Business
Fidelity Bank sparkles in top line performance
Okey Onyenweaku
Investors in Fidelity Bank are already salivating in anticipation of their enjoying good returns at year end 2021 and the indications are every where for discerning market observers to see. From the first quarter of this year to the latest third quarter results, the aroma of good food that is being cooked by the management of Fidelity Bank has pervaded the corporate world.
As analysts surmise, the foundation for this expectation was laid right from the first quarter of 2021 when the bank’s profit before tax (PBT) grew by 53.9 per cent: from N6.6 billion in the corresponding period in 2020 to N10.1 billion in the period under review.
The bank’s PBT in half year 2021 also showed a 72.4 per cent growth when compared to the N12.0 billion recorded in the comparative period of 2020. And now
Fidelity Bank’s 9-months results for the period ended September 30, 2021 results showed double-digit growth in revenues, deposits and profitability.
Gross earnings grew by 12.5 percent to N174.4 billion from N155.0 billion in the same period in 2020 while profit before tax (PBT) jumped by 31.4 percent to N28.1 billion from N21.3 billion in the first 9 months of 2020.
In other indices, total assets grew by 15.4 percent to N3.18 trillion from N2.76 trillion in the same period last year. Total deposits, a measure of customer confidence, increased by 16.1 percent YTD to N1.97 trillion from N1.69 trillion in 2020FY, driven by increased deposit mobilization across all deposits types.
Enthused by the impressive performance, Fidelity Bank’s CEO, Mrs Nneka Onyeali-Ikpe said, “We were able to sustain our performance trend since the start of 2021 with an impressive double-digit growth in profit driven by 69.9 percent increase in net fee income which compensated for the decline in net interest income as average yield on liquid assets remain low.”
She noted that digital banking has continued to gain traction as the bank now has 56.1 percent of its customers enrolled on its digital banking platform from 52.8 percent in the 2020 financial year.
The banking chief also stated that the bank had recorded a 125 percent year-on-year (YoY) increase in total NIP transaction, while 24.9 percent of fee-based income currently comes from digital banking.
“Other regulatory ratios remain well above the minimum requirement: Capital Adequacy Ratio (CAR) at 18.8 percent from 18.2 percent in 2020FY while liquidity ratio came in at 34.5 percent, well above the regulatory threshold of 30.0 percent,” she elaborated.
It is also to be noted that Fidelity Bank recently completed a highly successful Eurobond offering, raising US$400 million from the international capital markets through a five-year tenor Eurobond. The offering achieved a 7.625 percent coupon p.a. and recorded a 1.8x over-subscribed orderbook which peaked at over US$700 million.
“The pricing of the Senior Unsecured Notes, underscores the formidable confidence of a diversified range of global and local investors in Fidelity Bank’s growth aspirations and the well-experienced management team,” explained Mrs Onyeali-Ikpe.
This is no mean performance. In the last five years the bank has remained consistent with good, quality and impressive performance. For instance, its profit grew by 357.5 per cent from N6.131billion in 2016 to N28.054billion in 2020. Looking at it critically the bank recorded N6.131billion in 2016, N19.213billion in 2017, N25.087billion in 2018, N30.353billion in 2019 and N28.054billion in 2020. Similarly, its earnings per share also grew by 384.2 per cent from 19kobo in 2016 to 92kobo in 2020. Details show that earnings per share grew from 19kobo in 2016, 31kobo in 2017, 79kobo in 2018, 98kobo in 2019 and 92kobo in 2020.
OPERATIONAL ENVIRONMENT
Notably, Fidelity achieved this impressive result despite that the Nigerian economy has not been strong lately and no immediate indications show otherwise. However, the economy recorded a growth of 5.1 per cent in half year 2021 from a negative position of -6.10 in second quarter 2020. The economy improved again in the third quarter with GDP growth of 4.1per cent.
Recent statistics also reveal that the rate of unemployment, the second highest in the world is 33%; Underemployment rate stood at 22%; inflation which stood at 18.6 per cent early in the year has just eased to 15.99 per cent; diaspora remittances inflow in the country fell by 24 per cent from $5.6billion in 2020 to $4.2billion in half year 2021.
Remittances had plunged 27 per cent year on year (YoY) to $17.2billion in 2020 from $23.55billion in 2019.
Many have not forgotten that the operating environment last year was choking for almost all the business sectors including banks. In addition to the devastating effect of Covid-19 on the economy of which the 2021 budget runs a deficit of N5.2trillion representing 3.6 per cent, the country now owes N35trillion. The fear here is hinged on the fact that the federal government spends about 90 per cent of its revenue to service debts.
The major revenue earner for the country, crude oil price, which hovers between $80 pbd and $82 pbd as at November 2021 still fluctuates.
Insecurity has not only hobbled agriculture, many parts of the Northern part of Nigeria have been taken over by bandits that not much business activities can subsist.
With the fearful scenario above, the economic trajectory of the country is still uncertain.
This is because even the apex bank has warned that care must be taken to galvanize and push the economy out of slumber. The Apex regulator had reportedly warned its staff against unnecessary outings in Abuja, the capital of Nigeria for fear of kidnappers and bandits.
Recently, Onyeali-Ikpe of the bank explained that the bank’s agenda is focused on brand architecture, brand building and refresh, talent development and transformation, product and service delivery, agility and performance discipline, digital transformation, and regulatory compliance.
In May 2021, the management had announced plans to make Fidelity Bank one of the tier-1 banks by 2025 and achieve a 7.5 percent total market share of deposits in the same year.
Onyeali-Ikpe said her sight is fixed on positioning the bank as one of Nigeria’s leading financial institutions, leveraging automation and robotics to replace manual and repetitive processes.
In attaining the set objectives, the CEO said the bank would embark on an innovation drive to increase profitability and competitiveness, raise awareness of its brand, create a high performing and empowered workforce.
She added that Fidelity Bank would also build brand loyalty through personalised and seamless customer experience delivery, develop an end-to-end digitisation, boost performance discipline, and drive aggressive market penetration and business diversification.
“Other initiatives geared towards deepening growth include; accelerated play in the SME segment, renewal of institutional banking, and drive for transaction-based propositions in corporate banking,” she said.
Agenda highlights
In line with the strategies towards achieving its objectives, the bank intends to embark on an innovation drive through the implementation of new processes, techniques. It is also executing fresh ideas to ensure continuous process improvement, reduce cost to serve, increase competitiveness, improve brand recognition and value, build new partnerships and relationships, drive turnover, and increase profitability. There is also brand refresh with the aim to increase top-of-mind awareness of the Fidelity brand by external and internal stakeholders.
Workforce transformation to create a future readily supported by a high performing and empowered workforce is also part of the strategies. This will be achieved by deepening the skills and competencies of staff across the bank, entrenching a culture of high performance, and embedding new ways of working in the bank. So far, the commencement of capacity building training for staff and senior management training are some of the initiatives implemented.
There is also service excellence which is intended to build brand loyalty through personalized and seamless customer experience delivery. This is already underway with the award-winning virtual assistant IVY. This revolutionary chatbot handles simple tasks like account opening to complex tasks such as complaint resolution, bill payment, transferring users to a live agent, loans, fixed deposit applications, and answering random questions.
And then there is digital transformation which involves an end-to-end digitization across all facets of the business is also part of it. In line with this, the bank has launched a novel digital service —Pay Yourself —which revolutionized payday for salary earners and SMEs.
There is also performance discipline to ensure focus on strong fundamentals, asset quality, and strategic cost management. Initiatives already carried out in this regard include; the Policy Familiarization Program, a capacity-building project geared towards building a knowledgeable and versatile staff network/raising subject matter experts in all business areas that kicked off in March; the One Culture Project, which was initiated to reinforce enabling behaviours and value systems towards fulfilling the bank’s goals.
It also has accelerated growth which will drive aggressive market penetration and business diversification. This will be achieved through deeper penetration in key retail markets.
Other initiatives geared towards deepening growth include; accelerated play in the SME segment, renewal of institutional banking, and drive for transaction-based propositions in corporate banking, the bank said.
Many who had feared otherwise now believe Onyeali-Ikpe can indeed do a great job despite the challenges ahead. Unfortunately, she is coming at a time the head and tail winds arising from the pandemic are still strong.
With the above, there is no doubt that she has been part of the tradition, character and experience that built the bank and its successes in recent times.
Analysts say she has been part of the banking industry system in Nigeria and can navigate her way through the bumps.
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 strengths of the bank while exploring other business areas’’, Mr. Chukwu said.
On his part, the Managing Director of Highcap Securities limited, Mr. David Adonri who shares the views 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. And for us, there is nothing else to add. Presently.
These now confirm Onyeali-Ikpe’s capabilities and competence as initial jitters that greeted shareholders.
But they seem over the moon now with their new management team. Nneka Onyeali-Ikpe, the new helmsperson of Fidelity Bank and her team have in fact delivered strong and impressive figures for the bank with confidence.
However, despite the impressive performance of the bank, it is clear that if the stock price is used as an index of value, it can be safely assumed that the investing public have not valued the bank as highly as the management would surely wish. This is more so as the bank’s stock closed the week of Friday November 26, 2021 at the price N2.55 per share. So Mrs. Nneka Onyeali-Ikpe is right to worry. Nevertheless, this has not diminished her bank’s ambition to play in the big league. And understandably so, too.
