When Nneka Onyeali-Ikpe assumed the role of the Managing Director/Chief Executive Officer (CEO) of Fidelity Bank Plc at the beginning of 2021, the bank announced its ambition to be recognised as a tier-one bank in another four years. Yes!!!, a tall ambition, many may say, given the dynamic operating landscape but nevertheless, the bank is proving it is achievable.
To emerge as a tier-one bank, Fidelity Bank listed seven focus areas critical to achieving this objective namely: Accelerated Growth, Innovation Drive, Brand Refresh, Performance Discipline, Digital Transformation, Service Excellence and Workforce Transformation.
“While these are early days, we are happy to report that we are on-track to meeting our tier-one ambition as reflected in our financial results that have indicated significant growth on key reporting lines,” Onyeali-Ikpe noted.
Just recently, Fitch Ratings upgraded Fidelity Bank Plc’s long-term issuer default rating (IDR) from ‘B-’ to ‘B’, reflecting the bank’s increased creditworthiness. The rating agency also upgraded Fidelity’s National Long-Term Rating to ‘A(nga)’ from ‘BBB+(nga)’.
According to the global rating agency, the upgrade is a result of the Bank’s improving business profile and resilient financial metrics. The agency added that the improved rating reflected the bank’s increased creditworthiness relative to other issuers in Nigeria, emphasising that, “Fidelity’s Long- and Short-Term IDRs are driven by its standalone creditworthiness, as expressed by its Viability Rating (VR) of ‘b’ ’’.
The agency further stated that the Viability Rating reflects healthy asset quality, good business profile and reasonable capitalisation and liquidity. These are balanced against high sensitivity to Nigeria’s challenging operating environment as well as higher credit concentration as a percentage of equity and weaker profitability than larger domestic-rated peers.
“Receiving this upgrade at a time when the global economy is faced with a myriad of challenges, speaks to the strength of our business model, the efficacy of our risk management culture and the commitment of our staff towards creating sustainable value for all stakeholders. As a bank, we will continue to execute our growth strategy in a prudent manner that allows us to take advantage of emerging opportunities in our various markets,” said Onyeali-Ikpe.
Fidelity Bank according to its June 28 notice at the Nigerian Exchange Limited (NGX) expects to publish its audited half-year (H1) financial statements on or before August 29, 2022.
Full year 2021 scorecard
Fidelity Bank’s financial performance for the full year ended December 31, 2021 reflects the management’s persistent growth drive as it continues to work closely with the bank’s customers to ensure success despite the challenging times. The bank sustained an upward performance trend from the beginning of 2021, which culminated in impressive double-digit growth in profit at the end of the financial year 2021. The increase in profit was driven by 65.6 percent increase in fee and commission income.
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Though net interest income declined due to lower average yields on treasury bills and bonds, profit before tax (PBT) grew by 35.7percent to N38.1 billion from N28.1 billion in 2020 financial year. Earnings per share (Basic and Diluted) increased to 123kobo in 2021 from 92kobo in 2020.
The bank’s gross earnings increased by 21.6percent to N250.8billion on account of 60.3percent growth in non-interest revenue to N47.2billion from N29.5 billion in 2020. The growth in non-interest income reflects the significant increase in customer transactions resulting in 84.9 percent growth in trade income, 47.2percent increase in electronic banking income, 45.5percent increase in FX income and 48.1 percent growth in account maintenance charge.
Net Interest Margin came in at 4.7 percent from 6.3 percent in 2020, as average funding cost inched up with the gradual recovery of business activities while the yield on government securities remained low. In absolute terms, Total interest income increased by N26.8 billion while total interest expense increased by N36.1 billion, leading to N9.2 billion decline in net interest income.
“Today, Fidelity Bank is one of the best managed commercial banks in the country and is currently ranked the 6th largest bank in the Nigerian banking industry with a market share of above 5percent across key indices. Our aspiration is to grow your bank’s market share to at least 7.5 percent across key indices as it evolves into a global financial services brand by driving expansion in new business segments within and beyond the shores of Nigeria,” said Onyeali-Ikpe told shareholders recently.
Fidelity stocks return seen outperform market
In show of confidence in Fidelity Bank’s improved future performance, investors are seen raising bet in favour of the stock making it to outperform the market. At N3.10 per share as at July 25, Fidelity Bank share price has risen by 21.6percent year-to-date (YTD). The share price nears its 52-week high of N4.05.
Innovation as key pillar of bank’s strategic framework
Earlier this year, when Fidelity Bank in collaboration with OnePipe launched payment gateway PayGatePlus, Onyeali-Ikpe had said, “Innovation is a key pillar of our strategic framework and we are constantly looking for new ways of improving our processes and delighting our customers. Everything we do as a financial organisation including the design of our products and services has the customer as our main focus. It is on this basis that we have worked very hard over the last few months, together with our technical partners to innovate a solution that enables businesses across different sectors to easily integrate financial services with their product offerings”.
Upbeat on deposit mobilisation
In 2021, the bank’s total customer deposits increased by 19.2percent to N2.024trillion from N1.699trillion in 2020, driven by increased deposit mobilisation across all deposit types including demand, savings and tenor deposits.
Fidelity has consistently delivered double-digit growth figures in its savings deposits over the past 9 years with savings deposits accounting for 15.1percent of its total funding base. During the year 2021, local currency deposits increased by 16percent to N1.625trillion while foreign currency deposits increased by 33.9 percent to $941.3 million.
Net loans and advances increased by 25.1 percent to N1.658trillion from N1.326trillion in 2020. However, intervention fund facilities and the impact of the foreign exchange rate were responsible for 20.9percent and 10.8 percent of the growth in the bank’s loan book respectively.
Cost of Risk came in at 0.5 percent and the Non-Performing Loans (NPL) ratio dropped to 2.9percent from 3.8 percent in 2020FY. Other regulatory ratios stood above the minimum requirement with Capital Adequacy Ratio (CAR) at 20.1 percent from 18.2 percent in 2020FY while Liquidity Ratio came in at 40.4percent – above the regulatory threshold of 30 percent.
Basel III returns
Fidelity Bank has commenced the rendition of Basel III returns under the parallel implementation guideline (Basel II & III) as required by the Central Bank of Nigeria (CBN), in accordance with the internationally agreed set of measures developed by the Basel Committee on Banking Supervision. The bank remains well capitalised and its Basel III CAR is well above the minimum threshold.
Digital banking products gain traction
Fidelity Bank’s digital banking products gained traction during the year 2021 driven by new initiatives in the retail lending segment and increased cross-selling of the bank’s digital banking products. In 2021, about 56 percent of the bank’s customers enrolled on the mobile/internet banking products from 52.8 percent in 2020, while 90percent of all the bank’s customer-induced transactions are now done on digital platforms, with 27.5 percent of fee-based income coming from electronic banking products. The total value of Fidelity Bank’s Nigerian Inter-bank Payment (NIP) transactions grew by 71.7 percent in 2021, with its market share improving to 5percent.
Board assures good corporate governance and capital preservation
Mustafa Chike-Obi, chairman, Fidelity Bank Plc told shareholders that the bank will also continue to pay close attention to corporate governance and capital preservation.
“Going forward, our business will be driven by technology and innovation. We will optimise current processes through digitisation and automation to allow for improved service quality. We will deploy predictive tools to enhance customer experience. In recent times, there has been significant increase in migration of skilled manpower from Nigeria to more developed economies. Consequently, we will institutionalise remote working protocols to enable us attract and retain the best talents. In a technology-driven environment, Risk Management is critical. We will continue to strengthen our Enterprise Risk Management capabilities to ensure the sustainability of our business,” Chike-Obi said.
Fidelity Bank is a full-fledged commercial bank operating in Nigeria with over 6.5 million customers serviced across its 250 business offices and digital banking channels. The bank was recently recognized as the Best SME Bank Nigeria 2022 by the Global Banking & Finance Awards. The bank has also won awards for the “Fastest Growing Bank” and “MSME & Entrepreneurship Financing Bank of the Year” at the 2021 BusinessDay Banks and Other Financial Institutions (BAFI) Awards.
