From just a merchant bank with few branches, Fidelity Bank Plc has, over the years, maintained a steady growth, emerging the top tier 2 bank in Nigeria. In this interview with the lender’s CEO, Mr. Nnamdi Okonkwo, he speaks on the economy, the banking industry and the secret behind the stellar performance of the bank during its financial year ended December 31, 2017 at an interactive session with business editors in Lagos. Excerpts:
What is the bank’s roadmap for the next five years?
Let me give you some historical background. If you look at where Fidelity Bank was as at end of 2013 and where we are today, you would have noticed some marked improvements. The bank has had a stable leadership in our 30 years of operations. I am the third CEO of the bank.
The first CEO served for 15 years and the second was there for 10 years. Both of them laid solid foundations for the bank before I took on the mantle of leadership.
From day one, the watchword is to keep the bank safe and that was the same gospel that was transferred to me to ensure that the bank’s capital adequacy and liquidity are strong.
At some point, people thought Fidelity Bank was too conservative, but it was for good reason. It has enabled us to survive three or four cycles of crisis in the banking industry with us acquiring two banks in the process.
When I came on board, it was clear to me that we needed to be mindful of these and management also agreed to retain this posture when we had our retreat to strategies for the next growth phase.
We said to ourselves at the retreat that we want to be the clear leader among tier-two banks. So, we crafted the medium-term strategic initiatives built around balance sheet optimisation, cost reduction, and increased digitisation. We were sure that if we remained focused on the implementation of these initiatives, we would achieve success.
Four years down the line, we like the results we have achieved, even though we also realise that we are not yet where we intend to be ultimately. Specifically, in answer to your question, in the next five years we plan to break into the league of top five-six banks in the country.
This has implications for market share, number of customers, balance sheet size and all. We had a board retreat late last year to strategise and agree on the imperatives for achieving this goal and by God’s grace and the disciplined approach to the execution of the outlined initiatives, we will realise this goal.
Whilst I am not at liberty to completely divulge in details our plans for the next five years, let me speak to some of the quiet changes and internal realignments that we have made in preparation for the future.
Starting with governance, we ensured that as directors retired, both at the executive and non-executive board, we maintained quality by replacing them with equally very strong professionals from diverse backgrounds.
If you take a look at our board, you will see high profile representation by people who have been in regulatory roles, from our Chairman, Mr. Ebi, a former Deputy Governor of the Central Bank of Nigeria (CBN), to a former CEO of a multi-national corporation, former CEO of a bank, legal practitioners, former Chief Risk Officer of a bank, accountants and accomplished businessmen.
On the executive side, the professional background of our directors also speaks for themselves. We also started our mid-year audit last year. Nobody compelled us to do it. We are required to audit our account once every year, but we did it on our own because of our future aspiration. We decided to adopt international best practices.
Are you looking at organic growth, merger, capital raising or a combination of strategies?
We plan to grow organically, but that does not mean if we see a brownfield transaction, we will not do it. Getting to the top five-six league of bank is more important than just doing a combination today to become such, which means you did not get there by deliberate efforts.
But if we see an opportunity in the market that aligns with our goals, we will evaluate it but that’s not our primary plan. On capital raising, as a bank, we have a policy set out by the Board, which ensures that we remain above regulatory benchmarks.
We used to know Fidelity Bank as a bank that handles big transactions. Why have we not heard about such in recent times?
Apart from our reputation as SME-friendly bank, Fidelity has core competence in corporate banking; Fidelity is still financing the big corporates. On agriculture, we funded one of the biggest rice mills in Nigeria located in Kano, supported cocoa value chain in Ondo State, to name a few. We are also very active in food and beverage industries, construction,oil and gas, fast moving consumer goods (FMCGs), iron and steel, among others.
What will be key drivers of Nigerian banks going forward?
It will depend on strategic focus of each bank. At some point it was easy to make 20 per cent returns from treasury bills, we knew that was not sustainable, so expectedly, it has come down.
Those who stay focused in their core business at a time like this will remain profitable. For instance, if you look at our income distribution in 2017, you will see that we made about 25 per cent of our revenue from non-interest income, which was as a result of investment in digital technology. We used digitization to drive a lot of non-funded income.
We also took advantage of our balance sheet optimization to increase yield in short-term instruments. We have also cautiously resumed extending credits to customers in the consumer/retail segments, following improvements in salary payments.
You are known to be strong in the SME sector that has not been de-risked in the Nigerian banking environment and coupled with the issue lenders are having with Non-Performing Loans (NPL), are you still going to be bold lending to them while driving your NPL down to five per cent?
The NPLs you see in the banking industry are not even predominantly from SMEs. Fidelity approaches SMEs from a different strategy completely. When we started supporting SMEs, we did not want to use risk asset penetration strategy.
Businesses fail either because owners borrow for the wrong reasons or they don’t know proper book keeping and there is nothing tying them together and preventing them from behaving otherwise.
When a significant percentage of businesses go bad, there will be a spike in bad loans. Because of this, about eight years ago, Fidelity set up a division to understand SMEs and train people in that area.
A General Manager headed the division. We divided SMEs into general SMES and managed SMEs. We use the cluster approach to manage people that have similar needs.
You can have 500 people who have similar needs and talk to them as an association. Those that do not have proper book keeping, you make it clear to them that we need to see your business through your record keeping and we train them to imbibe and inculcate these habits. Recently, our people spent two weeks in Aba, in the shoe and leather segment of the market.
Today we have a thriving branch there, with the Bank of Industry (BOI) approaching us for collaboration. What they want from us is to use our office to provide money to support people in that market because our model is working. Now if any member of the cluster defaults, the other members will come against him or her in mutually re-enforcing manner.
Our products are specifically designed and if everybody in a particular cluster is facing bad time, we will know, but in a situation where only one person is not repaying, we know that person is doing something wrong. So that’s the way we approach the cluster SMEs. For the stand alone SMEs, we have developed templates.
For instance, if we check transactions across industry over a period of time, we can tell what kind of SME a business is, using account statements. That way we can query inflows and outflows and ask questions where there are gaps – we ask why you are not selling or are you deliberately stocking up, where we see stocks growing are higher than demand. Yes we are that detailed. the awards we keep winning on SME banking is an outcome of a deliberate strategy.
-Culled from New Telegraph
Microsoft 4Afrika partners FirstBank to support SMEs
On 18 January 2019, First Bank of Nigeria Limited, together with Microsoft 4Afrika, will host a free-to-attend event for SMEs in Nigeria, designed to promote technology adoption and skills development.
The event will serve as an official launch of the new partnership between Microsoft 4Afrika and FirstBank, following a memorandum of understanding signed earlier in June 2018. The partnership seeks to build the capacity of local SMEs andaccelerate their digital transformation, by providing them with exclusive and tailored non-financial solutions. Participants will be exposed to skills development resources, access to business networks and an educational platform.
According to Taiwo Shonekan, Head Customer Experience and Value Management, First Bank of Nigeria Limited: “This partnership with Microsoft enables us to deliver a portfolio of non-financial solutions to our SME customers. We have over the last 125 years supported SMEs in building their business, whilst contributing to the national economy. This partnership is a landmark step in our quest to leverage the influence of technology in businesses, especially in today’s digital age.”
“With this partnership, FirstBank customers can buy Microsoft products at discounted rates in the local currency – the naira – as this seamlessly aids technology adoption, skills and capacity development among SMEs in Nigeria,” she adds.
Amrote Abdella, Regional Director of the Microsoft 4Afrika Initiative and the keynote speaker for the event says: “For SMEs, integrating technology into their operations is no longer an option, but a necessity for future growth and success. We’re looking forward to engaging in discussions that explore how technology can extend reach to new markets and improve productivity, which results in better customer service, more competitive offerings and the ability to act with agility.”
Across the continent, Microsoft 4Afrika is forging partnerships with several players in the SME ecosystem – from banks to telcos – to enhance SME offerings and reach a broader audience.
“Technology and the relevant digital skills today play such an integral role in business success. We’re working with organisations to extend this support to as many SMEs as possible, ensuring not only their success, but the growth and competiveness of our continent in an increasingly digital world.”
Access Bank, Diamond Bank to unveil new identity after merger
The corporate identity of Access Bank Plc may have to change after the conclusion of its merger with Diamond Bank Plc in June 2019, Mr Herbert Wigwe and Mr Uzoma Dozie, CEOs of Access Bank and Diamond Bank respectively hinted in Lagos recently
While addressing customers of the financial institution, Mr Dozie said Access Bank will retain its name after the merger, while Diamond Bank will definitely lose its.
However, he disclosed that the new corporate identity of the new enlarged bank will reflect individual identities of the two merging lenders.
Late last year, Diamond Bank, a tier-1 one lender and Access Bank, a tier-2 financial institution, confirmed that they were coming together to become one.
This came after both companies had initially denied media reports that they were planning such move.
At the customer forum in Lagos, Mr Dozie, while responding to a question on whether the enlarged bank will have a new name, said, “I believe that the name will be Access Bank, but the identity will be the one that is recognised by both Access Bank and Diamond Bank.
“So, it will be……just as we have come here today to inform you of what we are doing and get your feedback, we are also going to have a customer forum to help us decide what is the best identity that when people see, they will say this is Diamond Bank, this is Access Bank.”
Giving more insight into Mr Dozie’s point, Mr Wigwe said, “Let me just add to that point, if you go to global banks like Barclays Bank and HSBC that have gone through mergers and acquisitions, you can keep an identity, but you can also make sure you reflect the identity of the different institutions and what they do.
“So, the retail will look like what you see in Diamond Bank so you don’t lose your connection; that is how it happens.
“If you look at the corporate logo and how things will come out, you will not see that you’ve not lost anything.
“Same thing for Access Bank customers, because you know we were also at the corporate end. We also have to be mindful of these customers as well.
“So, we have to do something that will sit nice for Access Bank customers and also sit nice for the retail business of Diamond Bank.”
At the moment, Access Bank logo has ‘access’ written in white colour on a blue background strip with three orange colour ‘>’ sign placed at the end of the word (access>>>).
UBA Customers win N30m in Wise Savers promo, N90m still up for grabs
Pan-African financial institution, United Bank for Africa (UBA) Plc has rewarded 20 loyal customers with N1,500,000 each, in the first edition of its quarterly draw for the ongoing UBA Wise Savers Promo, which was held at the bank’s headquarters in Lagos on Tuesday.
At the event, a total of N30,000,000 was won by 20 lucky customers who were selected following a draw that was witnessed by key regulatory officials including representatives of the National Lottery Regulatory Commission, (NLRC); Lagos State Lottery, Board, (LSLB) Consumer Protection Council (CPC) as well as members of the media.
To qualify for the draws, new and existing customers of the bank are expected to save at least N10,000 each month for three consecutive months, or N30,000 for 90 days in the promo, which will run for the rest of the year. Apart from the N30 million won by 20 customers on Tuesday, another N90 million is still expected to be won by 60 more loyal customers in the remaining three quarters of the year.
The winners, who cut across all regions of the country, are: Nnadumije, Ebube Dawn; Onwochei Christiana Okwukwe; Eze Mathias Nnaji; Christian N Orie; Uka, Okwudiri; Okata Stephen Uche; Okafor Onyinye Esther; Nwanekezi Chimezie Jude; Ayomide V Yahaya and Olanegan, Oyetunde Keji.
Others are Emmanuel Onu Chidozie; Mohammed Fatima; Aminu, Mustapha; James Nanre; Pahinti Albert; Emmanuel O Adeniji; Jaki Movihinze Mercy; Saminu Muritala Mohammed; Ezeh Raphael Uballa; Uchenna Iheji.
When contacted on the phone, one of the 20 lucky winners; Nnadumije, Ebube Dawn, excitedly expressed gratitude to the bank and said he was happy to be a customer of the bank. He thanked the bank, and said the move was thoughtful and will help to enrich customers especially during these trying economic times.
The Group Executive, Digital and Consumer Banking, Mr. Anant Rao, who addressed participants at the event, said the promo was launched as part of the bank’s initiatives towards prioritising customers. He added that customers who save consistently would be rewarded in order to promote the financial inclusion initiatives of the bank. ‘We believe it is time we rewarded our customers who have been very loyal over the years. Without them, we would not have made the giant strides attained thus far’ .
According to Rao, “Because our customers are invaluable to all that we do, we listen and give them nothing short of the best that they deserve’
“We remain committed to consistently improving customer service and rewarding our loyal customers. The Wise Savers Promo seeks to compliment current initiatives aimed at growing savings,” he noted.