Fidelity Bank Plc has reported a drop in profit for the 2025 financial year, with earnings falling to ₦242.44 billion, down from ₦278.11 billion in 2024, as a large derivative loss and rising costs pressured performance.
In the bank’s audited results released on Monday, May 11, Fidelity Bank stated that its performance was majorly affected by a ₦223.79 billion loss on derivatives during the year, despite strong growth in revenue and total assets.
Other issues that weighed on its performance include higher costs, regulatory capital pressures, tax charges, and a major legacy court case.
A review of the results shows that Fidelity Bank’s gross earnings rose by 45.6 per cent to ₦1.52 trillion in 2025, up from ₦1.04 trillion in 2024.
Interest income also increased by 38.7 per cent to ₦1.11 trillion, compared to ₦803.05 billion the previous year.
However, expenses grew sharply during the period as interest expense rose from ₦320.82 billion in 2024 to ₦467.17 billion in 2025, increasing the cost of funds.
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Operating costs also climbed, with other operating expenses rising to ₦335.29 billion from ₦242.70 billion in 2024.
As a result, profit after tax declined to ₦242.44 billion in 2025, down from ₦278.11 billion in 2024.
The drop was mainly driven by a large derivative loss of ₦223.79 billion, which outweighed foreign currency revaluation gains of ₦99.58 billion.
Although the bank recorded improvements in asset quality, with credit loss expense falling by 61.7 per cent to ₦21.61 billion from ₦56.44 billion in 2024, overall profitability was still pressured by the higher costs and market volatility.
The bank also operated in a challenging economic environment marked by inflation and currency devaluation.
While total assets grew by 18.6 per cent to ₦10.46 trillion as of December 31, 2025, customer deposits rose by 16 per cent to ₦6.89 trillion. Net loans and advances, however, declined slightly to ₦4.28 trillion from ₦4.39 trillion in 2024.
One of the most significant challenges during the year was the Sagecom litigation, a long-running legal dispute linked to a 2002 transaction.
In April 2025, the Supreme Court delivered a judgment in the case. A dispute later arose over how the liability should be calculated, with Sagecom claiming the amount exceeded ₦220 billion, while the bank argued it should not exceed about ₦31 billion.
In December 2025, the Supreme Court clarified the basis for computation, ruling in the bank’s favour by directing that the exchange rate at the time the liability arose and simple interest should be used.
Despite this clarification, the total value of claims against the bank rose sharply to ₦491.8 billion in 2025, compared to ₦14 billion in 2024.
The bank increased its litigation provision to ₦19.82 billion as of December 31, 2025, up from ₦2.27 billion in the previous year.
The ₦17.54 billion increase in litigation provisions contributed to the rise in operating expenses and is recognised as a non-current liability in the financial statements.
Fidelity Bank said it believes the final judgment amount will not exceed the provisioned sum and that it has adequate reserves to cover the liability.
The bank was also affected by new regulatory capital rules from the Central Bank of Nigeria (CBN), which raised the minimum paid-up capital for banks with international authorisation to ₦500 billion.
To comply, Fidelity Bank raised ₦227 billion through a private placement in December 2025, bringing its eligible capital to ₦532.6 billion.
In addition, the bank faced a 70 per cent windfall tax on foreign exchange gains realised between 2023 and 2025 following the floating of the Naira.
It estimated its windfall tax liability at ₦5.67 billion for the 2025 financial year.
Although the bank’s capital adequacy ratio remained above the regulatory minimum at 16.21 per cent, it fell from 23.47 per cent in 2024, reflecting pressure from asset growth and other adjustments.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X