A Failed Attempt to Trigger a Run on Banks
As market sentiment remains highly volatile and driven by news flow, banks’ liquidity levels can become vulnerable due to the spread of inaccurate information. As Nigerian banks finalize their recapitalization plans as directed by the Central Bank of Nigeria (CBN), industry watchers have seen how social media mercenaries and their hirelings are deliberately distorting the truth and pushing campaigns that spread false information, which could result in deposit outflows from their targeted banks.
Earlier this month, when the Central Bank of Nigeria (CBN) revoked the banking license of Heritage Bank, it gave reasons for the decision. The reason was clearly stated: “This action has become necessary due to the bank’s breach of Section 12 (1) of BOFIA, 2020. The Board and Management of the bank have not been able to improve the bank’s financial performance, a situation which constitutes a threat to financial stability,” CBN noted.
The CBN said Heritage Bank had continued to suffer and had no reasonable prospects of recovery, thereby making the revocation of the license the next necessary step.
A statement by Hakama Sidi Ali, acting Director, Corporate Communications of the CBN, said the apex bank acted in accordance with its mandate to promote a sound financial system in Nigeria and in exercise of its powers under Section 12 of the Banks and Other Financial Act, BOFIA, 2020.
Many market watchers, particularly those following developments in the banking industry, did not think the CBN should have done otherwise, and subsequent appointment of the Nigeria Deposit Insurance Corporation, NDIC, as the liquidator.
Mischievous ‘List’ of Other Banks
Shortly after the apex bank hammer fell on Heritage Bank, social media mischief makers released their own ‘list’ of other banks they felt would go the Heritage way – not minding the illegality of assuming such a regulatory position.
Thanks to the Central Bank of Nigeria (CBN) for quickly debunking the fake news which had mentioned the names of other banks – Fidelity Bank, Wema Bank, Polaris Bank, and Unity Bank.
“The attention of the Central Bank of Nigeria (CBN) has been drawn to some information circulating in the public domain, suggesting that the CBN is set to revoke the licenses of three additional banks following its regulatory action against Heritage Bank Plc on Monday, June 3, 2024.
“The CBN unequivocally states that these allegations are false and intended to trigger panic in the financial system. The Nigerian financial system remains safe, sound, and resilient. Our banks have begun submitting implementation plans for the Banking Sector Recapitalisation Programme in compliance with the CBN Circular reviewing the minimum capital requirements for Commercial, Merchant, and Non-Interest Banks (CMNIBs).
“These plans are currently being reviewed by the Bank. In addition to enhancing buffers to withstand economic shocks, this proactive measure by the CBN to require CMNIBs to recapitalise will result in increased capital for Nigeria’s banks, enabling them to provide much-needed credit to critical sectors of the economy. This will increase the financial system’s contribution to the growth and development of a $1 trillion Nigerian economy.
“The CBN would like to reassure all stakeholders of its unwavering commitment to ensuring the financial system’s stability. Our financial system remains on a solid footing, and the CBN will continue to take all necessary steps to maintain its safety and soundness,” said CBN’s Sidi Ali in a June 4 statement in response to the false allegations of license withdrawals.
Fidelity Bank’s Full Year 2023 PBT Grew by 131.5% to N124.26 Billion
Fidelity Bank Plc in its 2023 full-year audited financial statements reported a 131.5 percent growth in Profit Before Tax (PBT) to N124.26 billion. The results released to the investing public at the Nigerian Exchange (NGX) show the bank grew gross earnings by 64.9 percent year-on-year (YoY) to N555.83 billion, driven by 81.6 percent growth in Net interest income which increased from N152.7 billion to N277.37 billion. This led to a Profit After Tax of N99.45 billion, representing a 112.9 percent annual growth.
“We closed the financial year with strong double-digit growth across key income and balance-sheet lines. Our performance in 2023 is an attestation of our capacity to deliver superior returns to shareholders despite the difficulties in our operating environment. Profit before tax grew by 131.5 percent to N124.3 billion from N53.7 billion in 2022FY, leading to an increase in Return on Average Equity (RoAE) of 26.5 percent from 15.6 percent in 2022FY,” said Nneka Onyeali-Ikpe, Managing Director/CEO, Fidelity Bank Plc.
A review of the bank’s financial performance showed that Fidelity Bank in 2023 grew Net interest income by 81.6 percent to N277.4 billion, driven by a 55.5 percent increase in interest income, thus reflecting a steady rise in asset yield throughout the year. The average funding cost dropped by 20bps to 4.4 percent due to increased low-cost funds that grew from 83.6 percent in 2022FY to 97.4 percent in 2023. The combination of higher asset yield and lower funding cost led to an increase in Net Interest Margin (NIM) of 8.1 percent from 6.3 percent in 2022FY. Similarly, Total Customer Deposits crossed the N4 trillion mark as deposits grew by 55.6 percent from N2.6 trillion in 2022FY. The increase was driven by 81.1 percent growth in low-cost funds.
Despite the challenging operating environment, the bank reaffirmed its devotion to helping individuals grow, inspiring businesses to thrive, and empowering economies to prosper by increasing Net Loans and Advances to N3.1 trillion from N2.1 trillion in 2022FY.
Despite the growth in its loan portfolio, Regulatory Ratios were maintained well above the required thresholds, with liquidity ratio at 45.3 percent from 39.6 percent in 2022FY and capital adequacy ratio (CAR) at 16.2 percent compared to the minimum requirement of 15 percent.
Consistently Paid Dividend Since 2006
Fidelity Bank has consistently paid dividends since 2006. With the final dividend of 60 kobo per share it paid for the year 2023, Fidelity Bank paid investors a total dividend of 85 kobo per share for the reporting period, a 70 percent increase compared to the 50 kobo per share paid to its shareholders in 2022.
“We recognise the changing dynamics in the Nigerian banking space and the need to monitor and proactively manage evolving risks. The proposed final dividend of 60 kobo per share reflects our commitment to strong value creation and returns to our shareholders,” Onyeali-Ikpe had said ahead of the dividend payment.
Multiple Local and International Awards Winner
Ranked as one of the best banks in Nigeria, Fidelity Bank is a full-fledged customer commercial bank with over 8.3 million customers serviced across its 251 business offices in Nigeria and the United Kingdom, as well as on digital banking channels.
The bank has won multiple local and international awards including the Export Finance Bank of the Year at the 2023 BusinessDay Banks and Other Financial Institutions (BAFI) Awards, the Best Payment Solution Provider Nigeria 2023 and Best SME Bank Nigeria 2022 by the Global Banking and Finance Awards; Best Bank for SMEs in Nigeria by the Euromoney Awards for Excellence 2023; and Best Domestic Private Bank in Nigeria by the Euromoney Global Private Banking Awards 2023.
Acquisition and Recapitalization of Union Bank UK a Done Deal
African Export-Import Bank (Afreximbank) on Monday, June 10 said it has disbursed $40 million Intra-African Investment Facility to Fidelity Bank Nigeria Plc to support the bank’s acquisition and recapitalization of Union Bank UK as part of its international expansion programme. Provided in two tranches of $20 million each, the first tranche of the facility enabled Fidelity to part-refinance the acquisition of 100 percent equity stake in Union Bank UK, while the second tranche was used to support its recapitalization via the injection of additional equity into the acquired bank, as approved by the United Kingdom’s regulator.
With this acquisition, Fidelity Bank is able to birth a new pan-African financial institution capable of providing correspondent banking and offshore banking services to banks in Africa and servicing the banking needs of Africans in the diaspora.
Fidelity Bank’s Upcoming Public Offer and Rights Issue: Good Buys for Investors
Just recently, Fidelity Bank Plc concluded all necessary arrangements to raise a total of up to N127.100 billion by way of a Rights Issue to existing shareholders and a Public Offer (the Combined Offer).
The Combined Offer is a part of the bank’s strategy to increase its share capital base in compliance with the revised minimum capital requirements for Nigerian commercial banks introduced by the Central Bank of Nigeria (CBN) on March 28, 2024. Overall, the Bank expects that the capital raised would support the Bank’s efforts to drive sustained growth and diversification of its earnings base.
The Signing Ceremony with respect to the Combined Offer was held at the Board Room of the headquarters of Fidelity Bank in Lagos on Wednesday, June 5, 2024.
The bank’s shareholders had already approved the Rights Issue and Public Offer at the Extra-Ordinary General Meeting held on Friday, August 11, 2023. Under the Rights Issue, 3.2 billion ordinary shares of 50 kobo each will be offered in the ratio of 1 new ordinary share for every 10
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