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FIDELITY BANK BEGINS INTERNATIONAL EXPANSION DRIVE

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Fidelity Bank

FIDELITY BANK BEGINS INTERNATIONAL EXPANSION DRIVE

Fidelity Bank

With its half-year 2022 results showing a 20.7 per cent rise in profit after tax year-on-year, Fidelity Bank Plc, which last week announced the planned acquisition of Union Bank UK, is leaving no one in doubt with its readiness to avail itself of the tremendous gains of international presence.

In response to their peculiar needs and ever-changing business environment, commercial banks in Nigeria have continued to raise their scale through deliberate acquisitions and business combinations.

 

 

 

This is because, unlike in the past when the Central Bank of Nigeria (CBN) had to raise the capital threshold, forcing banks to either opt for public offers to raise additional funds or merge with operators with similar visions, it is the competition for the sphere of influence that is driving most mergers and acquisition these days.

Analysts attribute the development to the shrinkage of business opportunities amid the current global economic challenges.

 

 

 

Banking industry watchers said with the keen competition by fintech companies and the rising appetite of consumers of banking products for innovations and risks, there are pressures on banks to leave their comfort zones and respond to these growing needs.

Consequently, banks decided to go for options that are best suited for them including the option of a holding company where they bring their non-banking operations under one umbrella. Others decided to go for acquisitions to create a niche for themselves.

 

 

 

 

 

 

It is under the latter category that Fidelity Bank Plc falls as it announced a business combination with a United Kingdom bank last week.

The bank disclosed that it has entered into a binding agreement for the acquisition of a 100% equity stake in Union Bank UK Plc for which the central bank has issued a letter of no objection.

 

 

 

 

 

The move is seen as an opportunity for Fidelity Bank to optimise its international banking licence and take advantage of the planned business combination with Union Bank UK, which has been offering competitive banking services including personal banking, trades finance, treasury management, and structured trade and community finance, which offers to individual and corporate clients for as far back as 1983.

Although the transaction is subject to the approval of the Prudential Regulatory Authority of the United Kingdom, Fidelity Bank officials said they hope to leverage the gains of the acquisition to improve the bank’s returns to its shareholders and to add value to its current and prospective customers.

 

 

 

 

 

 

Improved Half-Year Result

The news of the planned acquisition came the same week that Fidelity Bank’s half-year result for 2022 made its way to the public domain.

Analysts said with the impressive results, Fidelity Bank has demonstrated the capacity to be competitive in the Nigerian banking industry.

 

 

 

 

According to the unaudited half-year results, the bank posted a profit after tax of N23.307 billion for its 2022 half-year results, representing a growth of 20.72% year-on-year.

In the financials submitted to the Nigeria Exchange Group Limited (NGX), the bank also made significant improvements across key performance indicators.

 

 

 

 

The results indicate that the bank’s gross earnings rose by 37.87% to N154.843 billion from N112.304 billion reported in 2021, driven by a 50% growth in net interest income.

Profit before tax stood at N25.079 billion from N20.628 billion posted in 2021, representing a growth of 21.57%.

 

 

 

 

 

 

Interest and similar income using the effective interest rate method rose by 48.45% from N85.090 billion recorded in the first quarter (Q1) of 2021 to N126.348 billion in the period under review.

Based on the result the Board of Directors under the powers vested in it by Section 426 of the Companies and Allied Matters Act (CAMA 2020), proposed an interim dividend of 10 Kobo per share amounting to N2,896,258,569.20 from Retained Earnings as of 30 June 2022.

 

 

 

 

 

 

 

The Register of Shareholders will be closed on September 13, 2022. The qualification date is September 12, 2022.

On September 20, 2022 dividends will be paid electronically to shareholders whose names appear on the Register of Members as of September 12, 2022, and who have completed the e-dividend registration and mandated the Registrar to pay their dividends directly into their bank accounts.

 

 

 

 

 

The planned acquisition of Union Bank UK signposts the final transition of the former Union Bank of Nigeria Plc to new separate owners. In December 2021, Union Bank’s core investors – Union Global Partners Limited and Atlas Mara –reached a Share Sale and Purchase Agreement (SSPA) with Titan Trust Bank (TTB) for the sale of 89.39 percent of Union Bank’s issued share capital.

The agreement came a decade after the initial investment by the core investors in 2012.

 

 

 

 

 

 

 

Commenting on the bank’s performance in March, the MD/CEO, Fidelity Bank Plc, Nneka Onyeali-Ikpe, said: “Digital Banking gained further traction driven by new initiatives in our retail business and the enhancement of existing digital banking products.

We now have 56.0% of our customers enrolled on the mobile/internet banking products and 90.0% of total customer-induced transactions done on digital platforms with digital banking business contributing 27.6% to net fee income.”

 

 

 

 

 

 

Fidelity Bank is described as a highly capitalised bank with a Capital Adequacy Ratio (CAR) of 19.8% in H1 2022. It successfully acquired and integrated two operating commercial banks (FSB and Manny Bank).

The bank boasts of a strong trade and export business with a diversified portfolio across sectors and market segments. It also has a wide distribution network serving over seven million customers. Today, Fidelity Bank is the only bank of its size in Nigeria with no business operation outside the shores of Nigeria.

 

 

 

 

Value Addition

At an interactive session with some financial journalists in Lagos last week, the bank’s Executive Director in charge of Operations and Information, Mr. Stanley Amuchie, explained that the acquisition aligns with the bank’s short to medium-term aspirations and international expansion drive.

Interestingly, UBUK’s competitive range of banking services includes Personal Banking, Trade Finance, Treasury Management, Structured Trade, and Commodity Finance which it offers to individual and corporate clients.

 

 

 

 

 

 

Listing the attraction in the UBUK, Amuchie said the bank offers a robust range of banking services to customers doing business from and into Africa, including trade finance, personal banking, business banking, treasury services, and commercial lending.

It is going to be a plus for Fidelity Bank to combine business with the UBK which provides extensive trade financing to businesses or individuals, that includes secure tracking of physical risks and events in the chain between importers and exporters.

 

 

 

 

 

 

 

 

Amuchie explained that up till now, what Fidelity Bank does when it needs to satisfy the demand of its Nigerian customers with banking needs in the UK is to work with other banks.

However, with the ongoing acquisition, the bank will not only meet the needs of its customers with ease, but it will also be able to conserve fees that it would have paid to another bank.

 

 

 

 

 

 

 

 

“Union Bank UK provides extensive trade financing to businesses or individuals that includes secure tracking of physical risks and events in the chain between importers and exporters,” he stated, adding that the bank provides transaction and liquidity management services to individuals and businesses, helping clients trade across borders and ensuring timely delivery and collection of payments.

Enhanced Product Offering

According to him, a significant captive business opportunity exists in Fidelity books as well as enhanced product offerings, bundled services, and cross-selling.

 

 

 

 

 

Other low-hanging fruits from the acquisitions include the offer of international banking service support, especially for HNIs in Nigeria, trade finance, and a corresponding banking relationship with Fidelity Bank.

In terms of operation, there is the prospect of cross-border collaboration in sales and client services, while the possibility of shared services will be considered.

 

 

Amuchie also talked about workforce transformation and integration of performance culture by the time the acquisition is fully consummated.

The acquisition also raises the prospect of significant captive business opportunities for UBUK from Fidelity Bank’s existing foreign currency transactions in Nigeria.

 

 

 

 

 

Fidelity Bank is also looking at the possibility of revenue and cost optimisation through cross-selling and shared services.

It is also believed that complementary business operations will enable strong value creation for shareholders and clear benefits for customers, staff, and other key stakeholders.

 

 

 

 

 

Throwing more light on the expectations from the acquisition, Amuchie pointed out that “UBUK will service other subsidiaries of Fidelity Bank under the proposed Holdco structure.

He added that there is potential for stronger customer loyalty and stickiness through integrated financial services and bundled products for diaspora customers and corporate banking clients, etc.

 

 

 

 

 

 

The bank was recently recognised as the Best SME Bank Nigeria 2022 by the Global Banking & Finance Awards. It has also 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.

Commenting on the agreement, Onyeali-Ikpe said: “This transaction aligns with our strategic plan of expanding our services touchpoints beyond the Nigerian market and providing straight-through services that meet and exceed the needs of our growing clients.

 

 

 

 

The diverse bouquet and business model of Union Bank UK offer a compelling synergy and we hope to build on the existing capacity to create a scalable and more sustaining service franchise that will support the wider ecosystem of our trade businesses and diaspora banking service

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ZENITH BANK DELIVERS REMARKABLE TRIPPLE-DIGIT GROWTH IN GROSS EARNINGS AS PBT HITS N1.0 TRILLION IN Q3 2024  

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Zenith Bank Enhances E-Channel Services for Customers

ZENITH BANK DELIVERS REMARKABLE TRIPPLE-DIGIT GROWTH IN GROSS EARNINGS AS PBT HITS N1.0 TRILLION IN Q3 2024

 

Zenith Bank Plc has announced its unaudited results for the third quarter ended 30 September 2024, recording a remarkable triple-digit growth of 118% from N1.33 trillion reported in Q3 2023 to N2.9 trillion in Q3 2024. This performance underscores the Group’s resilience and market leadership in spite of the challenging macroeconomic environment.

 

According to the Bank’s unaudited third quarter financial results presented to the Nigerian Exchange (NGX), the triple-digit growth in the topline also led to an increase in the bottom line, as the Group recorded a 99% Year on Year (YoY) increase in profit before tax, growing from N505 billion in Q3 2023 to N1.0 trillion in Q3 2024.  Profit after tax equally grew by 91% from N434.2 billion to N827 billion in the same period.

 

The growth in the topline was driven by the expansion of both interest income and non-interest income. Interest income saw a notable 190% rise to N1.95 trillion, attributed to the high-yield environment. Non-interest income rose by 41% to N856 billion, bolstered by substantial growth in fees and commissions, which highlights the strength of Zenith Bank’s retail growth and the robust performance of its digital channels during the reporting period. The robust increase in profitability reflects the Bank’s focus on operational efficiency and strong risk management practices. Earnings per share (EPS) nearly doubled, rising to N26.34 from N13.82 in Q3 2023, underscoring Zenith Bank’s strong value creation for shareholders.

 

The Bank’s balance sheet grew significantly, with total assets growing by 49% to N30.4 trillion, largely supported by customer deposits, which rose by 42% to N21.6 trillion. This growth in deposits was broad-based across corporate and retail segments, highlighting the Bank’s deepening reach and customer loyalty. Gross loans increased by 46% to N10.3 trillion, underscoring the commitment to supporting strategic sectors in the economy.

 

Capital adequacy ratio remained strong, improving to 21.9%, well above regulatory requirements. The return on average equity (ROAE) stood at 37.8%, up from 35.1%, while return on average assets (ROAA) also improved to 4.3% as Zenith Bank maximized its asset base. Cost of funds increased to 4.3%, reflecting the broader market trend of rising interest rates, while the cost of risk was maintained at 7.3%, underscoring the Bank’s proactive approach in provisioning for credit risk. The Bank’s cost-to-income ratio rose to 39.5%, reflecting the impact of strategic investments in technology and capacity building aimed at supporting long-term growth, even as it continues to strive for greater operational efficiency.

 

Zenith Bank’s asset quality remains a cornerstone of its strength, with a non-performing loan (NPL) ratio of 4.5%, within regulatory limits. A high coverage ratio of 198.4% underscores the Bank’s disciplined approach to risk management, positioning it for resilience in the face of market volatility while supporting stable loan growth.

 

Zenith Bank remains steadfast in its commitment to sustainable growth and value creation. The Bank launched a capital raise program on August 1, 2024, consisting of a combined Rights Issue and Public Offer. This capital raise was driven by the Central Bank of Nigeria (CBN)’s recapitalization directive for commercial banks issued in March 2024. While the Bank awaits final capital verification approvals from authorities, the fundraising exercise was successful, reflecting strong confidence in Zenith Bank’s brand.

 

The additional capital will enhance the Bank’s ability to expand its product offerings, deepen its penetration in strategic sectors, boost lending to the real sector and pursue its African and global expansion plan.  In furtherance of this, the Bank in September 2024 received regulatory approval for the establishment of a Zenith Bank branch in Paris, France, which is fully operational and will enhance the Bank’s product offerings in international markets.

 

With a strengthened capital base, Zenith Bank is well-positioned to navigate the evolving economic landscape, while putting best-practice sustainability standards at the heart of its business. The Bank will also continue to prioritize opportunities that enhance stakeholder value and a strong compliance and corporate governance culture, which will reinforce the its leadership position within Nigeria’s financial sector and drive long-term growth.

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Wema Bank Releases Q3 2024 Unaudited Results… Reports Profit Before Tax of ₦60.62billion, a 174% YonY Growth* 

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*Wema Bank Releases Q3 2024 Unaudited Results… Reports Profit Before Tax of ₦60.62billion, a 174% YonY Growth* 

 

Wema Bank Nigeria (“Wema” or “the Bank”)) has released its unaudited Consolidated Financial Statements for the period ended September 30th 2024, to the Nigeria Exchange Group (NGX). The Bank reported profit before tax of ₦60.62bn, representing an increase of 174% over the ₦22.13bn recorded in the corresponding period in 2023.

 

Wema Bank’s balance sheet remained well structured with total assets growing by 38% to

₦3,084.27 trillion in Q3 2024 from ₦2,240.06trillion in FY 2023. The bank also grew its deposit base year to date by 23% to ₦2,292.30bn from ₦1,860.57bn reported in FY 2023. Loans and Advances grew by 25% to ₦1003.28bn in Q3 2024 from ₦801.10bn in FY, 2023. NPL stood at 3.19% as at Q3 2024.

 

The bank recorded an improved 3rd quarter performance as Gross Earnings grew by 91% to

₦288.32bn (Q3 2023: ₦150.90bn)). Interest Income was up 81% y/y to ₦229.11bn (Q3 2023:

₦126.67bn). Non-Interest Income up 144% y/y to ₦59.21bn (Q3 2023: ₦24.23bn).

 

Return on Equity (ROAE) of 38.62%, Pre-Tax Return on Assets (ROAA) of 2.64%, Capital Adequacy Ratio (CAR) of 14.06% and Cost to Income ratio of 60.47%, speak to the resilience of the brand.

 

The Managing Director/Chief Executive Officer of the bank, Mr. Moruf Oseni said, ‘our Q3 2024 numbers speaks to our resilience despite a tough operating environment. We will sustain our growth trajectory into 2025. The performance is headlined by impressive improvements in Profit before Tax which grew strongly by 174%. The growth of Gross Earnings by 91.07%, Total Assets by 38% and earnings per share at 328.1kobo shows the core improvements to our balance sheet. In addition, our cost to income ratio at 60.48% has witnessed significant improvement from the previous period.

 

Wema Bank Releases Q3 2024 Unaudited Results… Reports Profit Before Tax of ₦60.62billion, a 174% YonY Growth* 

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FirstBank Joins Partnership for Carbon Accounting Financials, Reinforces its Commitment to Climate Action

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FirstBank Joins Partnership for Carbon Accounting Financials, Reinforces its Commitment to Climate Action

 

As part of its commitment to sustainable finance and taking active steps towards reducing its carbon footprint, FirstBank has joined the Partnership for Carbon Accounting Financials (PCAF) to promote sustainable finance, combat climate change and advance sustainable socioeconomic development for the just transition.

 

PCAF is a collaboration between financial institutions worldwide to enable harmonised assessments and disclosures of greenhouse gas (GHG) emissions from loans and investments. With more than 530 financial institutions from six continents, the group is rapidly expanding in North America, Latin America, Europe, Africa and Asia-Pacific.

 

Joining PCAF aligns with FirstBank’s broader climate agenda, reinforcing its efforts to contribute meaningfully to global climate goals. By adopting PCAF’s globally recognised standards, FirstBank aims to enhance transparency in carbon accounting and reporting, integrate climate risk into its lending and investment decision-making, and support Nigeria’s transition to a low-carbon economy. This initiative complements FirstBank’s ongoing work on environmental, social, and governance (ESG) issues, underscoring its dedication to responsible banking practices.

 

PCAF will provide FirstBank with a standardised methodology and framework to measure and report the Bank’s GHG emissions and climate-related risks. By joining PCAF, the Bank’s capability in understanding and managing its exposure to climate risks and liabilities (physical and transition risks) will be enhanced. This will enable the Bank to make informed decisions and take proactive measures to mitigate these risks while leveraging on the opportunities for growth.

 

Dylan Hauser, regional lead For PCAF Africa said “We congratulate FirstBank on becoming a signatory of PCAF. We are absolutely delighted to have FirstBank on board sharing our commitment to driving positive change and reducing carbon footprints in the region through transparent and accountable practices.”

 

According to Patrick Akhidenor, Chief Risk Officer, FirstBank, “Joining PCAF is a significant milestone in our sustainability journey. It is not only a demonstration of our commitment to combatting climate change but also a step towards ensuring that we, as a financial institution, are accountable for the carbon emissions our activities finance. We are excited to collaborate with other global institutions in driving meaningful climate action”.

 

By joining forces with PCAF, FirstBank is poised to champion transparency and accountability in impact of the financial sector’s activities on climate change.

 

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