Fidelity Bank impresses with profit

Fidelity Bank, a leading financial institution in Nigeria, has recently reported a remarkable growth in its profits before taxes, with a staggering 66.7% increase for the first half of 2017. The bank's CEO and Managing Director, Namdi O'Conquo, sat down with CNBC Africa to provide insights into the factors driving this exceptional performance. O'Conquo highlighted the three key drivers behind Fidelity Bank's success in the first half of 2017. Firstly, the bank saw a significant boost in FX income, driven by positive margins on FX forward transactions. Secondly, Fidelity Bank's strong focus on SME support led to a substantial increase in trade finance income. With the improving FX liquidity for SMEs, the bank experienced growth in absolute FX trade finance. Lastly, balance sheet optimization efforts resulted in improved yields, contributing to the overall positive performance. O'Conquo emphasized that these outcomes were a result of a medium-term strategy put in place three and a half years ago. The strategic focus on strengthening retail banking, supporting SMEs, and ensuring continued focus on corporate banking heritage has paid off significantly. Fidelity Bank's digital strategy has played a crucial role in enabling the bank to achieve these results. With approximately 25% of customers now using alternative channels, including online and mobile banking, the bank has witnessed a surge in fee income from electronic banking. O'Conquo noted that as demographics change and digitization takes precedence, Fidelity Bank is poised to capitalize on the growing trend of digital banking and drive further income growth. Additionally, Fidelity Bank recorded a 10% rise in net interest income, attributed to improved margins of 15.5%, leading to a notable increase in the net interest margin (NIM) to 7.4%. Despite a 5% decline in customer deposits due to higher yields on government securities in the economy, the bank has strategically focused on growing low-cost deposits, which now constitute 75% of its deposit base. O'Conquo pointed out that ongoing digitization efforts in retail banking have been instrumental in driving low-cost deposit growth. The bank's cost income ratio has also improved significantly, with a reduction in operating expenses and a substantial increase in revenues. By implementing process improvements, cost optimization projects, and innovative strategies such as partnering with Uber for back office functions, Fidelity Bank achieved a notable decrease in expenses and an increase in revenues. Looking ahead, O'Conquo expressed confidence in maintaining the current strategies and fine-tuning them to ensure the bank's performance remains strong for the rest of the year. Fidelity Bank plans to continue its support for SMEs and the retail sector, leveraging past successes to drive future growth. Despite challenges in the retail portfolio in the past, improvements have been noted, and the bank is optimistic about the sector's outlook. As the Nigerian banking sector continues to evolve and adapt to changing market dynamics, Fidelity Bank's strategic focus on innovation, digitization, and customer-centric solutions positions it well for sustained growth and success in the years to come.