BusinessDay

Fidelity: Full year scorecard reflects disciplined execution of bank’s growth strategy

…capacity to deliver superior returns to shareholders

Recently, Fidelity Bank Plc release its audited financial results for the twelve (12) months period ended December 31, 2021. On Thursday April 7, the management team of the full-fledged commercial bank with over 6.5 million customers held analysts and investors conference call discussing the 2021 audited results. The bank’s management team leveraged the opportunity to answer questions from participants after the presentation of the 2021 performance of the bank.

Full year 2021 financial highlights
Profit before tax grew by 35.7percent to N38.1billion from N28.1billion in 2020, which translates to an increase in Return on average equity (RoAE) to 12.5percent from 10.5percent in 2020. Gross Earnings increased by 21.6percent year-on-year (YoY) and 23.2percent quarter-on-quarter (QoQ) to N250.8billion driven by a combination of 60.3percent growth in non-interest revenue (NIR) and 15.2percent increase in interest and similar income.

The growth in NIR reflects the significant increase in customer transactions resulting in 84.9percent growth in trade income, 48.1percent in account maintenance charge, and 47.2percent increase in digital banking income, among others. Digital Banking gained further traction driven by new initiatives in the bank’s retail business and the enhancement of existing digital banking products.

Fidelity Bank now has 56percent of its customers enrolled on mobile/internet banking products and 90percent of total customer-induced transactions done on digital platforms with digital banking business contributing 27.6percent to net fee income. Net Interest Margin came in at 4.7percent from 6.3percent in 2020, as average funding cost rose slightly to 4.2percent from 3.6percent in 2020 while average yield on government securities remain low.

In absolute terms, the bank’s record total interest and similar income increased by N26.8billion in 2021 while total interest expenses increased by N36.1billion, leading to N9.2billion decline in Net Interest Income (NII). Total Deposits increased by 19.2percent to N2.024trillion from N1.699trillion in 2020, in line with the bank’s guidance for 2021.

The increase was driven by double-digit growth across all product lines (Demand | Savings | Tenor). Local currency deposits grew by 16percent and accounts for 80.3percent of total deposits while foreign currency deposits increased by 33.9percent and accounts for 19.7percent of total deposits from 17.5percent in 2020FY.
Net Risk Assets increased by 25.1percent to N1.658trillion from N1.326trillion in 2020. However, the combination of on-lending facilities and the impact of foreign currency rate change was responsible for 31.7percent of the absolute growth in loan book.

Non-performing loans (NPL) ratio dropped to 2.9percent from 3.8percent in 2020, which led to a decline in cost of risk to 0.5percent from 1.4percent in 2020.
Other Regulatory Ratios are above the required thresholds with liquidity ratio at 40.4percent and capital adequacy ratio (CAR) at 20.1percent. 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). The bank remains well above the minimum requirement.

The bank’s CEO speaks
Nneka Onyeali-Ikpe, Managing Director/Chief Executive Officer of Fidelity Bank Plc said, “We closed the financial year with strong double-digit growth in profit and across key balance-sheet lines, which reflects the disciplined execution of our strategy and the capacity to deliver superior returns to shareholders.”
“We are committed to achieving the long-term strategic objectives of Fidelity Bank while we look forward to sustaining the current performance trend and delivering another strong set of results for the 2022 financial year,” she added.

Onyeali-Ikpe further noted: “My team and I are committed to achieving the long-term strategic objectives of Fidelity Bank while we look forward to sustaining the current performance trend and delivering strong set of results for the 2022FY”.
She noted that “Digital Banking gained further traction driven by new initiatives in our retail business and the enhancement of existing digital banking products. We now have 56percent of our customers enrolled on the mobile/internet banking products and 90percent of total customer-induced transactions done on digital platforms with digital banking business contributing 27.6percent to net fee income.”

Proposed dividend
In respect of the 2021 financial year, the Board of Directors Fidelity Bank Plc recommended a dividend of 35 kobo per Ordinary Share of 50 kobo each amounting to N10.136billion for approval at the 34th Annual General Meeting. If approved, dividend will be paid on May 5, 2022 to shareholders whose names appear on the Register of Members at the close of business on April 22. The company’s register will be closed from April 25 to April 29 to enable the registrars prepare for payment of the dividend. The proposed dividend is subject to Withholding Tax at the applicable tax rate.

Stock price movement justifies analysts’ earlier “buy” ratings
Shares of Fidelity Bank Plc were among some of analysts’ top picks for 2022. Justifying analysts Buy rating given to the stock at the beginning of the year, between January 1 and April 6, 2022, Fidelity Bank shares have outperformed the market, rising by 38.4percent to a new high of N3.53 (as at Thursday April 7), placing it among the most actively traded stocks on the Nigerian Exchange Limited (NGX). Joshua Odebisi’s team of equity research analysts at Lagos-based Vetiva Capital Management Limited had in their January 31 note to investors set a twelve-month target price of N3.89 for Fidelity Bank Plc, showing its upside potential as against April 6 close.

Fidelity Bank’s “Buy” rating by Vetiva was based on the analysts consideration that the stock is highly undervalued, but with strong fundamentals, and that its potential return in excess of or equal to 15percent is expected to be realised between the current price and analysts’ target price. No doubt, the performance of the bank’s share price is a reflection of high investor confidence in its strong fundamentals and leadership team. As at Thursday April 7, the bank’s outstanding shares of 28,974,797,023 units are valued at N102.281billion.

Focused on growth strategy
Fidelity Bank’s over 6.5 million customers are serviced across its 250 business offices and various digital banking channels. The bank is focused on select niche corporate banking sectors, small and medium enterprises (SMEs) and has rapidly implemented a digital-led retail banking strategy which led to over 300percent growth in savings deposits in the last 6 years, 56percent customer enrollment on its flagship mobile / internet banking products and 90percent of customer-induced transactions now done on its digital banking platforms. Fidelity began operations in 1988, as a merchant bank. In 1999, it converted to commercial banking and then became a universal bank in February 2001.

Still committed to tier 1 journey
Fidelity Bank is today ranked the 6th largest Nigerian Bank, with presence in every commercial hub and key business centres in Nigeria. The Bank is led by a stable, experienced, and highly regarded management team. The team has built the bank on sound corporate governance with robust enterprise-risk management at the core of the Bank’s operations. It has also voluntarily subjected itself to the NGX Corporate Governance Rating System (CGRS) and compliance. Fidelity Bank was recently recognised 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.

Get real time updates directly on you device, subscribe now.