Fortis Microfinance Bank has just released its Q1 2016 earning result to The Exchange.
The bank according to its balance sheet is into: “the provision of microfinance banking and other financial services to corporate and individual customers ” said its gross income rose to 3.6 billion from NGN 3.3 billion it made within the same quarter last year. As a sign that its income is almost stagnating, this a marginal percentage growth of 9%.
The company’s cost of doing business must have increased due to the harsh economic condition as its profit before tax fell to NGN 882 million compared to NGN 1 billion the bank recorded in the same quarter last year. Because of this, the company net profit fell to NGN 583 million from NGN 674 million it recorded last year.
As a going concern, the company’s net asset has risen to NGN 19.9 billion compared to NGN 16.5 billion it recorded within the same quarter last year. The company’s net liabilities are getting close to its assets value. As at last quarter, the bank’s total liabilities have risen to NGN 17.2 billion compared to NGN 14.4 billion it had against it books same quarter last year. This is still predicated on the fact that company’s loans and advances to customers which stood at 13,9 has a low default rate. The risk of having high non-performing loans would pose serious risk for the future of the bank.
The bank has made a total of NGN 219 million as impairment provision for the quarter. This is however higher than NGN 114 million it made provision for last year. This is a year on year growth of 92.1%. Its report shows that it has written off about NGN 30 million as lost funds to bad debt. The bank has about NGN 3.5 billion in total cash balance.
Fortis would need to really look into its risk management strategy. The bank’s income is impressive but it is suffering the challenge major micro-credit providers suffer, defaults can get out of control.
Shares of Fortis Microfinance [FORTISMFB [AWR]] are currently trading at NGN 5.15 per share. It has remained unchanged for a more than six months.