akintoye Babalola, Treasurer; Adetunji Mustafa, Division Head Strategy; and Samuel Obioha, Head Investor Operations. We have uploaded the investor relations presentation on our website for your review. In this session, I will provide a high-level overview of the macroeconomic environment and speak to the facts behind the figures. Nigeria's domestic business environment showed strong signs of improvement in 2025.
The government's contractionary policies delivered greater macroeconomic stability. The key developments during this period include: on inflation, the rate declined from 34.8% in December 2024 to 16.05% in October 2025, maintaining a steady downward trend since April 2025. Analysts forecast further moderation in the coming months. On GDP growth, Nigeria recorded a growth rate of 4.3% in Q2 2025, an increase of 21.6% compared to 3.48% in the same quarter of 2024. With respect to the external reserves and exchange rates, as of November 2025, foreign reserves stood at $46.7 billion, while the exchange rate appreciated to NGN 1,454 per US dollar, compared to NGN 1,649 in the corresponding period last year. On oil production, an average daily crude oil production rose to 1.58 million barrels per day in September 2025, reflecting a 19% increase over the same period in 2024.
Concerning capital importation, in Q1 2025, capital importation reached $5.6 billion, representing a 67.12% increase compared to the same period in 2024. On financial governance, another milestone was Nigeria's removal from the Financial Action Task Force, FATF, gray list, which restored investor confidence and underscored progress in financial governance and regulatory compliance. Finally, on the back of these reforms introduced by the current government, S&P Global and other rating agencies changed Nigeria's outlook from stable to positive. The rate change is expected to increase foreign inflow, lower borrowing costs, and help debt sustainability. Therefore, our prognosis for Nigeria's economy is positive in the coming months, and we expect the monetary authorities to drive an expansionary policy. Hence, we expect further rate reductions in the coming months.
As a bank, our strategic imperatives in the current financial year are to optimize the balance sheet by expanding the earning base, enhancing the net interest margin, increasing non-interest revenue, reducing our cost to serve, and keeping the cost to income ratio, that CIR, within acceptable thresholds. Despite the end of CBN's forbearance regime, our financial results highlighted the resilience and adaptability of our business model. Permit me to speak specifically to the financial numbers now. The increase in our NIM from 12% in December 2024 to 13% in the review period was due to the elevated interest rates regime in H1 2025, which impacted both the yield in earnings assets and the cost of funds.
The yield on the earning assets increased by 240 bips from 18.1% in full year 2024 to 20.5% in the review period, while the cost of funds increased by 100 bips from 5.2% to 6.2% in the same period. The rise in average funding costs was moderated by our maintaining a low-cost, a high low-cost deposit profile. The ratio of low-cost funds to our total deposits was 92.9% in H1 2025, up from 92.6% in full year 2024. Our initiative to drive non-interest revenue over the years is finally beginning to bear fruits. In the review period, we grew our non-interest revenue by 134% from NGN 35.6 billion in H1 2024 to NGN 83.4 billion in the reporting period. The drivers of this growth are digital income, trade income, account maintenance charges, and credit-related fee income. Slide 21 of the investor presentation showed the movement in expenses.
Year on year, our OPEX increased by NGN 90.2 billion from NGN 160.6 billion in H1 2024 to NGN 250 billion in the reporting period. A 33% of this increase came from additional provisioning for legal costs. Other cost drivers were staff costs, regulatory charges, and marketing, as well as communication expenses. The rise in staff costs was due to the increased wages and salaries across the whole cadre. Regulatory costs related to NDIC and AMCON charges, while marketing and communication costs relate to expenses incurred in our ongoing internal expansion efforts. Overall, our cost-to-income ratio increased to 56.3%, which is in line with our guidance of less than 60%. As a deliberate strategy, we prioritized capital conservation over dividend payment in H1 2025. We are on track to complete the second phase of our capital raise exercise through a private placement. This exercise will add approximately 900 bips to our CAR.
We assure our esteemed stakeholders that the full-year dividend payment will be in line with our dividend payout policy. Thank you for your support. I will now take questions.
Thank you. Ladies and gentlemen, if anyone would like to ask a question, you may press star and then one on a touch-tone phone or on the keypad on your screen. You will hear a confirmation tone that you have joined the queue. If you decide to withdraw the question, please press star and then two to remove yourself from the question queue. Once again, if you would like to ask a question, please press star and then one. The first question we have is from Nabila Mohammed of Chapel Hill Denham. Please go ahead.
Good afternoon. Thank you for the opportunity to ask questions. Please confirm you can hear me.
Yes, we can hear you.
Okay, thank you. I have a couple of questions. I understand the need to prioritize capital conservation because of the level of the CAR that we saw as at H1 2025 at 15%. I just want to understand clearly what that NGN 303 billion that was classified as under impaired meant and how that affected the retained earnings, because as H1, we saw it as a negative NGN 74 billion just based off the financial statement. I need clarity on that figure, if it's related to forbearance or not, or just color around it, basically. That's my first question. My second question is with regards to dividend payment, the final dividend payment.
Since we did not see an interim for H1 2025, what should we expect for final dividend, and when should we expect if not, if we do not expect for full year, when should we now expect dividend payments to resume fully? Those are my two questions for now. Thank you.
Thank you very much for understanding our capital conservation strategy. Just to speak specifically to your question, your question specifically, the movement of NGN 303 billion from retained earnings to risk with regulatory reserve was born out of the bank's exit from the forbearance regime. To answer your second question, the dividend payout policy of the bank is 25%-40%, and we will pay full dividend full year. We will continue to abide with our dividend policy of between 25% and 40%.
Hello? Hello.
Hello.
I can hear you, ma'am.
Okay. My first question is with regards to the forbearance. Is the bank fully out of the forbearance, and even the breach in SOL, is that sorted out already?
Yes, we have exited forbearance as required by the central bank. We have fully exited forbearance as required by the central bank.
Thank you.
Thank you. The next question we have is from Oni Mere Sole of Renaissance Capital Africa. Please go ahead.
Hello, good afternoon. Please confirm if you can hear me.
We can hear you, sir.
Okay. Starting with for retained earnings, I see that retained earnings was negative as at H1 as on the balance sheet. Please can you explain the reason for that? Also, the legal contingency that we have, legal contingency, what's the update on it? Are there any provisions also being made for the legal contingency in case things go south? That's all.
Yes, thank you very much. Like I answered the previous speaker, the movement of NGN 303 billion was the movement from our retained earnings to the risk reserve capital, regulatory reserve, and that's borne out of the exit of the forbearance regime. On your second question, yes, we made adequate provisioning for the legal contingencies.
Follow-up question, sorry.
It was the movement that caused the negative retained earnings. In our Q3, that's been adjusted. Positive. It's back to positive in Q3. Thank you.
Okay. For the legal contingency, how much have you provided, please?
We have provided billion for the because that is our expectation of our liability in that particular issue.
Okay. Okay.
Thank you. The next question we have is from Habib Oladehinde of WSTC Financial Services.
Hello, good afternoon. Please confirm if I am in.
We can hear you, sir, but there is an echo on your line.
Thank you very much. My question is based on the litigation because from the provision, we saw it as NGN 37 billion provision. According to the last court order, it is NGN 22-25 billion. What can you say about that? How do you arrive at your expectation, please?
The truth of the matter is that this matter has gone back to the Supreme Court, and we are unable to make comments on it because it's sub judice. Our expectation, by our own calculation, which is what gave us the confidence to go back to the Supreme Court, is that our liability is limited to NGN 33 billion, NGN 32 billion, plus additional things that we have moved since when the case came up. I am not allowed to make further comments on this. Thank you.
Okay. Thank you, ma'am.
The next question we have is from Sadiq Safiri of SBG Securities. Please go ahead.
Yeah, thank you very much for taking my questions. Good afternoon. I just wanted to confirm for the purpose and right of the H1 name probably goes or the sectors that were affected, exactly what they mean in the exam. That's the one. Two would be the plans of the bank to sort of minimize the effect of that, considering the accommodation choice that the.
This is the operator. Sadiq, your line is breaking up, sir. If you could just speak a little bit closer to the mic. Yes.
Yes, please. Can you hear me?
Your connection does not seem very stable, sir.
Okay.
Give me now.
Sadiq, it seems that your connection is not very stable, sir. Can you please try and dial back again from a different line? In the meantime, we'll take the next question from Tumininu Segun-Banjo of WSTC Financial Services. Please go ahead.
Good afternoon. Thank you for sharing with us. Thank you for having to be a port in this kind of storm. Well done for what you're doing. Very quickly, my question is around recapitalization. Where is Fidelity Bank, and how close is she to having achieved the seeding requirement for Q1 of 2026? Thank you.
Thank you very much. For a financial bank, the regulatory capital for us is NGN 500 billion. We are on NGN 305 billion now as we speak. We are on course to, for our private placement within before the end of the month, to raise NGN 259 billion. We have all the approvals that we need for that, and we're very much on course to do that. We threw NGN 259 billion in. We will be at NGN 565 billion. We are very confident that we'll be able to achieve that for the end of the year because we have, if you remember, our private placement. If you remember, our public offer was oversubscribed by 234%. The investor interest is still very much alive for obvious reasons because the investors that we got in at the public offer have made jumbo profits. Everybody wants to be part of our private placement.
We are very confident. Our book yield for now has exceeded what we need. We are very confident that we will close out all of this before the end of the year. This will add back about 900 bips to our CAR. Thank you.
Yes, thank you. Can you also speak to your FX namings? You mentioned 40% of the balance sheet is foreign denominated, and given the current client, the Naira seems to be appreciating against the dollars. How does that weigh on your holdings, and what does that look like for how did that affect half year, and how does that also look like in Q2? Thank you.
Okay.
Thank you very much. We are aware of the impact of the FX gains, so I will get the CFO to speak to that. Thank you.
Thank you so much. The FX gain recorded was born out of the FX tradings that we did during the period, and that gave us these figures you are seeing. Because of the availability of the FX during the period, we took advantage of it, and we brought in so much about it. The FX transaction that took place complemented the FX translation gain made in the balance sheet on the NOP. A combination of those two income lines gave us what we have on the FX gains of NGN 34.5 billion. Thank you.
The next question we have is from Stephen Chima of CardinalStone. Please go ahead.
Right. Good afternoon. On your forbearance, I'd like to get a sense of what the exposure was, I mean, the size of the exposure really. Also, what sectors were impacted the most? We also noticed you have your results. You guys had a windfall tax. Should we be expecting further windfall taxes in Q3 and Q4? I would really appreciate if you could speak a little around Fidelity Bank UK's financial performance and expectation into 2026 as well. Thank you.
Okay. Let me start from the last question. U.K., Fidelity Bank U.K., over the past two years, we have focused on rebuilding the business for sustainable growth and long-term profitability, supported by our enhanced risk management practices and very strong corporate governance. You know the environment where we are within England, we have to ensure very strong corporate governance. I am pleased to inform you that these efforts over the last two years have yielded results as Fidelity Bank U.K. is back on track for profit this year. In the short to medium term, we project that Fidelity Bank U.K. will contribute about 2%-5% to the group profits. In the long term, we expect that its contribution will increase to about 10%.
We are confident in this outlook, given the robust banking license that we have in the U.K., which enables the subsidiary to provide a broad suite of services, namely retail, commercial, and also for corporate clients. We are confident that they would deliver on the short term, like I said, 2%-5%, and on the long term, 10%. Thank you. The second question that you asked is on the windfall taxes booked in Q3 and Q4. They have been amortized over the past three years, and the outstanding balance will be completed this year. There will be no further assessments for windfall taxes. The question you asked of forbearance, we have exited all forbearances. Our forbearance was about NGN 800 billion. The sectors that were affected were power and oil and gas.
We have exited all forbearances. Thank you.
The next question we have is from Ngozi Chukwuneke of CardinalStone. Please go ahead.
Hello. Good afternoon. Thank you for the opportunity to ask questions. I have a few questions. First, I do not know if this was mentioned, but I want to speak about the delay in the release of the full-year results. Were there any reasons in particular that resulted in the delay of the Q2 results? When should we expect to see the 9-month 2025 results? Based on the bank's estimates, when do you believe that retained earnings will turn positive? I believe this is going to be also supportive for dividend payments going forward.
On the private placement, I wanted to know if you, by your estimates, you think that the capital verification process and all of those will be concluded in the current year or if that will be concluded in 2026 so that we can get a sense of when the inflows will be expected on the bank's book. Moving on to our expectations for 2026, given that if you look at the mix of the bank's earnings, it's more or less tilted towards interest income, how do you gauge Fidelity Bank's performance for 2026 given that we're moving into a more dovish interest rate cycle? That would be awesome. Thank you.
Thank you. Thank you very much. Just to confirm that our retained earnings have turned positive in the third quarter, and the third quarter results will be out within the week. Just to let you know that we've turned positive. The capital verification exercise, we believe, will not be anywhere as long as the last one because if you remember, the last one was a public offer, and there were many, many, many investors. A private placement has much shorter investors, anywhere in the levels of 50. We believe that it will be a very quick exercise. We actually do believe that everything about the verification will be completed before the end of the year. We expect that we should be able to add on the figures for our full-year report.
The question on the delay and why the nine-month report was delayed, I'll have my CEO, IO, who is the one that liaises with the central bank to discuss it. You know that the fact that we had to do a lot of stuff around the forbearance and the capital raise, that's all part of what delayed it. I'll have the CIO speak to it. Thank you.
Okay. Thank you very much. It has been a very busy year, busy in the sense that a lot of things happen at the same time. We are one of the few banks that do audits, and audits also take a bit of time. If you add the audit, then the process of exit of forbearance and all that, that delayed a little bit. What we do, we try to carry the market along. If you notice, as soon as we saw that there were some levels of delay, we published information to the market to let the market know. That is behind us now. We are making good progress. At the end of the day, just after this, I think within the week, as Nneka mentioned earlier, our nine-months will also be published.
It is just a busy year that we've seen, and we feel that going forward, things will come in faster and other. Thank you very much.
For 2026 performance, as we move into a new cycle, given that Fidelity Bank's mix of earnings tilts mostly to interest income, how do you intend to manage that?
Yeah. Our strategy has been based on low-cost funds, driving low-cost funds. If you notice from the report for half year, our non-interest income, the fees and commission have gone up significantly. We are driving a lot on our digital banking and diversifying our earnings through export, efforts on export, significant efforts in digital loans, and all of that. The idea is to diversify our portfolio away from interest income alone and ensure that we have a broad-based income. On that, we are sure that we have a winning streak and we will continue to be along those lines. Thank you.
Ladies and gentlemen, just one final reminder. If you would like to ask a question, you may press star and then one on a touch-on phone or on the keypad on your screen. We will pause a moment to see if we have any further questions. It seems that we now have no further questions at this time, and I would like to hand back to Nneka for any closing remarks. Please go ahead, ma'am.
Yes. Thank you for attending this call. Just to say that over the years, we have built a very resilient and sustainable balance sheet, and we believe that we will be able to deliver the numbers this 2026 based on that. For the rest of 2025 and going into 2026, despite the headwinds, we will continue to prioritize our strong corporate governance practices, and we will continue to run a very effective risk management structure as well as try to conserve our capital in the process. We are also very focused on talent retention, and in all of this, we promise that we will enhance our shareholders' value, which is our DNA. Thank you very much. Thank you very much.
Thank you. Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your line.