29042019 - Economy bleeds as power system collapses

24 — Vanguard, MONDAY, APRIL 29, 2019
FINANCIAL VANGUARD
We will grow to tier-1 organically, but...
— Fidelity Bank boss
deepening our digital platforms.
By Emeka Anaeto, Business
Editor
BEGINNING from last
year, Fidelity Bank,
began to drive a fiveyear
strategic plan that
would see it migrating to
Tier-1 bank status in the
country by 2022, growing
organically but with an eye
on inorganic growth opportunity.
In his sixth year as Chief
Executive of the bank,
Nnamdi Okonkwo, in this interview,
said the bank is driving
the plan and the numbers
show that it is making steady
progress, year-on-year, in
terms of balance sheet size,
deposit and profitability. He
also spoke on other industry
and economy issues.
Excerpts.
What plans do you have
to grow the bank organically
and inorganically?
A company’s strategic initiative
for growth might be
driven by either organic
growth or inorganic growth.
Our five-year plan was crafted
to be based on organic
growth, based on the projections
we made. We also purposefully
decided that we
will not expand outside Nigeria
until after 2022. So,
our plans are based on organic
growth.
We also left a window that
allows us to take advantage
of emergent opportunities
though. When these happens,
we will sit down and
look at them and go back to
our Board to see if we need
to alter anything to take
advantage of such opportunities
or to continue with on
the organic growth path.
What measures have you
put in place to ensure that
your bank is not threatened
as you grow to become
a Tier-1 Bank?
We are keeping our eyes on
our capital, on risk management,
on governance and
sustained profitability. This
explains why, for instance
we had enough buffers to
absorb the impact of implementation
of IFRS9.
Do you plan to raise Eurobond
to support capital?
We do not plan an immediate
increase in Eurobond.
We are not doing any Eurobond
this year but we may
consider local bond issue if
Nnamdi Okonkwo, MD/CEO Fidelity Bank Plc
necessary as part of Tier-2
capital but no size yet.
Fidelity Bank recorded
about 28 per cent growth
in deposit base in 2018,
what was responsible for
this?
The deposits came from a
combination of growth in
savings, growth in current
and domiciliary accounts.
We have a new product
where you can transfer foreign
exchange with your
mobile phone up to the regulatory
limit. It means that
we have also seen growth in
our domiciliary accounts
because people built up
funds so that when they
want to transfer they can
easily use it. We also have
corporates that are in foreign
currencies earning
businesses. The increase in
oil prices also impacted on
our deposit growth as it
favoured our oil and gas
upstream customers.
What are you doing to
sustain loans and advances
above 10 percent?
The environment is so
challenging that growing
loans double digit as we
have done have prompted
some people to ask us: How
come we grew double digit.
In 2018, we took advantage
of opportunities in some sectors
to grow loans. For this
year we are guiding for between
7.5% to 9%. Still talking
about last year, a lot of
those were to the real sector
of the economy which encourages
growth and creates
employment.
We do not plan an
immediate increase
in Eurobond, we
are not doing any
Eurobond this year
but we may consider
local bond issue
if necessary as part
of Tier-2 capital but
no size yet
porate Banking and that
should tell you how seriously
we take Corporate Banking.
Fidelity Bank used to be
Fidelity Union Merchant
Bank and that was why
most multinational companies
in the country have
continued to bank with us.
Supporting business in this
niche segment comes at is
at huge costs. Therefore,
building up low cost deposits
from the lower end of the
market helps support lending
to the corporate segment
at rates lower that higher
risk segments. We have
grown our savings deposit
You were a leading investment
bank before the consolidation
in the banking
industry, but are you deemphasising
corporate
banking for retail banking?
We have just appointed a
new Executive Director, Coraccount
base from N75 billion
when I became CEO on
January 1, 2014, to N226
billion at present.
What is your take on
cyber security in the industry
and what is your
bank doing to tackle it?
The entire industry is as
strong as a bank with the
weakest security measures.
Therefore, no bank should
toy with cyber security measures
because there is a contagion
effect, if fraudsters
can penetrate one bank.
What it means is that they
can also affect other banks.
At the Bankers Committee,
we have discussed this several
times. Therefore, even
at regulatory level, there are
certain measures you are
compelled to take. For instance,
building a Security
Operations Centre and appointing
people with certain
qualifications and executive
level personnel as Heads of
IT Security.
What is your take on payment
service banks
You know it has been a
prolonged push by the Telcos
to come into the banking
space. We don’t have a
problem with that. Let them
be subjected to the same
regulatory conditions that
we have, because you are
talking about depositors’
money. So, once all of us are
subject to regulatory control,
we will all do banking
together. I think the sky is
big enough and as banks,
we are not sleeping, that is
why you see some of us
Nigerian stock market is
still experiencing heavy
foreign capital outflows
post-election, what is your
opinion on this?
We just got back from London
on a no-deal roadshow
and the outlook on Nigeria
is quite positive. Indeed,
based on some of the sentiments,
we were being advised
to raise Eurobonds
because they want to increase
their emerging markets
investments especially
the fixed income managers.
On the flows, you know
European Central Bank
raised rates. With the increase
in rates, capital will
always follow where margins
have just popped up.
People generally move money
to those areas just the
same way when we had our
treasury bills going for
about 20 percent, everybody
rushed in. So, that is the
constant dynamics of inflows
and outflows.
How is Fidelity Bank leveraging
Fintech to grow
its franchise?
Under our five-year plan
which was crafted in 2017
and commenced on January
1, 2018, we got one of the
big four consulting firms to
do a full global analysis of
Fintechs and how we can
collaborate with them.
Part of our engagement
strategy is partnership. This
partnership has been on several
fronts including the deployment
of a solution for a
major customer of ours; an
airline. We are bankers to
an airline that controls
about 40 percent of the industry.
Initially, they had
challenges with ticketing on
the electronic system they
were using, and they came
to us. Through collaborating
with a Fintech, we
migrated their entire transactions
to the cloud. This
has worked so efficiently
well in the last one and half
years without fail.
Aside from partnering with
Fintechs, we then decided
that there was need for us
to develop our internal capacities
as well. We decided
to build a digital lab as part
of the outcomes of the strategic
studies we had done
with the consulting firm in
the last six years. Today we
have several millennials
that are IT savvy, working at
solving problems with innovative
solutions, under flexible
hours and work environment,
at our digital lab.