Banking
S&P Affirms Fidelity Bank Ratings, Raises Concerns on High Loan Concentration
By Dipo Olowookere
One of the top rating agencies in the world, S&P Global Ratings, has announced affirming its ‘B-‘ long-term and ‘B’ short-term issuer credit ratings on Nigeria-based tier-two lender, Fidelity Bank Plc with a stable outlook.
In a statement issued last Friday and obtained by Business Post, the rating company said it was also affirming its ‘ngBB+/ngB’ Nigeria national scale ratings on the bank.
S&P explained that the affirmation reflects its view that the bank will display relatively moderate earnings compared with the sector average, as demonstrated in 2017, and relatively stable asset quality amid a slow economic recovery in Nigeria.
It noted that although an improvement in systemwide US Dollar liquidity–due to higher oil prices and increased oil and gas production–has eased the pressure on Nigeria’s manufacturing and trade sectors, some corporate entities still suffer from the effects of the foreign currency shortages over the past 24 months.
S&P stressed that the ratings reflect the lender’s modest size and position in the Nigerian banking sector, characterized by a high cost base and sizable funding costs, which have constrained it from competing with certain top-tier banks in terms of profitability.
Fidelity Bank’s regulatory capital adequacy ratio (CAR) declined to 16 percent at year-end 2017 from 17.2 percent in 2016, compared with the regulatory minimum of 15 percent. This was attributable to N15.2 billion (about $45.6 million) charge on capital for exceeding its single-obligor limit, and the amortization of its subordinated local bond.
The rating firm said it expects the single-obligor charge to drop over the next 12 months as the exposure is settled, and that the bank’s CAR will remain above the minimum requirement of 15 percent.
“We project that Fidelity Bank’s risk-adjusted capital (RAC) ratio before adjustments for diversification will decline to below 5 percent and range between 4 percent and 5 percent over the next 12-18 months, compared with 5.2 percent at year-end 2017,” the statement said.
The bank’s initial application of International Financial Reporting Standard (IFRS) No. 9 resulted in a N28 billion reduction in total adjusted capital as of March 31, 2018.
“Our projected RAC ratio takes into account our expectation of low double-digit loan growth, measured underwriting standards, and a naira depreciation, combined with the necessity for growth to counterbalance the decline in government securities.
“We also anticipate good fee and commission revenue generation (supported by the bank’s digitalization strategy) and a cost-to-income ratio of around 70 percent.
“Over the next 12-18 months, we forecast that the bank’s cost of risk will be higher than historical levels, at around the 1.5 percent posted at year end-2017, as it implements IFRS 9,” it added.
As of March 31, 2018, Fidelity Bank’s nonperforming loans (NPL) had declined to 6.3 percent of gross loans from 6.6 percent in 2016, while loan loss reserves accounted for a higher 110 percent of gross loans compared with 51 percent at year-end 2016.
The lower NPL ratio is mainly attributable to debt reduction in the upstream oil and gas sector, which the rating agency expects will continue over the next 12 months, while the higher coverage was due to the initial IFRS 9 application.
S&P said looking ahead, despite the higher expected coverage ratios, the bank’s high loan concentration and foreign currency exposures remain a concern; at year-end 2017, pointing out that the top 20 loans accounted for 59 percent of total loans and foreign currency lending for about 46 percent.
“Nonetheless, we see as positive that foreign-currency denominated loans are typically backed by receivables in the same foreign currency.
“Notwithstanding the relatively high cost of funding, the bank benefits from a stable funding base and adequate liquidity buffers, which compare well with peers’.
On December 31, 2017, the bank’s stable funding ratio was 112 percent and liquid assets covered short-term wholesale funding 6.9x.
“However, similar to other banks operating in Nigeria, Fidelity Bank’s deposit base is confidence sensitive, due to its contractually short-term nature.
“The stable outlook reflects our expectation that the bank will maintain its prudent underwriting standards, its CAR above the minimum regulatory requirement despite the IFRS 9 implementation, and adequate liquidity over the next 12 months,” it said.
S&P stressed that it could lower the ratings over the next 12 months if asset quality deteriorates by more than the sector average, and concentration risk materializes through a default of large exposures, adding that a positive rating action is unlikely in the next 12 months and would require a material improvement in macroeconomic conditions, coupled with stronger capitalization than it currently expects, with the RAC ratio sustainably exceeding 7 percent.
By Modupe Gbadeyanka
Registration for the second HerFidelity Apprenticeship Programme (HAP 2.0) organised by Fidelity Bank Plc has commenced.
The Divisional Head of Product Development at Fidelity Bank, Mr Osita Ede, informed newsmen that the initiative was designed to empower women with sustainable entrepreneurship skills.
The lender created the flagship women-empowerment initiative to equip women with practical, income‑generating skills and structured pathways to entrepreneurship.
“HerFidelity Apprenticeship Programme 2.0 reflects our commitment to continuous improvement. Having evaluated feedback from the first edition, we have returned with stronger partnerships and deeper mentorship programmes to ensure that women acquire not just skills, but sustainable economic opportunities,” he said.
“At the heart of the programme is guided, real‑world learning. Participants will undergo intensive apprenticeship training under reputable institutions and industry experts across select fields such as hair styling, shoe making, auto mechatronics, and interior decoration,” Mr Ede added.
He noted that HerFidelity Apprenticeship Programme 2.0 goes beyond skills acquisition by offering participants a wide range of business advisory services. These include business and financial literacy training, mentorship support throughout the apprenticeship journey, access to Fidelity Bank’s women‑focused and SME financial solutions, as well as guidance on business formalisation and growth strategies.
Further emphasising the bank’s vision, Mr Ede said, “By integrating structured mentorship with entrepreneurial development, Fidelity Bank is positioning women not just as trainees, but as future employers, innovators, and economic contributors within their communities. This aligns with our mandate to help individuals grow, businesses thrive, and economies prosper.”
By Modupe Gbadeyanka
A new branch of The Alternative Bank (AltBank) has been opened in Ondo State as part of the expansion drive of the financial institution.
A statement from the company disclosed that the new branch would support export-oriented agribusinesses through Letters of Credit and commodity-backed trade finance, ensuring that local producers can scale beyond state borders.
For SMEs, the bank is introducing robust payment rails, asset financing for equipment and inventory, and supply chain-backed facilities that strengthen working capital without trapping businesses in interest-based debt cycles.
The Governor of Ondo State, Mr Lucky Aiyedatiwa, represented by his Chief of
Staff, Mr Olusegun Omojuwa, at the commissioning of the branch, underscored the importance of financial institutions in economic development.
“The pivotal role of financial institutions to economic growth and development of any economy cannot be overemphasised. It provides access to capital, supporting small and medium-scale enterprises and encouraging savings.
“Therefore, I have no doubt in my mind that the presence of The Alternative Bank in Ondo State will deepen financial services, create employment opportunities and stimulate economic activities across various sectors,” he said.
In her remarks, the Executive Director for Commercial and Institutional Banking (Lagos and South West) at The Alternative Bank, Mrs Korede Demola-Adeniyi, commended the state government’s leadership and outlined the lender’s long-term vision for Ondo State.
“As Ondo State steps into its next fifty years, and into the future anchored on the sustainable development championed during the recent anniversary celebrations, The Alternative Bank is here to be the financial engine for that vision. We didn’t come to Akure to hang banners. We came to fund work, farms, shops, and factories.”
With Ondo State’s economy anchored largely on agriculture, particularly cocoa production, poultry farming, and other cash crops, alongside a growing SME and trade ecosystem, AltBank is deploying sector-specific financing solutions tailored to these strengths.
For cocoa aggregators, processors and poultry operators, the bank will provide production financing, facility expansion support, machinery lease structures, and structured trade facilities under its joint venture and cost-plus financing models, with transaction cycles of up to 180 days for commodity trades and longer-term structured asset financing for equipment and infrastructure.
The organisation is a notable national non-interest bank with a physical network now surpassing 170 locations, deploying capital to solve real-world challenges through initiatives such as the Mata Zalla project, which saw to the training of hundreds of women as electric tricycle drivers and mechanics.
By Adedapo Adesanya
The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, announced on Tuesday that the country’s banking sector is making strong progress in the recapitalisation drive, with 20 banks now fully compliant.
Mr Cardoso disclosed this during a press conference at the first Monetary Policy Committee (MPC) meeting of 2026, where he also highlighted positive developments in the nation’s foreign reserves.
On March 28, 2024, the apex bank announced an increase in the minimum capital requirements for commercial banks with international licences to N500 billion.
National and regional financial institutions’ capital bases were pegged at N200 billion and N50 billion, respectively.
Also, CBN raised the merchant bank minimum capital requirement to N50 billion for national licence holders.
The banking regulator said the new capital base for national and regional non-interest banks is N20 billion and N10 billion, respectively.
To meet the minimum capital requirements, CBN advised banks to consider the injection of “fresh equity capital through private placements, rights issue and/or offer for subscription”.
Following the development, several banks announced plans to raise funds through share and bond issuances.
In January, Zenith Bank said it had raised N350.46 billion through rights issue and public offer to meet the CBN minimum capital requirement.
Guaranty Trust Holding Company Plc (GTCO), on July 4, said it had successfully priced its fully marketed offering on the London Stock Exchange (LSE).
In September, the CBN governor said 14 banks fully met their recapitalisation requirements — up from eight banks in July.
With one month to the central bank’s March 31, 2026, recapitalisation deadline, 13 Nigerian lenders are yet to cross the finish line.
Additionally, the governor noted that 33 banks have raised funds as part of the ongoing recapitalisation exercise, signalling robust capital mobilisation across the sector.
He stated that gross foreign reserves have climbed to a 13-year high of $50.4 billion as of mid-February 2026.
-
Feature/OPED6 years agoDavos was Different this year
-
Travel/Tourism10 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz3 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking8 years agoSort Codes of GTBank Branches in Nigeria
-
Economy3 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking3 years agoSort Codes of UBA Branches in Nigeria
-
Banking3 years agoFirst Bank Announces Planned Downtime
-
Sports3 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn