Banking
Fitch Affirms Fidelity Bank at ‘B-‘
** **Expects Market Share to Rise
By Modupe Gbadeyanka
The Long-Term Issuer Default Rating (IDR) of Fidelity Bank Plc has been affirmed by Fitch Ratings at ‘B-‘ with a stable outlook.
A statement issued by the rating agency explained that the IDRs of the mid-level Nigerian lender are driven by its standalone creditworthiness, as expressed by its ‘b-‘ Viability Rating (VR).
However, it noted that the loan quality remains weak as the bank’s impaired (Stage 3 under IFRS 9) loans ratio (5.4 percent at end-1H19) is low relative to the sector average, but a large stock of Stage 2 loans (20 percent of gross loans at end-1H19) that are concentrated by single-borrower and derive from troubled sectors such as power and oil and gas, present a risk to Fidelity Bank’s financial profile.
Fitch stressed that specific loan loss coverage of impaired loans (49 percent at end-1H19) is low as explained by management’s view of collateral valuation, but broadly in line with peers.
According to the statement, the VR of the bank reflects its size as highlighted by market shares of loans and deposits of around 4 percent.
But Fitch said it expects the market share to increase in line with management’s growth strategy, pointing out that the financial institution has a high cost of funding that limits pricing power compared with larger peers.
It further said the profitability metrics of the lender are adequate, with operating returns over risk-weighted assets averaging 1.6 percent over the past four years.
“Profitability metrics tend to exceed those of similar sized peers, given that Fidelity Bank has not experienced the particularly high loan impairment charges that other banks have incurred.
“Profitability continues to be constrained by a relatively weak net interest margin, which is explained by a high cost of funding and a low interest spread on Fidelity Bank’s increasing on-lending activities, in addition to a high cost-income ratio,” it said.
It further said the solvency of the bank is adequate because the company’s FCC ratio (15.6 percent at end-1H19) compares favourably with similar sized peers, but should be considered in the context of high single-borrower concentration and a large stock of Stage 2 loans.
Fitch noted that the bank’s loans/customer deposits ratio (96 percent at end-1H19) is higher than peers, but explained by a greater volume of non-deposit funding (31 percent of non-equity funding at end-1H19), in particular a $400 million Eurobond maturing in 2022 and funds for on-lending, which are low-cost and carry a tenor of up to 20 years.
“A higher proportion of longer-term funding serves to reduce asset and liability maturity mismatches, which are comfortably covered by holdings of liquid assets. This is balanced against high single-depositor concentration (in particular in US dollars) and a reliance on less stable deposit funding,” it said.
By Aduragbemi Omiyale
The decision of the management of Wema Bank Plc to improve its customer relationship management and digital banking operations is already yielding positive results.
This is because the financial institution increased its deposit base last year by 36 per cent to N2.524 trillion from N1.861 trillion in 2023, according to its audited results filed to the Nigerian Exchange (NGX) Limited.
In the year, the balance sheet remained well structured, diversified and resilient with total assets growing by 60 per cent to N3.585 trillion from N2.240 trillion, and the loans and advances expanding by 50 per cent to N1.201 trillion from N801.10 billion in FY 2023, as the non-performing loan (NPL) ratio stood at 3.86 per cent.
Business Post reports that the lender grew its gross earnings in the fiscal year by 92 per cent to N432.34 billion from N225.75 billion, with interest income up by 92 per cent to N353.54 billion from N184.48 billion.
Also, non-interest income was up 91 per cent to N78.80 billion from N41.27 billion, and closing December 31, 2024, with a Return on Equity (ROAE) of 43.60 per cent, Return on Assets (ROAA) of 2.96 per cent, Capital Adequacy Ratio (CAR) of 19.67 per cent and Cost to Income ratio of 56.23 billion, underscoring the commercial bank’s resilience and financial strength.
Wema Bank ended the financial year with a profit before tax of N102.51 billion, 135 per cent higher than the N43.59 billion recorded in the corresponding period in 2023, proposing a dividend of N1.00 per share on the back of the impressive result.
“Our people are committed to the institution’s founding ethos of supporting Nigerian businesses and individuals with the most innovative banking products and services.
“ALAT, our flagship digital platform, continues to lead in the adoption of digital banking services across the increasingly young Nigerian populace.
“An example of this innovation is ALAT XPlore, the first licensed banking App for teenagers designed to help teenagers ages 13-17 build their money management skills, achieve their financial goals and become financially responsible,” the chief executive of Wema Bank, Mr Moruf Oseni, stated.
By Adedapo Adesanya
JP Morgan, an American financial institution, is in the process of acquiring a merchant banking licence from the Central Bank of Nigeria (CBN), and this is likely going to happen in the coming months.
The American financial entity plans to transform its representative office in Lagos into a fully-fledged business branch.
According to reports, the New York-based financial institution, managed in Nigeria by Mr Dapo Olagunju, will apply to the apex bank for the merchant banking licence to further expand its input in the country.
If granted, the JP Morgan entity will offer Dollar loans to large companies in addition to its advisory and asset management activities.
The merchant bank license will also allow the bank to use its decades of experience to serve corporate clients, high-net-worth individuals, and government entities.
It will be able to arrange, structure, and issue bonds, equities, and other securities for corporate clients.
The entry comes at a time when banks are moving to recapitalise ahead of a March 2026 deadline, with some banks possibly up for mergers and acquisitions. As a merchant bank, JP Morgan will be able to provide advisory services on business acquisitions, mergers, and divestitures.
Present in Lagos since the 1980s, JP Morgan plans to transform its Nigeria representative office into a fully-fledged branch, marking a further step in its CEO, Mr Jamie Dimon’s strategy to strengthen its presence on the African continent.
As part of Mr Dimon’s strategy to increase its presence on the African continent, last October, he visited Nigeria, where he met the CBN Governor Mr Yemi Cardoso and promised stronger relationship.
He also visited South Africa, where JP Morgan has a subsidiary, alongside Cote d’Ivoire and Kenya. he stressed that the bank wants to strengthen its presence in Africa by adding a country or two every couple of years or so — with the possibility of Nigeria increasingly possible.
By Aduragbemi Omiyale
The chief executive of Fidelity Bank Plc, Mrs Nneka Onyeali-Ikpe, has said the total dividend of N2.10 per share to shareholders for the 2024 financial year is a demonstration of the company’s capacity to deliver superior returns to investors.
Having consistently paid dividends since 2006, Fidelity Bank will pay investors a total dividend of N2.10 per share for the 2024 financial year, subject to shareholders’ approval at its Annual General Meeting (AGM) on April 29, 2025.
The dividend will be paid on April 29, 2025, to shareholders whose names appear on the register of members as of April 15, 2025.
Last week, the bank released its 2024 full-year audited financial statements, reporting a 210 per cent growth in profit before tax to N385.2 billion versus the N124.3 billion achieved in 2023, and a 179.6 per cent improvement in the post-tax profit to N278.1 billion.
As for the top-line, the lender grew its gross earnings by 87.7 per cent to N1.043 trillion, driven by 106.9 per cent rise in interest and similar income to N950.6 billion.
The increase in interest income was led by a combination of improved yield on earnings assets and 51.6 per cent expansion in earnings base to N6.3 trillion.
In the period under consideration, the bank’s net interest income increased by 127.1 per cent to N629.8 billion, driven by a high-yield environment in 2024.
To optimize its margin, the company sustained its asset yields above funding cost by maintaining a high low-cost deposit profile at 92.6 per cent, leading to a jump in its net interest margin to 12.0 per cent from 8.1 per cent in the preceding year.
Similarly, the bank continued to deepen its market share in both the corporate and retail segments, with customer deposits increasing by 47.9 per cent to N5.9 trillion from N4.0 trillion in 2023FY due to strong double-digit growth across all deposit types.
The retail banking business gained significant traction with savings deposits increasing by 28.8 per cent to N1.1 trillion, marking the 10th consecutive year of double-digit annual growth in savings deposits.
Despite the difficult economic terrain in 2024, the bank has continued to support the real sector of the economy by increasing its net loans and advances to N4.4 trillion in 2024 from N3.1 trillion in 2023.
“We are delighted with our 2024 full-year (FY) performance, which showed strong growth across key revenue lines, improved asset quality, and significant traction in our strategic business segments.
“Our impressive results led to a triple-digit increase (210.0 per cent) in Profit Before Tax (PBT), rising from N124.3 billion in 2023 to N385.2 billion in 2024.
“This remarkable performance demonstrates our capacity to deliver superior returns to our shareholders.
“In line with our commitment to them, we have declared a final dividend of N1.25 per share, bringing our total dividend for the 2024 financial year to N2.10 per share,” Mrs Onyeali-Ikpe stated.
It will be recalled that the bank successfully completed the first phase of its capital raising exercise through a public offer and rights issue in 2024, which were oversubscribed by 237.92 per cent and 137.73 per cent, respectively.
The positive result is a testament to the strength of the bank’s franchise in the capital market. A total of N175.9 billion was recognized as fresh capital in 2024 financial year from the exercise, which had a positive impact on its Capital Adequacy Ratio (CAR) at 23.5 per cent.
The bank plans to conclude the second phase by Q3 2025, ahead of the Central Bank of Nigeria’s deadline, which will further strengthen its capital base and reaffirm its attainment of Tier 1 Bank status in the Nigerian Banking Industry.
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