Derivatives trading by Fidelity Bank led to significant losses in 2025, decreasing group profit from N278 billion the previous year to N242 billion, after losses of approximately N224 billion.
The fair value of currency forward/futures contracts decreased significantly from over N50 billion in 2024 to N410 million at the end of 2025.
The numbers are contained in the bank’s audited financial report for the full year ended December 2025, which also shows strong cost increases alongside the trading losses.
Despite a gross earnings increase of N476 billion to N1.52 trillion, cost increases and trading losses offset all revenue gains, significantly reducing margins and the bottom line.
Over the preceding two years, Fidelity Bank reaped gains from derivatives trading at about N24 billion in 2023 and close to N58 billion in 2024, but the huge losses that occurred in 2025 have wiped out more than all the gains.
Derivatives offer benefits such as hedging risk, speculating on asset prices, and accessing markets, but they also carry the potential for substantial losses.
For Fidelity Bank, as much as over N194 billion of the derivative losses had not been realised at the balance sheet date.
Cost increases that added to the pressure from trading losses include the cost of funds that grew well ahead of the increase in interest earnings. At N467 billion, interest expenses rose by 45.6 per cent compared to an increase of 36.6 per cent in interest income to roughly N1.30 trillion.
The increase in cost of funds is also close to three times the increase of 16 per cent in customer deposits, confirming a significant increase in the average cost of the naira of deposits during the financial year.
The result is a squeeze on lending margin, which slowed down the growth of net interest income from 127 per cent in 2024 to 32 per cent in 2025, closing at a little over N831 billion for the year.
A drop in credit loss expenses from N56.4 billion to N21.6 billion provided some relief from rising costs. This saving boosted the increase in net interest earnings after credit loss charges to 41 per cent, closing the year at N809 billion.
The bank reaped a windfall from net foreign exchange gains that multiplied eight and a half times to stand at N99.6 billion by the close of the 2025 financial year.
However, the cost savings and revenue gains could not fully counter the losses from derivatives trading, which depressed net profit margin from 26.7 per cent in 2024 to less than 16 per cent in 2025.
The bank ended the 2025 operations with earnings per share of N5.80, dropping from N6.63 per share in 2024. The directors have declared a dividend holiday for the bank’s trading in 2025.
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