Fidelity Bank Issues US$400m Eurobond, refinances US$256m of maturing notes: Fidelity Bank Plc, on October 11, 2017, returned to the international capital markets and priced a successful US$400m 5-year Eurobond at a 10.50% coupon. The transaction also included the US$256m repurchase of its existing US$300m Eurobond maturing in May 2018. The transaction, according to the bank, was part of a strategic liability management exercise designed to extend Fidelity Bank’s debt maturity profile and proactively refinance the maturing 2018 Eurobond. (Source: Thisday)
Fidelity Bank Plc Boosts Entrepreneurial Capacity of small scale businesses
The Group Managing Director, Fidelity Bank Plc, Mr. Nnamdi Okonkwo has identified lack of capacity as one of the major impediments to the growth and development of small scale businesses in the country.
Speaking in Abuja during the opening session of the entrepreneurship training workshop for small businesses organised in partnership with EMPRETEC, he added that unstable government policies, lack of collateral to access loans, hostile business environment and funding remained a nightmare for aspiring businesses.
However, he said the bank had decided to wade in to ameliorate the challenges of SMEs through capacity enhancement following findings that lack of capacity accounted for over 80 per cent of the challenges facing small scale businesses.
Represented by the Group Head, Specialised SMEs, Fidelity Bank Plc, Mr. Ndubuisi Onuoha, the MD said the bank had strong focus for the development of small scale entrepreneurs.
He said the training programme would expose participants to the complexities of the business environment so their business would be able to contribute effectively to the growth of the economy
He added: “In Fidelity, we are very strong in SMEs and we have a lot of programmes being run for SMEs and we are partnering with Lagos Business School to encourage exports for our customers. This program is to empower our entrepreneurs to make them better businessmen.”
He said the bank was committed to building sustainable small enterprises, noting that only 50 per cent of such enterprises survive beyond three years because of lack of capacity and funds which pose major challenges.
“It doesn’t matter how much money they have, without capacity it will be lost,” he said.
The General Manager Business and Strategy of Enpretech Mr. Bright Osakwe said the programme is an initiative of the United Nations Conference on Trade and Development (UNCTAD) aimed at enhancing entrepreneurship skills of SMEs.
Late yesterday Fidelity Bank (Fidelity) published Q2 2017 results which showed that PBT grew by a stellar 155% y/y to N5.4bn. The key driver behind the strong y/y growth in earnings was a 20% y/y growth in profit before provisions. However, flat loan loss provisions y/y also helped the results. In terms of the revenue contributions, both revenue lines contributed to the solid growth: both grew by c.20-21%. Further down the P&L, PAT expanded by 110% y/y to N7.7bn, thanks to a 67% y/y growth in other comprehensive income.
Compared with our forecasts, PBT beat by 148% because of positive surprises in non-interest income, funding income and opex, in that order. The strong positives on these lines offset a negative surprise in loan loss provisions. The positive surprise in the PAT was greater (319%) because of the strong other comprehensive income. To put the strength of the results in proper context, Fidelity’s H1 PBT of N11.0bn is already ahead of consensus 2017 PBT forecast of N10.7bn.
Sequentially, PBT grew by 11% q/q. Although both revenue lines contributed, non-interest income which grew by 130% q/q was the major driver. Funding income grew by a modest 10% q/q, relatively. As such, pre-provision profits advanced by around 30% q/q. The revenue contributions were strong enough to offset a sequential spike in loan loss provisions and opex which increased by 441% q/q and 15% q/q respectively. Similar to the y/y trends, PAT grew strongly, by 136% q/q, thanks to the positive result in other comprehensive income (the bank reported an OCI loss of –N1.0bn in Q1 2017).
The strong growth in non-interest income was underpinned by solid growth in fx trading income which grew by 165% y/y in H1 and mark-to-market gains on fixed income securities. When annualised, Fidelity’s loan impairment charges for H1 2017 translate to a cost-of-risk of 1.3%, higher than the 1.0% guidance provided by management on its Q1 2017 conference call. Although this will draw some scrutiny from the market, the strong results should more than compensate.
Given that Fidelity Bank’s H1 2017 PBT tracks well ahead of consensus 2017 PBT forecast of N10.7bn, we expect to see marked upward revisions to consensus earnings forecast and a positive reaction from the market.
Year to date, Fidelity shares are up 63.1% ytd compared with a 34.6% return on the index.
We rate Fidelity shares Neutral. Our estimates are under review.
Fidelity Bank Q2 2017 results: actual vs. FBNQuest Research estimates (N millions)
Fidelity Bank Nigeria Plc’s profit position amid a myriad of challenges inhibiting the growth of banks in Africa’s most populous nation signals value addition to over 400 diverse shareholders.
The Nigerian lender has maintained a steady dividend policy amid a credit crunch caused by
a mismatch of monetary and fiscal policy.
The board of directors has recommended a dividend of 14 kobo per share to shareholders.
This translates to a dividend yield of 19.03 percent.
Currently, the bank’s guidance for dividend payment is between 30 percent and 50 percent of annual net profit.
It must be noted that the markets reacted to the results of Fidelity Bank as it closed at 0.84, 10.53 percent above the 52 week low of 0.76 set on Apr 05, 2017.
For the year ended December 2016, the lender recorded a profit after tax of N9.73 billion and a profit before tax of N11.06 billion, respectively. Gross earnings moved by 3.45 percent to N152.02 billion in December 2016 as against N146.94 billion as at December 2015.
Interest income increased by 1.65 percent to N123.15 billion in the period under review as against N121.15 billion; thanks to a 9.71 percent increase in loans and advances to N88.0 billion in the period under review.
“Interest income on loans and advances to customers of N88.06 billion (2015:N80.3 billion) includes interest income on impaired financial assets of N2.1 billion (2015:N2.7 billion), recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss, said the bank in its 20156 audited financial statement.
Fidelity Bank and other midsized banks are struggling with rising loans caused by a sudden drop in the price oil that hindered of customers from paying interest on loans borrowed from financial institutions.
Apart from the exposure to the oil and gas due to the aforementioned uncertainties, banks are owed huge monies by contractors and government agencies starved of FAAC Allocations.
Non-performing loans was 14 percent of total credit at the end of December from 11.7 percent at the end of June, according to central bank data.
Moody’s expects the ratio to remain at about 12 percent to 14 percent this year.
Despite all these challenges, Fidelity Bank remained aggressive about lending as gross loans and advances to customers spiked by 24.24 percent to N718.40 billion from N578.20 billion as at December 2015.
The loan growth can be attributed to the devaluation of the currency that ballooned the naira denominated assets in the books of lenders.
The central bank last year adopted a flexible exchange rate regime that saw the naira lose 40 percent of its value against the U.S currency.
Analysts say Nigerian banks have reduced incentive to lend to the private sector because of favorable interest on government securities.
Fidelity Bank has a total asset of N1.29 trillion as at December 2016 while shareholders’ fund stood at N185.40 billion.
Fidelity Bank Supports Education Centre
Fidelity Bank Plc, in its bid to strengthen educational development and enhance the health and well-being of students through physical recreational activities, has donated sporting facilities to the Special (Deaf & Dumb) Education Secondary School in Calabar, Cross Rivers State.
The bank under the auspices of the ‘Fidelity Helping Hands Programme’ (FHHP), its multi-purpose vehicle for corporate social responsibility (CSR) programme also donated stationeries and writing materials to the students as part of continuous efforts to improve the standard of education in the country.
According to a statement, the project was initiated by staff members in Calabar whose personal contributions was supported by the bank, is in fulfillment of the objectives of the CSR philosophy which rests on a tripod: environment, education and health.
Commending staff members in Calabar for their personal contribution and sacrifice, Fidelity Bank CEO, Nnamdi Okonkwo, noted that the decision to embark on the project was borne out of a deep-seated realization that education remains critical to driving socio-economic development in Nigeria, Africa’s most populous country.
He pointed out that the absence of modern educational resources in schools disrupts the learning process which consequently undermines the mental development of students.
According to him, the “bank is making conscious efforts to empower the youths because Fidelity Bank believes that the future belongs to them.”
Wife of the Governor of Cross River State, Mrs. Linda Ayade, who was the special guest of honour at the event, thanked the bank for its kind gesture.
She also commended the Fidelity staff who contributed their personal funds for the project. The Cross Rivers State First Lady expressed confidence that the facilities will encourage students in the School in their mental development and help in raising a new generation of Nigeria youths and called on other corporate organisations to emulate Fidelity Bank and give back to the society.
Fidelity Bank CEO receives eight awards for Tough Job campaign
The CEO Fidelity Bank, Nnamdi Okonkwo, was at the weekend presented with the eight awards won by the Bank’s ‘Tough Job’ campaign at the recently concluded 2016 Lagos Advertising and Ideas Festival (LAIF).
Tough Job won Silver for Radio, another Silver for Film, a Bronze for Best Use of Production Design & Art Illustration whilst the Bank’s logo unveil took home a Bronze in the Radio category.
Fidelity Bank’s (Our Word) campaign won Bronze in Radio under the Investment & Other Financials products category whilst ‘Tough Job’ picked bronze each for “Best Use of Film Editing” and Film prize, under the Bank & Investment category.
Speaking in Lagos, when the awards were presented to him at the Bank’s corporate Head Office, Mr. Nnamdi Okonkwo who dedicated the feat to the Bank’s esteemed customers said “to be recognized at LAIF validates the hard work that we have put into the development and execution of our new corporate identity”.
According to Okonkwo, the new identity reinforces its overall transformation and also strengthens its focus on the youth segment and overall service excellence. He pointed out that the lender has not only raised the bar in the area of customer service delivery but also remains focused on attaining its renewed vision of becoming a vibrant and millennial brand.
A former staff of Fidelity Bank Plc, Ihionu Chibuike, on Thursday bagged six years imprisonment for fraud.
Justice Lateef Akapo of an Ikeja High Court sentenced him to jail after pleading guilty to the four-count charge of stealing, obtaining money by false pretence, forgery and impersonation.
The charge was brought against him by the Economic and Financial Crimes Commission, EFCC.
PREMIUM TIMES reports that the convict had in 2013 opened a savings account number 6052039264 in the name of a certain Chimezie Ifekwe with relevant document as instructed by the bank.
The victim, Mr. Ifekwe, reportedly transferred money into the Fidelity account purportedly opened for him.
According to Nigerian Tribune newspaper, a part of the charge reads: “Ihionu Chibuike sometime in February, 2013 within the Ikeja judicial division, stole and fraudulently converted to your own personal use the sum of N4.8 million, property of Mrs. Chibuzo Nwakwu.
“Ihionu Chibuike sometimes in the month of February, 2013 at Ikeja, within the Ikeja Judicial Division stole and fraudulently converted to own personal use the sum ofN200.000.00 (Two Hundred Thousand Naira) property of Chimezie Ifekwe.
“Ihionu Chibuike, sometime in February, 2013 within the Ikeja Judicial Division and in order to facilitate the commission of the offence of stealing forged the account opening documents of Fidelity Bank Plc purporting same to be that of Chimezie Ifekwe, the account holder.
“Ihionu Chibuike, sometime in February, 2013 within the Ikeja judicial division and in order to facilitate the commission of the offence of stealing forged instruction letter of Fidelity Bank Plc and gave same to Chimezie Ifekwe purporting same to have emanated from Fidelity Bank Plc.”
Delivering his judgment, Mr. Akapo declared that the former Fidelity Bank staff should spend one year each on the first and second count, two years on the third, and two on the fourth. The judge also ordered that upon completing his jail term, Mr. Chibuike should refund N1,451,592,
being the outstanding balance, to the victim.
He however ruled that Mr. Chibuike’s two years jail term should run concurrently from the day of the sentence.
The convict has so far refunded N3,498,408 of the stolen sum.
Fidelity Bank wins Ghana Bank of the Year 2016
Fidelity Bank has emerged Ghana bank of the year 2016 at the Banker’s seventeenth (17th) annual Bank of the Year awards held in London. Commenting on Fidelity Bank’s accomplishment, the judges gave the following citation: “In a highly competitive banking sector Fidelity Bank has emerged as the standout entrant for the Ghana country award. Sound portfolio management, a commitment to innovation and an excellent financial performance all contributed to the judging panel’s decision.
In local currency terms, Fidelity Bank’s Tier 1 capital increased by 31 percent in 2015 while its total assets and net profits grew by 36 percent and 83 percent, respectively. Similarly, return on equity hit 33 percent in 2015, up from 31 percent in the previous year, while its cost-to-income ratio fell to 53 percent, from 56 percent in 2014. To better tackle non-performing loans (NPLs), Fidelity Bank established a dedicated recoveries unit, while its strategy of booking only the highest quality assets has led to the lender’s loan book dramatically outperforming the sector average. In 2015, the industry NPL ratio was 15 percent against Fidelity Bank’s 2.27 percent.
In 2015, Fidelity Bank completed the acquisition of ProCredit Savings and Loans. The deal has bolstered Fidelity Bank’s position in the small and medium-sized enterprise (SME) market, in which ProCredit was a focus, while growing the bank’s footprint by a further 75 branches, 109 ATMs and a further 693,000 customers.
Fidelity Bank also launched a partnership with IBM to manage the bank’s technology infrastructure, which improved standards of service delivery and consolidated its position in the market. The bank’s SME Business Academy also impressed the judges. Acting in a capacity-building function, the academy helps SMEs to develop a sound governance culture, unlock growth opportunities and make these entities more bankable over the long term. Experts specialised in different industries train the businesses listed in the academy.”
Fidelity Bank Goes Live On mCash, Boosts Merchant Business • System To Drive CBN’s Financial Inclusion Strategy
As part of renewed efforts to further drive the financial inclusion mandates of the Central Bank of Nigeria (CBN), Fidelity Bank Plc, one of the country’s most diversified financial institutions has introduced a new solution which will allow it’s over 200 registered merchants to receive low-value retail payments from customers using their phones. Launched in collaboration with the Nigerian Inter-Bank Settlement System (NIBSS) and leading telecommunications companies, this electronic payment solution dubbed ‘microCash’ (mCash) rides on Unstructured Supplementary Service Data (USSD) technology to enable merchants and customers conduct transactions instantaneously.
The new initiative was unveiled in the commercial city of Lagos recently by the lead promoter – NIBSS, with the apex financial institution projecting that mCash would facilitate 80 percent financial inclusion in the country by 2020. In keeping with its promise to make financial services easy and accessible to its teeming customers, the Bank integrated mCash into its Instant Banking service *770#. With this integration, customers can now make payments to merchants registered with any participating financial institution. According to the Bank, this new offering will enables merchants to give their customers at least three (3) payment options; Cash, Cards, Mobile Phones.
The launch of the system, the Bank said is a reflection of its relentless pursuit of efficiency, customer service and innovation. Speaking at a press briefing in Lagos recently, Chief Operations Officer (COO) of Fidelity Bank Plc., Gbolahan Joshua pointed out, “mCash is a new path aimed strategically at offering a digital payment system to Bank customers. The launch of this innovative payment service goes to show the power of collaboration in driving success”. Joshua however expressed confidence that the solution (mCash) will provide immense value to Nigerian customers. Commenting on the service, the Managing Director/Chief Executive Officer (CEO) of NIBSS, Ade Shonubi noted that the initiative is geared towards creating convenient ways of making payments, further adding that a collaboration between the banking and telecommunications industries was necessary to bring this initiative into fruition.
Speaking in the same vein, Seun Omotosho, Head of Mobile Financial Services for Etisalat Nigeria, the nation’s fourth largest Mobile Network Operator (MNO) with over 18 million active subscribers, congratulated NIBSS for the successful launch of the service. “At Etisalat Nigeria, we are excited about this solution and all of us have heard about what is happening in East Africa with MPESA and co and we strongly believe this is going to rival this.
“We are going the direction of payment because we believe payment is what will drive inclusion. This solution is simple and addresses what customers need.” On his part, the Director, Banking and Payment, CBN Mr. Dipo Fatokun, described the solution as another effort by the apex bank to boost financial inclusion and meet its Payment Systems Vision 2020. Fatokun who was represented by a Principal Manager at the CBN, Mr. Joe Ogbogu said: “We endorse this because it would take our payment system to the next level. Nigeria is at the top pendulum of payment system in the whole world. Because of this, various countries come to understudy our payment system and this is one product I hope they would understudy in the near future.
“Another reason for this endorsement is that it is going to drive financial inclusion in Nigeria. We have challenges of acceptance of Point of Service (PoS) transactions because they don’t get instant value for their services some cases the next. With this product, merchants get instant value which is indeed a big plus.”
Fidelity Bank Grows Deposits to N795.6bn In Nine Month
Fidelity Bank Plc, one of Nigeria’s highly diversified financial institutions has announced its Unaudited Results, for the 9 months ended 30 September 2016, disclosing that the Bank’s deposit base grew to N795.6 billion in spite of the current economic turmoil. This represents a 3.4 percent increase from N769.6 billion recorded in the corresponding period of 2015 Financial Year (FY). According to the lender, the devaluation of the Naira accounted for N53.6 billion of its deposit growth. This result was contained in a statement issued by the Bank and made available in Lagos yesterday. The Bank’s gross earnings also rose to N110.3 billion from N107 billion, representing a growth of 3.0 percent in the period under review.
Commenting on the financial results, the Managing Director/Chief Executive Officer of the Bank, Nnamdi Okonkwo pointed out that the Bank’s performance was indeed reflective of the recessionary environment characterized by lower government revenues, rising inflation, lower consumer disposable income, significantly tougher operating environment in all sectors and the impact of these headwinds on asset quality and foreign trade transactions. According to the Fidelity boss, “We continued with the disciplined execution of our medium term strategy and recorded decent growth on some key operational metrics while moderating the impact of the headwinds above on other financial indices.”
The unaudited financial statement also stated that Profit before Tax (PBT) decreased by 28.7 percent to N9.8 billion from N13.8 billion in the period under review. Giving cogent explanations for the relatively poor performance in this regard, the Fidelity helmsman noted that PBT declined largely due to “a 102.0 percent Year-on-Year (YoY) growth in impairment charge (N4.0bn) driven significantly by increased provisions made in the second quarter (Q2) and third quarter (Q3) of 2016 (N4.1 billion and N3.2 billion respectively) due to the impact of the devaluation of the local currency (naira) on our trade finance portfolio and some critical sectors affected by the weaker macroeconomic indices.”
He further added that a 95.7 percent YoY (N1.3bn) decline in dividend income on equity investments as well as a 8.9 percent YoY growth in operating expense were also responsible for the decline in profit. According to him, growth in operating expenses was driven essentially by increased technology and advert costs. On a Quarter-on-Quarter (QoQ) basis, he stated that gross earnings grew by 10.7 percent to N39.9bn driven by a 22.6 percent growth in Interest Income. “The Interest Income growth was largely driven by 25.6 percent (N5.4bn) growth in Interest Income on Loans while Interest Income on Liquid Assets increased by 13.5 percent (N0.9 billion) for the quarter”, Okonkwo said.
On a QoQ basis, the report stated that NIM increased to 7.0 percent from 6.5 percent in H1 2016 as the increase in the Bank’s average yield on earning assets (0.8 percent) outpaced the growth of its funding cost (0.4 percent). “The increased yields on earning assets was driven by the re-pricing of the loan book and higher yields on liquid assets. Deposits grew by 3.4 percent (N26.0bn) from Dec 2015…” he explained. Low cost deposits, according to Okonkwo currently accounts for 78.4 percent of total deposits, adding that savings deposits grew by 20.4 percent from December 2015 as the Bank continued to implement its retail banking strategy which is being driven by its electronic products and channels.
“We have crossed the half a million customer base on subscribers to our flagship Instant Banking product:*770# (Mobile Phone USSD Technology) and we will be launching payment services to merchants using our Instant Banking product (*770#) in Q4, 2016”, Okonkwo disclosed. Risk assets grew by 26.1 percent (N150.8bn) from Dec 2015 with the devaluation of the naira accounting for 20.4 percent (N118.2bn) of our loan growth. Foreign currency loans now constitute 45.3 percent of total loans up from 40.4 percent in Dec 2015 due to the currency devaluation. The organic loan growth of 5.6 percent was principally driven by on-lending facilities to the public sector. Cost of risk increased to 1.5 percent in 9M 2016 due to the N7.2bn impairment charge taken in Q2 and Q3 2016.
“We have continued to take a very prudent view of the impact of the currency devaluation, tougher operating environment and declining consumer disposable income on selected sectors of our loan portfolio. “NPL ratio increased to 4.5 percent largely due the macro-economic weakness which has negatively impacted on our asset quality metrics. “We are still focused on keeping our NPL ratio below 5.0 percent in this very challenging operating environment. Our other regulatory ratios (Liquidity Ratio / CAR) remained above the set thresholds, though Capital Adequacy Ratio improved from 16.4 percent in Q2 2016 to 16.8 percent in Q3, 2016, we expect CAR to revert to 18 percent+ once we adjust for the excess non-distributable reserves (N23bn) in our 2016FY audited accounts.”
The Bank’s key objectives for the 2016 Financial Year (FY) remains: redesigning its systems and processes to enhance service delivery, cost optimization initiatives to moderate expenses in a rising inflation environment, proactive risk management, increased customer adoption/migration to our digital platforms and increasing our retail banking market share”.