How We Recorded Impressive Half Year Results—Fidelity Bank CEO

By Modupe Gbadeyanka

In the first six months of 2020, Fidelity Bank Plc sustained the financial performance trajectory of recent years despite the economic challenges occasioned by the COVID-19 pandemic.

In the half-year results filed to the Nigerian Stock Exchange (NSE) last week, the top Nigerian lender churned another set of impressive performance, with strong growth in profits and other indices.

For instance, the bank printed a 22 per cent surge in pre-tax profit of N12.0 billion as against N9.8 billion in 2019, while the net profits grew by 33 per cent from N8.5 billion to N11.3 billion in the reporting period.

In other indices, the total assets rose by 13.7 per cent from N2.1 trillion in 2019 to N2.4 trillion this year whilst total deposits increased by 14.8 per cent from N1.2 trillion to N1.4 trillion during the same period.

According to the CEO of Fidelity Bank, Mr Nnamdi Okonkwo, the strong performance achieved in the first half of the year was as a result of the resilience of the bank’s business model.

“Due to the global and domestic headwinds witnessed in H1 2020, we proactively increased our cost of risk as the impact of the pandemic slowed down economic activities whilst adapting our business model to the new risks and opportunities of the new normal,” the banker stated.

Mr Okonkwo disclosed that Fidelity Bank re-stated its H1 2019 figures from N15.1 billion to N9.8 billion to reflect the impact of IFRIC 21- Levies, which was adopted for the first time on the H1 2020 financials.

“The key impact of IFRIC 21 was that our 2020FY AMCON Cost was recognized 100 per cent in our H1 2020 accounts rather than been amortized over 12 months as was done previously on our financials,” said the Fidelity CEO.

He further revealed that without implementing IFRIC 21, profit for the period would have been N17.9 billion compared to the N15.1 billion reported in H1 2019.

Fidelity Bank has been implementing a digital-led retail strategy and digital banking gained further traction during the period with 87.3 per cent of the bank’s customers now transacting on digital platforms.

The figures are up from 82.0 per cent in 2019FY while 51.2 per cent of the bank’s customers are now enrolled on the bank’s mobile/internet banking products.

“Though digital banking income dropped by 29.1 per cent due to the downward fee revisions for electronic transactions in line with the new bankers’ tariff, we have continued to receive positive reviews on our digital channels.

“IVY, the bank’s chatbox is rated as the clear leader, among virtual assistants in the industry, just as our flagship instant banking product (*770#) was also rated in the top tier category in the recently released 2020 KPMG Digital Channels Scorecard,” he explained.

Retail Banking in Fidelity Bank has continued to also deliver impressive results. Savings deposits in H1 2020 increased by 32.2 per cent to N363.9 billion with the bank on course to achieving the 7th consecutive year of double-digit growth in savings.

Savings deposits accounted for 49.1 per cent of the total growth in customer deposits and now represent 25.9 per cent of total deposits compared to 22.5 per cent in 2019FY.

In reflection of the bank’s early conservative assessment of the sectors that were affected by the COVID-19 pandemic, the bank’s Non-Performing Loans (NPL) ratio increased to 4.8 per cent from 3.3 per cent in 2019FY.

Regulatory ratios, however, remained above the required thresholds with Capital Adequacy Ratio increasing to 18.8 per cent from 18.3 per cent due to the capitalisation of H1 2020 audited profits while liquidity ratio stood at 32.1 per cent.

Buoyed by the H1 performance, the bank said it is optimistic about the remaining part of the year as Mr Okonkwo said, “We believe the new phase of normalcy will unveil some growth opportunities.

“We will continue to monitor and pro-actively manage any evolving risks as the Nigerian economy gradually reopens and economic activities pick-up in key sectors.”