Published On: Tue, Jun 19th, 2018

Fidelity Bank aims for the top

.           Okonkwo’s relentless drive yields dividends

Barely 30 years after it was licensed by the Central Bank of Nigeria (CBN) to operate as a commercial bank, Fidelity Bank has successfully risen to the leadership position amongst tier-2 banks in Nigeria.

The bank’s 2017 financial year performance is a testament to the significantly improved optimisation of its balance sheet under the management of its ambitious Managing Director/Chief Executive Officer, Nnamdi Okonkwo.

Okonkwo, since taking over from his predecessor, Reginald Ihejiahi in 2014, has consolidated on the performance momentum to record a modest growth on key indices in spite of operating in a harsh environment.

Not satisfied with these modest achievements, his goal is to break into the league of top six banks in Nigeria, alongside Zenith Bank Plc, Guaranty Trust Bank Plc, Access Bank Plc, United Bank for Africa Plc and FirstBank Nigeria Limited.

To achieve this, the bank has put in place a four-year strategic growth plan (organic and in-organic) which would usher it into tier-1 group upon successful implementation.

“We had a board retreat late last year to strategize and agree on the imperatives for achieving this goal and by God’s grace and the disciplined approach to the execution of the outlined initiatives, we will realize this goal”, Okonkwo said in this interview with Okey Onyenweaku. Excerpts:

 

What is the bank’s roadmap for the next five years?

Let me give you some historical background. If you look at where Fidelity Bank was as at end of 2013 and where we are today, you would have noticed some marked improvements. The bank has had a stable leadership in our 30 years of operations. I am the third CEO of the bank. The first CEO served for fifteen years and the second was there for ten years. Both of them laid solid foundations for the bank before I took on the mantle of leadership.

From day one the watchword is to keep the bank safe and that was the same gospel that was transferred to me to ensure that the bank’s capital adequacy is strong and also make sure that liquidity is also strong. At some point people thought Fidelity Bank was too conservative but it was for good reason.

It has enabled us to survive three or four cycles of crisis in the banking industry with us acquiring two banks in the process. When I came onboard, it was clear to me that we needed to be mindful of these and management also agreed to retain this posture when we had our strategic retreat to strategise for the next growth phase.

We said to ourselves at the retreat that we want to be the clear leader among tier-two banks. So, we crafted the medium-term strategic initiatives built around balance sheet optimization, cost reduction, and increased digitization. We were sure that if we remained focused on the implementation of these initiatives, we would achieve success.  Four years down the line, we like the results we have achieved even though we also realize that we are not yet where we intend to go ultimately.

Specifically, in answer to your question, in the next five years we plan to break into the league of top five-six banks in the country today. This has implications for market share, number of customers, balance sheet size and all. We had a board retreat late last year to strategize and agree on the imperatives for achieving this goal and by God’s grace and the disciplined approach to the execution of the outlined initiatives, we will realize this goal.

Whilst I am not at liberty to completely divulge in details, our plans for the next five years, let me speak to some of the quiet changes and internal realignments that we have made in preparations for the future. Starting with governance, we ensured that as Directors retired, both at the executive and non-executive board, we maintained quality by replacing them with equally very strong professionals from diverse backgrounds.

If you take a look at our board you will see high profile representation by people who have been in regulatory roles. From our Chairman, Mr. Ernest Ebi was former Deputy Governor of the Central Bank of Nigeria (CBN), to a former CEO of a multi-national corporation, former CEO of a bank, legal practitioners; former Chief Risk officer of a bank, accountants and accomplished businessmen. On the executive side, the professional background of our directors also speaks for themselves.

We also started our mid-year audit last year. Nobody compelled us to do it. We are required to audit our account, once every year but we did it on our own because of our future aspiration. We decided to adopt international best practices.

 

Are you looking at organic growth, merger, capital raising or a combination of strategies? 

We plan to grow organically but that does not mean if we see a brownfield transaction, we will not do it. Getting to the top five-six league of bank is more important than just doing a combination today to become such, which means you did not get there by deliberate efforts. But if we see an opportunity in the market that aligns with our goals, we will evaluate it but that’s not our primary plan.

On raising capital; as a bank, we have a policy set out by the Board which ensures that we remain above regulatory benchmarks.

We used to know Fidelity Bank as a bank that handles big transactions. Why have we not heard about such in recent times?

Apart from our reputation as SME-Friendly bank, Fidelity has core competence in corporate banking; Fidelity is still financing the big corporates.  On Agriculture, we funded one of the biggest rice mills in Nigeria located in Kano, supported cocoa value chain in Ondo State, to name a few. We are also very active in Food and Beverage industries, Construction, Oil and Gas, FMCGs, Iron and Steel etc.

 What will be key drivers of Nigerian banks going forward?

It will depend on strategic focus of each bank. At some point it was easy to make twenty percent returns from treasury bills, we knew that was not sustainable so expectedly, it has come down. Those who stay focused in their core business at a time like this, will remain profitable. For instance, if you look at our income distribution in 2017, you will see that we made about twenty-five percent of our revenue from non-interest income, which was as a result of investment in digital technology.

We used digitization to drive a lot of non-funded income. We also took advantage of our balance sheet optimization to increase yield in short term instruments. We have also cautiously resumed extending credits to customers in the consumer/retail segments, following improvements in salary payments.

You are known to be strong in the SME sector that has not been de-risked in the Nigerian banking environment and coupled with the issue banks are having with NPL, are you still going to be bold in lending to them while driving your NPL down to five percent?

The NPLs you see in the banking industry are not even predominantly from SMEs. Fidelity approaches SMEs from a different strategy completely. When we started supporting SMEs, we did not want to use risk asset penetration strategy. Businesses fail either because owners borrow for the wrong reasons or they don’t know proper book keeping and there is nothing tying them together and preventing them from behaving otherwise. When a significant percentage of businesses go bad, there will be a spike in bad loans.

Because of this, about eight years ago Fidelity set up a division to understand SMEs and train people in that area. The Division was headed by a General Manager. We divided SMEs into general SMES and Managed SMEs. We use the cluster approach to manage people that have similar needs.  You can have five hundred people who have similar needs and talk to them as an association. Those that do not have proper book keeping, you make it clear to them that we need to see your business through your record keeping and we train them to imbibe and inculcate these habits.

Recently, our people spent two weeks in Aba, in the shoe and leather segment of the market. Today we have a thriving branch there, with the Bank of Industry (BOI) approaching us to do a collaboration. What they want from us is to use our office to provide money to support people in that market because our model is working.

Now if any member of the cluster defaults, the other members will come against him or her in mutually re-enforcing manner. Our products are specifically designed and if everybody in a particular cluster is facing bad time, we will know but in asituation, where only one person is not repaying, we know that person is doing something wrong. So that’s the way we approach the cluster SMEs.

For the stand-alone SMEs, we have developed templates. For instance, if we check transactions across industry over a period of time, we can tell what kind of SMEs a business is using account statements. That way we can query inflows and outflows and ask questions where there are gaps – we ask why you are not selling or are you deliberately stocking up, where we see stocks growing higher than demand. Yes, we are that detailed.

 

© 2018, Hallmarknews. All rights reserved. Reference and link to this site is required if you wish to reuse any article.

Reactions from Facebook

comments and opinions

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Most Shared

Recent posts

  • Modric defeats Ronaldo, Salah to emerge FIFA’s Footballer of the Year 2018

    Real Madrid and Croatia midfielder Luka Modric has been named the Best Men’s Player at The Best FIFA Football Awards on Monday evening, fighting off competition from fellow nominees Cristiano Ronaldo and Mohamed Salah. The award caps off an incredible year for Modric, who won his fourth Champions League title with Real Madrid in May, […]

  • Nigerian bond market witnesses low demand

    A slowdown in client demand characterizes the bond market on Monday, unlike sentiments witnessed for the most part of last week. This is on the back of expected renewed supply at the bond auction on Wednesday, where the Debt Management Office (DMO) would raise a total of N90billion from the 2023, 2025 and 2028 maturities. […]

  • Oil price climbs to four-year high as Saudi, Russia turn Trump down

    Oil prices have hit a four-year high of over $81 a barrel after Saudi Arabia and Russia rejected calls by Donald Trump to increase production. Brent crude hit its highest level since November 2014 at $81.16 a barrel, up 3 per cent on the day. Saudi Arabia led the c oil cartel, while Russia is […]

  • Buhari releases N22bn to Nigerian Airways retirees

    The Federal Government has released N22.68 billion to settle part of the retirement benefits of former workers of the defunct Nigeria Airways. The government has also approved the release of N20 billion to revitalise public universities in line with demands of the Academic Staff of Universities (ASUU). Minister of Finance, Zainab Ahmed, made the disclosure […]

  • MPC set for another policy freeze

    By FELIX OLOYEDE Despite the outcry for lower domestic interest rates, the Monetary Policy Committee (MPC) is expected to leave the Monetary Policy Rate (MPR) at 14 per cent as it responds to inflation jitters ahead of the 2019 general elections, say economists. The MPC meeting schedule to hold today, Monday 24th 2018 and Tuesday […]

  • Ambode fights for his political life

    By OBINNA EZUGWU It is no longer news; the political love affair in Lagos state is in trouble. For the first time since 1999, a sitting governor is facing a real challenge from his own party for the ticket. The indignity can only be imagined and its implications continue to reverberate across the state and […]

  • Adeosun: Betrayed by a dysfunctional system (Editorial)

    A fortnight ago, former Finance Minister Mrs. Kemi Adeosun, resigned her position following the report of an investigative panel into allegations of NYSC certificate forgery against her. The allegation had been earlier made by an online newspaper, Premium Times, and the nation was agog with speculations about it. Her resignation has been interpreted by most […]

  • High cost of Nomination Forms: A conspiracy against the youths

    From PETER OKORE, Umuahia Amidst the mixed feelings trailing the high cost of Nomination Forms for interested candidates to participate in the 2019 general elections, there is growing consensus for the electorate should go for credible candidates rather than political parties in order to achieve desired results. This is because since some political parties in the […]

  • Govt bottlenecks still inhibiting agric business– Farmfields CEO

    Mr. Zanau Hassan Maikasuwa is the CEO of Farmfields Agro-allied Services, an agro-allied consulting and supply firm located in Jalingo, Taraba State. He is an ardent agricultural expert and a strong believer of improving agricultural methods for an improved and more rewarding agricultural sector in Nigeria. In this interview with BLESSING PETER, he assessed the […]

  • China and Nigeria’s debt burden

    By AYOOLA OLAOLUWA Experts have raised the alarm over the continued foray of Chinese businesses and massive funds into Nigeria, saying it portend danger for the country. They argued that the nation risk falling into debt trap, joblessness, among other costs, as is being experienced by several Africans countries. Available data indicate that apart from the […]

  • New Banks fight for survival 

    By OKEY ONYENWEAKU A clutch of new financial institutions are beginning to slowly appear on Nigeria’s banking scene as the once fragile economy wriggles out of a recession that held sway between the middle of 2015 and the second quarter of 2017. The renewed institutional confidence in the economy (which has grown more recently at […]

  • Gov poll: Stalemate in Osun as APC, PDP live to fight another day

    The Independent National Electoral Commission on Sunday declared the Osun State governorship election inconclusive. The candidate of the Peoples Democratic Party, Ademola Adeleke, had polled 254,698 votes against that of the All Progressives Congress, Gboyega Oyetola, who polled 254,345 votes. However, due to irregularities which marred the election at some polling units in Ife North, […]

  • Ambode fights for his political life

    By OBINNA EZUGWU It is no longer news; the political love affair in Lagos state is in trouble. For the first time since 1999, a sitting governor is facing a real challenge from his own party for the ticket. The indignity can only be imagined and its implications continue to reverberate across the state and […]

  • Business Hallmark Cover Page for this week

    © 2018, Hallmarknews. All rights reserved. Reference and link to this site is required if you wish to reuse any article. Reactions from Facebook comments and opinions

  • Customers fret over Skye Bank’s demise

    By Okey Onyenweaku There was subdued anxiety within the finance circles throughout the weekend over the collapse of Skye Bank plc. The sudden demise of the stricken lender, caught many industry stakeholders napping. However, usually reliable sources confirmed to Business Hallmark that the move had long been anticipated and was carefully managed to protect depositors […]

  • Cover

    © 2018, Hallmarknews. All rights reserved. Reference and link to this site is required if you wish to reuse any article. Reactions from Facebook comments and opinions