Fidelity Bank signals strong returns to shareholders in 2017

.           Stock price gains 95% year-to-date

By OKEY ONYENWEAKU

With speculations of a weakening banking industry, some banks have actually pushed against worrisome macro-economic walls to signal hope to shareholders of a promising financial year end.

Fidelity Bank which has traditionally been strong in commercial retail operations through efforts at providing superior customer service delivery emerges as one of the strongest operators in the financial sector up until the third quarter of the year as shown by its third quarter (Q3) results.

Details of the lender’s nine month financials released on the main board of the local bourse the previous Monday showed significant growth in key revenue lines and improved efficiency and regulatory ratios.

The bank’s gross earnings grew by 17.9 per cent to N130.1 billion, from N110.3 billion reported in the contemporary period of 2016 while profit before tax rose by 65.1 per cent, from N9.8 billion to N16.2 billion.

The bank’s managing director, Mr Nnamdi Okonkwo, noted that the bank was delighted, “with our nine months financial performance which showed strong growth in key revenue lines and a corresponding decline in our operating expenses, despite the high inflationary environment”.

He attributed the consistent delivery of strong financial results to the disciplined execution of the bank’s medium term strategy, which centred on optimal balance sheet management, strategic cost reduction and increased play in the digital and retail banking space.

Okonkwo noted that, “the implementation of the initiatives from our Business Process Review Project continued to impact positively on our operational efficiency as total operating expenses declined by 2.6 per cent to N47.5 billion, leading to our cost-income ratio dropping to 66.8 per cent from 77.3 per cent in 2016 FYE.’’

Analysts have noted that the combination of the strong net revenue growth of N5.1 billion (8.8 per cent growth) and the decline in total expenses by N1.3 billion (2.6 per cent) translated to a N6.4 billion (65.1 per cent) increase in profit before tax (PBT) to N16.2 billion.

Figures show that the Q3 2017 PBT of N16.2 billion was higher than the annual profit numbers in any of the last four financial years (2013 to 2016).

Further grilling of the banks Q3 figures show that fee and commission income, dropped 13.6 per cent from N15.944billion in 2016 to N13.775billion in 2017. Loans and advances rose marginally from N729billion in 2016 to N753.9billion in 2017.

At the close of business in Q3, bank data reveal that ATM charges at N2.5billion, commission on E-banking activities at N1.3billion constituted a larger proportion of its fee and commission income.

While total assets stood at N1.3billion, deposit to customers slid to N774.5 billion in the period of review.

Fidelity Bank is a full-fledged commercial bank operating in Nigeria with over 3.8 million customers who are serviced across its 240 business offices and various digital banking channels.

The bank has in recent times won accolades as the Best SME Friendly Bank, Best in Mobile Banking and the Most Improved Corporate/Investment Bank, among several industry awards and recognitions.

The bank was also ranked the Fourth Best Bank in the Retail Banking Segment in the 2017 Banking Industry Satisfaction Survey conducted by KPMG.

Focused on select niche corporate banking sectors as well as Micro Small and Medium Enterprises (MSMEs), Fidelity Bank is rapidly implementing a digital-based retail banking strategy which has resulted in a 93 per cent growth in savings deposits over the last three years, 50 per cent customer enrolment on debit cards, and 30 per cent of its customers now using its flagship mobile/internet banking products.

Also last week, the bank successfully issued a $400 million Eurobond, with a coupon of 10.50 per cent.

The transaction regarded as the largest combined new issue and liability management offering by a single Nigerian issuer has reopened the international bond markets for Nigeria’s Tier II banks.

Analysts believe that the bank’s performance was encouraging and an improvement on the achievement of the previous year.

‘’There is significant improvement on what the bank achieved last year and the management is doing well. However, it is a conservative bank which is doing a lot to reposition itself’’, Mike Ezeh of Crane Securities said.

With presence in the major cities and commercial centres in the country complemented by innovative digital banking products and channels, Fidelity Bank was rated as one of the Top 4 banks in the retail segment in the recently published KPMG BICSS. The bank which is managed by a highly professional team and a reputable Board of Directors commenced the interim audit of its financials in 2017 in line with its emphasis for continuous process and governance improvement.

Fidelity Bank is one of the financial institutions that can boast of operational professionalism in the entire industry. Banking has been described by many as a business of trust and confidence. They also think that bankers must be conservative in order to avoid operational lapses that could pose grave danger to the bank. Credit mismatch and over-stretching of capacity were the experiences that resulted in margin and oil and gas loan crisis

Well traditionally, Fidelity Bank has always been a well-capitalized and liquid bank that is why as far back as a year ago, we had increased our retail clients to make sure that we build up enough low cost deposit to help us ensure that liquidity is not a problem’’, Okonkwo had told Business Hallmark in an interview.

‘’We often laugh, whenever we are associated with a particular ethnic region of the country.  You will be surprised to know how strong we are in the Northern part of the country. The Northern client’s deposits are more than the clients’ deposits from the eastern parts of the country. Remember that Fidelity Bank is made up of FSB International, Manny Bank and Fidelity. We have gone way beyond being associated with a particular region of the country, while there is nothing wrong in being associated with a region , if we are associated as the bank for the North, we want to be the best bank for the North, East and in the South/South and South/West. But fortunately for us we are spread across the 36 states in the country’’, he also said.

Those who have followed the growth of the bank have rated them above average, especially for keeping the medium financial institution afloat to this day. This notwithstanding, some analysts perceive the bank as one of the best managed in the banking industry. Industry experts hinged this perception on the highly experienced and qualitative persons in the management cadre.

A visit to the bank’s Head Office on Fidelity Bank Close, Off Kofo Aboyomi revealed an organization which future lies in what it is able to do today to leap forward. Our reporter observed the banks keen effort at rendering qualitative service to customers.  Its customer services officers were professional enough to explain in very clear detail some its products.

Of the 10 branches of the bank visited by our reporter in various parts of Lagos, there were impressive comments by customers about its services. Nevertheless, this has not diminished the bank’s ambition to play bigger and do better.

Meanwhile, shareholders of the bank have gained 95 per cent from the stock year –to- date. The stock which opened early in the year at N0.83 per share has out- performed analyst’s expectations to close at N1.62 per share as at Wednesday October 25, 2017.