Banking Briefs
FIDELITY BANK Plc has cut its profit target for the year 2020. The bank cited the impact of the coronavirus pandemic as a reason for cutting the target. The bank also said it had set aside money for a Eurobond coupon payment due in two weeks, before the country begins the lockdown.
The bank now expects to see a 15 percent drop in profit this year to N25.8 billion, compared with its 2019 profit of N30.4 billion. Gbolahan Joshua, its chief operations and information officer, Fidelity Bank, in an interview with Reuters said the bank assumed that the second quarter was going to be soft after the disruptions associated with coronavirus.
Africa’s largest economy has been hit hard by the coronavirus pandemic. It is struggling for foreign income from its production of oil, for which prices have slumped due to a drop in demand from China and a price war between major producers Saudi Arabia and Russia.
But Joshua noted that Fidelity has enough cash to honour its Eurobond coupon payments. “There’s been no mass discussion for loan restructuring. It’s still early days,” he said, adding that the sectors of the economy that could be impacted by the virus had been identified.
He said the bank had transferred $21 million to bond trustees for the half-yearly coupon payment on its $400 million 2022 Eurobond due on April 13 as part of its contingency plans for a lockdown.
The bank transferred the funds to Citibank, the trustees, on Monday, Joshua said. He said the bond issue was now yielding 16 percent interest, compared with five percent in January, due to investors shedding emerging market assets.
Around 60 percent of the bank’s 3,000 staff were working from home before the lockdown began, and the bank has looked at several scenarios to keep operations running, Joshua said. Joshua said the bank had reduced its exposure to upstream oil and gas production to $365 million from $500 million in 2015 shortly before Nigeria entered a recession.
Fidelity has also increased its cost of risk guidance for 2020 to a six-year high of 1.5 percent, he said, up from one percent last year, on its loan book worth around N1.1 trillion. He said the higher cost of risk would hurt the bank’s profits.
– Apr. 3, 2020 @ 14:35 GMT |
Tags: COVID-19: Fidelity Bank cuts profit target for 2020
