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Fidelity Bank boosts key performance indices to rank amongst tier-one banks

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Fidelity Bank got an upgrade from Fitch Ratings last month in its long-term issuer default rating (IDR) from ‘B-‘ to ‘B’, an indication of the increased creditworthiness and excellent track record of the bank.

Notably, the rating agency also upgraded Fidelity Bank’s National Long-Term Rating to “(nga)” from “BBB+(nga),” placing the financial institution among the top tiers of banks in the country. Simply put, the B credit rating is given to a prospective borrower, that is rated to have the ability to meet its financial commitments.

The rating firm stated that the upgrade recorded by Fidelity Bank was due to its improved business profile and resilient financial metrics. For better context of how the ratings are generated via the Viability Rating (VR), which is used to reflect the asset quality, reasonable capitalisation, and liquidity of a bank. A metric that Fidelity Bank scaled in stellar fashion.

According to the bank’s financial performance in the previous full year, its non-performing loans ratio dropped to 2.9 per cent in 2021 from 3.8 per cent recorded in the previous year, one of the lowest NPL ratios in the Nigerian banking industry.

Fidelity Bank was also able to boost its top and bottom line in 2021, growing its gross earnings by 21.6 per cent  to N250.8 billion, while profit before tax surged by 35.7 per cent to N38.1 billion.

In the same vein, capital adequacy ratio improved to 20.1 per cent , while returns on average equity rose to 12.5 per cent, showing how well the bank is utilizing shareholders fund in generating profit.

In terms of balance sheet components, Fidelity Bank grew its customer deposits by 19.2 per cent to N2.02 trillion, while its loans and advances improved by 25.1 per cent  to N1.66 trillion. Its total asset appreciated by 19.3 per cent  to N3.29 trillion in the same period.

Fidelity Bank was able to demonstrate its ability to obtain credit at the highest levels after the Nigerian lender raised $400 million from the international debt market through a 5-year tenor Eurobond, with a 7.765 per cent coupon in October 2021.

The lender was able to assemble a team comprising JP Morgan, Citigroup, and Afreximbank to manage the Eurobond jointly due to the bank’s reputation for world-class corporate governance and risk management, along with its highly experienced and top-quality management.

This further demonstrates the bank’s prudent risk management practice as well as its impressive track record in the global markets having previously issued Eurobonds in 2013 and 2017.

Notably, these performance ratios were selected after querying half a dozen other variables namely: Assets Size (Ass), Gross Earnings (GRE), Net Interest Margin (NIM), Cost to Income Ratio (CIR), Digital Earnings, Loans to Deposit Ratio (LDR) Cost of Risk (CoR) and Ratio of Non-executive-to total directors.

While analysts await the bank’s H1 2022 financial results, it suffices to say that the bank’s performance remains one to look out for over the next few months.

Fidelity Bank is a full-fledged commercial bank operating in Nigeria with over 6.5 million customers and 250 business offices and digital banking channels across the country. Fidelity Bank was recently recognized as the Best SME Bank Nigeria 2022 by the Global Banking & Finance Awards.

Also, the bank won awards for the ‘Fastest Growing Bank’ and ‘MSME & Entrepreneurship Financing Bank of the Year’ at the 2021 BusinessDay Banks and Other Financial Institutions (BAFI) Awards, a testament of Fidelity Bank’s support for business growth and impressive track records over the years.

Money market

Naira will continue to appreciate against dollar – Shettima

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Vice President Kashim Shettima has expressed optimism that the Naira would continue to appreciate against the dollar at the forex market.

Spokesperson of the Vice-President, Mr Stanley Nkwocha, in a statement on Saturday, said Shettima stated this at a meeting with officials of the Lagos Chamber of Commerce and Industry (LCCI), at the President Villa, Abuja.

He said President Bola Tinubu ended the fuel subsidy and ensured the unification of the multiple exchange rate because the former arrangement was producing billionaires overnight.

“Naira went haywire and some people were celebrating but inwardly we were laughing at them because we knew that we have the leadership to reverse the trend.

“Asiwaju knows the game, and truly the Naira is gaining and the difference will drop further.”

He recalled that the quality of leadership provided by President Tinubu as governor of Lagos laid the foundation for the massive development witnessed in the state.

Shettima assured that the Tinubu administration is doing its best to address challenges in the power sector.

According to him, Tinubu’s administration is aware that power is absolutely essential for development.

“We are determined to ensure that we generate jobs for our youths. Honestly, the President’s obsession is to live in a place of glory, to transform this country to a higher pedestal.

“He wants to leave a legacy, one of qualitative leadership because the hope of the black man, the hope of Africa rests with Nigeria.

“I want to assure you that President Bola Ahmed Tinubu is one of you. He understands your ecosystem. In this government, you have an ally and a friend.”

Earlier, the President of LCCI, Gabriel Idahosa, emphasised the need for the Federal Government to consider more innovations to address the insecurity challenge in the country.

He also urged the Tinubu administration to ensure a significant upswing in the pace and scale of alternative policy measures that promote credit access, stimulate investment, and support entrepreneurship.

“This could include targeted interventions such as concessional lending facilities, loan guarantees, and interest rate subsidies tailored to the needs of SMEs and key sectors of the economy like agriculture, manufacturing and power technology.”

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LCCI advocates discipline, export to sustain Naira appreciation

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LCCI advocates discipline, export to sustain Naira appreciationThe Lagos Chamber of Commerce and Industry (LCCI) has emphasised the importance of maintaining discipline in the foreign exchange market to sustain the steady appreciation of the Naira.

The President and Chairman of the Council of LCCI, Mr Gabriel Idahosa, made the call in an interview with newsmen on Wednesday in Lagos.

Idahosa praised the efforts of the Central Bank of Nigeria in imposing discipline, attributing the recent Naira appreciation to curbing speculative activities.

“On the monetary side, the CBN is doing it. The primary efforts should continue to impose discipline in the foreign currency market.

“The abuses in the foreign currency market were prevalent and most of the fall in the value of the Naira in the last six months is not because there was any sudden calamity in the Nigerian economy.

“It was primarily because of very reckless speculations, that people were just speculating in the dollar, they had nothing to export, nothing to import, they were just buying the dollar for speculative reasons.

“And once the Central Bank started to impose discipline in the foreign currency market, we saw the value of the Naira rising very quickly by stopping speculation,” he said.

According to him, the strategies of the Central Bank, now, are designed to achieve a sustained discipline in the foreign currency market.

Idahosa highlighted the need to continue reducing the number of Bureau de Change operators, stressing that many operated without contributing to international trade.

He applauded the Central Bank’s move to enforce documentation and identification of buyers and sellers at BDCs, aiming to deter reckless speculation and curb illicit financial flows.

On the fiscal side, Idahosa urged President Bola Tinubu to prioritise a nationwide export drive, citing it as the key to bolstering the Naira and providing essential foreign exchange.

He emphasised the importance of fostering a culture of export among Nigerians across all scales of enterprise to reduce reliance on imports and strengthen the country’s economic resilience.

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Foreign reserves decline to $32.29bn

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The foreign reserve has depleted to $32.29 billion, which is a six-year low in the Central Bank’s course to save the naira.

This is the lowest level the reserves have been since September 25, 2017, when it was $32.28 billion.

The country’s foreign reserves declined by 6.2 percent, losing $2.6 billion since March 18, when the naira started its rebound from record-low levels against the dollar to $32.29 billion as of Monday, based on the latest available data from the CBN.

At the beginning of the month, the reserve was at $33.57 billion, then further dipped to $32.6 billion by April 12.

This comes as the CBN has attempted to save the naira through various interventions such as raising interest rates to 24.75 percent and managing foreign exchange trades.

It stepped up its intervention in the FX market with sales at both the official market and to BDC operators who sell dollars on the streets.

The apex bank, which sells $10,000 to each BDC every week, mandated them to only sell at a spread of 1.5 percent, which comes to N1,117 per US dollar.

The rate sold by the BDCs has set a defacto floor for the naira in the black market since the apex bank resumed sales to them in February.

Also, last month the CBN said it had cleared a backlog of $7 billion since the beginning of the year. That was built over the years as the central bank pegged its currency against the dollar, leading to a scarcity of foreign currency that deterred foreign portfolio investment. However, it’s unclear how much dollar debt the CBN retains on its books.

Akpan Ekpo, a professor of economics and public policy, said the CBN’s managed float system in which it is trying to ensure supply and curtail demand is not sustainable in the long term.

He said the CBN needs to be careful with how it depletes the foreign reserves as its main source is oil revenue.

“We need to manufacture non-oil goods and services, export them, and get foreign exchange and not depend on oil income,” he said.

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