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 Adedapo Adesanya
Access Bank Plc, the banking subsidiary of Access Holdings Plc, has entered into a binding agreement with South African-based Bidvest Group Limited for the acquisition of 100 per cent equity stake in Bidvest Bank Limited.
The deal for the 24-year-old South African lender is due to be completed in the second half of 2025, upon regulatory approval.
This shows Access Bank’s further expansion plans in line with goals set by its late founder, Mr Herbert Wigwe.
The agreement to acquire 100 percent stake in Bidvest Bank reflects Access Bank’s commitment to strengthening its footprint in South Africa and consolidating on its position as the continent’s gateway to global markets as it seeks to optimise the benefits of recent acquisitions and accelerate its transition towards a greater focus on efficiencies.
Bidvest Bank, founded in 2000 is a niche and profitable South African financial institution providing a diverse range of services, including corporate and business banking solutions and diverse retail banking products.
As of its year ended June 2024, Bidvest Bank reported total assets equivalent of $665million and audited profit before tax of $20million.
Upon conclusion of this acquisition, Bidvest Bank will be merged with the bank’s existing South African subsidiary to create an enlarged platform to anchor the regional growth strategy for the SADC region.
This is coming just as the bank opened a new branch in Malta as part of efforts to focus on international trade finance after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
The Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
By Modupe Gbadeyanka
To strengthen Europe-Africa trade ties, Access Bank has opened a new branch in Malta. It will focus on international trade finance, employing approximately 30 people in its initial phase, with plans for controlled expansion over time.
It was learned that this Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
Access Bank Malta Limited commenced operations after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
Malta, a renowned international financial centre, and a gateway between the two continents, is strategically positioned to play a pivotal role in advancing commerce and fostering economic partnerships.
This strategic expansion into Malta enables The Access Bank UK Limited to leverage growing trade opportunities between Europe and Africa.
It underscores the organisation’s commitment to driving global trade, financial integration, and supporting businesses across these regions.
“By establishing operations in Malta, we will gain a foothold in a market that bridges European and North African economies, moving us one step closer to our goal of becoming Africa’s Gateway to the World.
“It further enhances our bank’s capacity to support clients with innovative solutions tailored to cross-border trade and investment opportunities,” the chief executive of Access Bank, Mr Roosevelt Ogbonna, stated.
“Europe has emerged as Africa’s leading trading partner, driven by initiatives such as the Economic Partnership Agreements between the EU and African regions and the African Continental Free Trade Area (AfCFTA).
“With Europe-Africa economic relations entering a new phase, The Access Bank Malta Limited is ideally positioned to deepen trade and meet the financing and banking needs of our clients in these expanding markets,” the chief executive of Access Bank UK, Mr Jamie Simmonds, commented.
Also speaking, the chief executive of Access Bank Malta, Renald Theuma, said, “Malta is uniquely positioned as a bridge between Europe and Africa, making it an ideal location for our subsidiary. This move allows The Access Bank Malta Limited to engage more closely with customers in Europe and deliver tailored financial solutions that drive growth and connectivity across both continents.”
By Adedapo Adesanya
The International Finance Corporation (IFC) and Goldman Sachs have announced a new partnership with African banks, including Nigeria’s Zenith Bank and Stanbic IBTC Nigeria to support the Goldman Sachs 10,000 Women initiative, a joint programme launched in 2008 to provide access to capital and training for women entrepreneurs globally.
The two Nigerian banks are part of nine financial institutions from across Africa which have agreed to join the 10,000 Women initiative committing to leverage the business education and skills tools the programme provides to create more opportunities for women entrepreneurs across the continent by providing access to business education.
Others banks include Stanbic Bank Kenya, Ecobank Kenya, Ecobank Cote d’Ivoire, Equity Bank Group, Banco Millenium Atlantico – Angola, Baobab Group, and Orange Bank.
Speaking on this, Ms Charlotte Keenan, Managing Director at Goldman Sachs said – “10,000 Women has had a powerful impact to date, but we know that there are more women to reach and more potential to be realized.
“We are delighted to partner with IFC to supercharge the growth of women-owned businesses across Africa, and mainstream lending to female business leaders. We remain committed to supporting entrepreneurs with the access to education and capital that they need to scale.”
Since 2008, the 10,000 Women initiative has provided access to capital and business training to more than 200,000 women in 150 countries.
“This expanded initiative marks a significant step forward in creating equitable economic opportunities for women in Africa, enabling them to build stronger, more resilient businesses and to realize their entrepreneurial goals,” said Ms Nathalie Kouassi Akon, IFC’s Global Director for Gender and Economic Inclusion.
Goldman Sachs’ 10,000 Women initiative complements the Women Entrepreneurs Opportunity Facility (WEOF), launched in 2014 by Goldman Sachs and IFC as the first-of-its-kind global facility dedicated to expanding access to capital for women entrepreneurs in emerging markets.
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