BY OKEY ONYENWEAKU
Only a few banks can lay claim to having qualitative and focused management as Fidelity. Compact, organized and seamless, there is a consensus that the bank has had a history of very good, deliberately cultivated and focused leadership since 2004, the era of its pioneer Managing Director, Mr. Nebolisa Arah.
Mr Arah was a top banker and a grand teacher to the generation of bankers that came afterwards.
Many have also testified that Mr. Reginald Ihiejiahi during his time in the saddle proved to be a high flyer in navigating the operational business of the financial institution. And the figures are also there to attest to Nnamdi Okonkwo’s mettle and creativity in taking Fidelity to the enviable height it stood at just before today.
Indeed, Fidelity Bank has performed impressively over the years. Looking at the bank from 2004 to 2019, its total assets has grown by 7,572 per cent from N27.552billion in 2004 to N2.114 trillion in 2019. Similarly, profit before tax grew by 2,741 percent from N1.077billion in 2004 to N30.4 billion in 2019. Its gross earnings have grown 3,839 percent from N5.471billion to N215.5billion. The three preceding Managing Directors have built a formidable, stable and vibrant financial institution that can compete anywhere in the world.
‘Fidelity bank runs clean operations with high standards of corporate governance’’, said a senior banker who would not want his name mentioned in print. It, according to a senior staff, ‘’aspires to be the best in any chosen area of operations and the bank has achieved that.”
Among the immediate past MDs, Mr. Okonkwo’s towering achievements in his six years in the saddle are quite legendary. Among others, he led the bank in implementing a greater emphasis on the cultivation of retail deposits and then embarked on a Digital-led Strategy which saw a significant growth across key performance metrics and an increase in market share, with the Bank currently ranked 6th amongst Nigerian Banks on most performance indices.
This has helped in his securing some of his other key achievements in number terms which include a Profit Before Tax, PBT growth of 236% from N9.0bn to N30.4bn; Return on Equity, RoE increase from 5.5% to 13.3%; Customer Deposits growth of 68% from N806.3bn to N1,352.3bn and Savings Deposit growth of 275% from N83.3bn to N312.1bn.
Other notable achievements include Net Loans and Advances growth of 174% from N426.1bn to N1, 165.8bn; Customer Base increase by 121% from 2.4 million to 5.3 million and Digital Banking penetration improvement from 1.0% to 50.1%, accounting for 28.4% of total fee income.
In the area of institutional finance mobilisation, the Bank under the leadership of Okonkwo successfully accessed the local and international markets through the issuance of N30bn Corporate Bonds in 2015 and $400million Eurobonds in 2017. He also left a strong balance sheet in the third quarter of 2020 as he made his exit.
The bank’s former Chairman, Mr. Ernest Ebi had enthused then: “Fidelity Bank has enjoyed a very stable leadership since inception. These appointments underscore the bank’s robust human capital capabilities, governance and succession policies. We thank Nnamdi not only for his sterling performance but also for nurturing the new team and current crop of leaders to continue to steer the bank on its growth trajectory”,
These words would of course put Mrs. Onyeali-Ikpe under some subtle pressure of sorts. But her antecedents, qualification, and experience in the industry gives shareholders of the bank a lot of confidence. In fact, Mrs. Onyeali-Ikpe who gave Nnamdi Okonkwo all the support he needed to succeed, apart from having been in position to understudying him, also exudes the confidence and poise to fill the large shoes.
MrsNnekaOnyeali-Ikpe, a confident, determined and clear headed professional who has an eye for details has over 30 years of banking experience, including stints at Standard Chartered Bank Plc, Zenith Bank Plc, and Enterprise Bank Plc. She joined Fidelity Bank Plc’s board of directors in 2015 and has reportedly played a very integral role in the transformation of the bank’s Lagos and Southwest Directorate.
Mrs Onyeali-Ikpe has also contributed immensely towards Fidelity Bank’s generally positive financial performance over the last five years.
She is a graduate of Law from the University of Nigeria, Nsukka, and also holds a Master of Laws (LLM) from Kings College in London. Other professional certifications were obtained from Harvard Business School, Wharton School, University of Pennsylvania, INSEAD School of Business, London Business School, and more. Such well equipped persons appear to understand the industry nitty-gritty.
Ten point agenda for Onyeali-Ikpe
First some realism. Unfortunately, she is coming to the saddle at a time the head and tail winds arising from the pandemic are still very strong. A time when banks all over the world are grappling with strategies to get a better grip at the new normal due to the disruptions of the Covid-19.
But what gives shareholders solace is that Mrs. Onyeali-Ikpe has not only worn boots to trudge in the mud of the banking industry in such institutions as Chartered Bank and Zenith Bank, she has also been part of the Fidelity bank’s character, tradition and experience that built the bank and its successes in recent times.
They therefore, seem to urge her to do all in her capacity to ensure that the bank remains a top financial institution in the country and beyond. Some have already told Business Hallmark that they do not expect anything less than a stable bank which makes good profit and pays good dividends.
“Our new managing director must work tirelessly to increase our profitability and ensure that the bank returns increased performance in the coming years. This will translate to more dividends for the shareholders,” a shareholder of the bank told Business Hallmark.
And in which areas?
1. As a bank whose strength is hinged partially on trade finance, it is expected that that opportunity which big business entities and trading outfits enjoy from the lender is deepened and expanded. Fidelity has always shared the limelight of being the backbone for traders in the South Eastern market with the failed Diamond Bank. Now that the sympathy for Diamond Bank is waning, Fidelity Bank should seize this opportunity and render swift and fast service to that segment of the market. Notably also, the Eastern market is not located in one place; they are in Lagos, Kano, Kaduna and other locations across the country. The market share from this group of people can give any bank up to 5 per cent of the banking industry.
The failing of Diamond Bank creates bigger and more opportunity for Fidelity to scrap up the market of those other traders and businesses who will be edgy about their present condition. These importers gave high returns to the lender before the coming of SME’s and it should consolidate on it.
2. Research shows that even the government is interested in the growth of SME’s. There is a consensus that Fidelity Bank is already one of the most effective in developing, supporting, nurturing SME’s. The lender should sustain its vigour with SME’s and seek ways to deepen its activities in that sector.
3. Many analysts believe that Fidelity Bank should diversify further and stronger into Oil and Gas, infrastructure development and real estate in order to increase areas of income stream. Spreading its tentacles will help the bank evade the unstable policies of the government and the weak economy which is threatening many businesses. Also think of diversifying out of the most volatile areas.
4. Creating risk assets is one of the major planks through which banks make the most profit. Fidelity Bank is on good track here having grown its loan book by about 30 per cent in 2019. However, the new team is expected to sustain the tempo while seeking better and more viable sectors to expand and extend credit facilities to.
5. There should be more aggression on the part of the bank to join the league of the first top three or four banks in Nigeria. Being number six as it is today is not bad but the new management’s target should be to edge up.
6. Fidelity Bank is strong in its digital strategy which has enabled it achieve 82 per cent of its total transactions. The bank’s new management should insist on improving on this as a veritable way to continuing to save on cost of operations
7. Experts say the leading banks in the world today are Holding Companies.
This is because holding company structures help firms not only to protect their assets, cut cost but also reduce risks. The holding company structure also creates room for organisations to compete with fintechs and explore other opportunities. Fidelity Bank needs to consider the holdco opportunity to avoid operating within a narrow scope and have what may look like a one stop shop solution. In addition, the holdco structure will enable the bank diversify into fintech, Assurance and capital market.
8. Fidelity Bank’s management team must be ready to build the capacity of its work force and train them to recognize the advantages in the new normal.
9. Fidelity should expand to African Countries to enable it partake more robustly in the market space and tap the numerous opportunities that abound given the expansive and yet growing African population. This will also help the bank to take advantage of the AFCFTA scheme which has kicked off.
10. This actually should have been the first point under the circumstance. Keeping its staff safe to be able to deliver service to its teeming customers.
Many believe the new CEO can hack the job despite the challenges ahead.
The managing Director of Cowry Asset Management Company, Mr. Johnson Chukwu told Business Hallmark that Mrs. Onyeali-Ikpe has worked in many banks in Nigeria and has as a result garnered all the needed experiences required for the top position.
”She can deliver but I advise that she consolidates on the current strengths of the bank while exploring other business areas’’, Mr. Chukwu said.
The managing Director of Highcap Securities limited, Mr. David Adonri who shares the view of Mr. Johnson Chukwu told Business Hallmark in a telephone interview that Mrs. Onyeali-Ikpe must have studied the structure of the bank to know its strengths and weaknesses which will enable launch her strategies to achieve greater things for the bank. “She inherited a viable bank. She can build on it”, said David Adonri
‘’She has the qualification and experience to sustain and add value to the institution’’ said Olisa Egbunike of Renaissance group.
Fidelity Bank hits the bulls eye in the Q3
The bank demonstrated resilience, showing improvement in key income lines in its third quarter results for the year 2020 released recently at the Nigerian Stock Exchange (NSE).
Details revealed that, although Gross Earnings dropped marginally by 3.7 per cent to N155 billion from N161.1billion in 2019, profits were up by 3.6%, closing at a Profit Before Tax (PBT) of N21.3bn while Profits After Tax (PAT) rose by 7% from N19bn to N20.4bn in the period under review.
Further measurement indicators show that Customer Deposits, Net Loans and Total Assets grew in double digits. Total Assets grew by 21% from N2.1bn in 2019 to N2.5bn; Customer Deposits were up by 22.3%from N1.23bn to N1.5bn while Net Loans rose by 12 percent to N1.27billion from N1.12billion.
Commenting on the results, the then Group Chief Executive Officer of the bank, Mr. Nnamdi Okonkwo said: “Our 9 months results reflect our resilient business model, particularly in a very challenging operating environment. We worked closely with our customers to gradually recover from the economic impact of the pandemic and the attendant effect of the lockdown.”
Okonkwo explained that the drop in gross earnings was due to the decline in interest and similar income caused by lower yields and drop in fee income.
He said, “Net fee income declined by N1.3 billion largely due to a reduction in FX related income on account of the revaluation gains recorded in H1 2020. Digital Banking however continued to gain traction as we now have 52.3 per cent of our customers enrolled on the mobile/internet banking products from 47.4 per cent in 2019 full year and 88.2 per cent of customer-induced transactions are done on digital platforms.
“Similarly, digital banking income increased by 20.0 per cent quarter on quarter due to improved adoption by customers and new services migrated to our digital channels.”
The lender has over the years implemented a retail digital banking strategy which has continued to pay off, with the bank now on course to achieving the 7th consecutive year of double digit growth.
“The growth in savings deposits accounted for 40.2 per cent of total growth in customer deposits and savings deposits now represent 25.7 per cent of total deposits, up from 22.3 per cent in 2019,” Okonkwo had enthused.
He further disclosed that the bank has disbursed over N50 billion in intervention funds to customers in the last three months, in critical sectors to kick-start the economy after the lockdown and was quite optimistic about finishing the year strongly.
“We will continue to monitor and pro-actively manage evolving risks as business activities improve and look forward to delivering another set of resilient results in the remaining quarter of 2020FY.” He noted.
We also similarly counsel.