Investors now face a tougher question, as Fidelity Bank’s return on equity slid to 24.4 per cent in 2025 from a 41.7 per cent peak in 2024 after shareholders’ funds doubled during a recapitalisation. The shift preserves capital but diluted average equity, reducing ROE even as the wider Nigerian yield environment cools.
A five-year review shows Fidelity benefited strongly from the rate and currency cycle. ROE climbed from 13.3 per cent in 2021, operating margins tracked a similar arc, and net interest income surged across the period. Net interest income rose 60.9 per cent to ₦152.7 billion in 2022, then jumped 82 per cent to ₦277.4 billion in 2023, and expanded a further 127.1 per cent to ₦629.8 billion in 2024 as net interest margin widened to 12.0 per cent.
The bank’s net margin also swung sharply, from 27.8 per cent in 2021 to a 35.6 per cent high in 2024. FX revaluation gains played a role in 2023, rising to ₦44.1 billion from ₦2.7 billion, but in 2024 FX gains dropped 73 per cent and earnings reflected spread expansion more than paper gains. Cost dynamics varied, with cost-to-income at 67.1 per cent in 2022 before improving to 46.8 per cent in the first half of 2023.
The payback arrived in 2025. Implied average equity swelled to ₦990 billion, pulling ROE down by two-fifths to 24.4 per cent. Net profit fell to ₦242.4 billion from ₦278.1 billion in 2024. Headwinds included a derivatives position that swung to a ₦59.8 billion loss in H1, a 2.4 per cent contraction in net loans to ₦4.28 trillion, and a heavier tax charge as windfall tax raised the effective tax burden to 30 per cent.
Management choices earned credit for being opportunistic and prudent. The bank squeezed higher yields from a low-cost deposit base, where the low-cost deposit ratio reached 92.6 per cent, and moved early to recapitalise, leaving a capital adequacy ratio of 30.94 per cent. But the 2024 numbers stand out as an outlier: derivative hedges proved costly and loan growth stalled. A 24 per cent ROE in a high-yield economy is respectable, not exceptional, and watchers will want to see whether margins can withstand falling interest rates.
What happens next is a test of margin durability. If net interest margins compress with a falling-rate cycle, the bank’s sizeable capital buffer will protect solvency, but investors will require evidence that underlying profitability does not rely solely on a favorable macro cycle.
