H1 RESULTS : Okonkwo pushes Fidelity to the big league

OKEY ONYENWEAKU|
Fidelity Bank pushed against a recessionary headwind in half year (H1) 2017 to raise investors’ hopes of an attractive dividend pay-out by year end as gross earnings grew more than 20 per cent above the gross income posted in the contemporary period of 2016. Year-to-date capital yield on the banks listed stock was 60.71 per cent as at last week while year-on-year the bank has handed investors a plump return of 72.42 per cent.
Analysts are sure that the bank would offer investors a combined investment yield in excess of 80 per cent by yearend based on an indicative current dividend yield of 10.37 per cent.
The banks audited financial results released just before the Muslim public holiday of Eid Kabir, showed that gross earnings rose by 22.1 percent from N70.3billion in H1 2016 to N85.8 billion for the corresponding period at June 30, 2017. The growth in Gross Earnings was driven primarily by a 27.8% increase in interest income and a 0.7 percent growth in net fee income to N11.2 billion.
Similarly profits surged by 66.7 percent from N6.1 billion in 2016 to N10.2 billion, just as it recorded significant improvement in other key performance indices such as Net Interest Margin of 7.4%, Cost Income Ratio at 67.3%  and Capital Adequacy of 18.4% in the period under review.
Fidelity Bank CEO, Mr. Nnamdi Okonkwo attributed the double digit growth in gross earnings and profits to the disciplined execution of the Banks medium term strategy which focused on deepening its market share in the Small and Medium Enterprises (SME) segment of the market , and the retail and digital banking business segments.
According to Okonkwo, “our balance sheet optimization initiatives continued to deliver improved results as Net Interest Margin (NIM) increased by 7.4% in H1 2017 from 6.4% (2016FY), just as the growth in the yield on our earning assets outpaced the increase in funding costs. The process improvement and digital banking initiatives in the period helped to optimize our cost profile as total expenses declined by 1.8% (despite the high inflationary environment) leading to a reduction in our Cost to Income Ratio (CIR) to 67.3%” he stated.
Fidelity Banks’ retail strategy continued to deliver impressive results in HI2017 as savings deposits; a measure of customer confidence, increased by 3.9% to N161.1 billion in June 2017 on the strength of improved cross selling of its digital banking products with about 30% of customers now enrolled on our flagship mobile (*770#) and internet banking products” he explained.
Fidelity Bank Plc had reported a pretax profit of N11.1 billion for the period ended December 31, 2016 compared to N14.0 billion recorded a year ago.
Its Profit after (PAT) however, dropped 30.2 percent to N9.7 billion from N13.9 billion posted in the corresponding period of 2015.
Gross earnings appreciated 4.10 percent to N152.0 billion from N146.9 billion declared in 2015 end while offered investors 14 kobo per share dividend for the period ended December 31, 2016 compared to 16 kobo paid in 2015. The 14 kobo per share dividend amounts to N4.05 billion compared to N4.6 billion last financial year.
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 betrayed an organization which future lies in what it is able to do today to leap ahead. However, our reporter observed the banks effort to render qualitative service to customers. Its customer services officer was professional enough to explain in details 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. But this has not diminished the bank’s ambition to play bigger and do better.