Fidelity Bank has had a terrible 2013 and 2014 is not about to be any better at least going by Q1 2014 results. The bank has seen it’s profits drop this year by 20% YoY one of the worst in the industry. In fact its Net Interest Margin for 2013 of 35% was one of the lowest in the industry so far.
According to RENCAP the bank’s problem started in 2011, when they increasingly focused on corporate lending and was subsequently faced with a tightening monetary policy environment.
As expected this calls for immediate action and according to The Nation reports, this is what the bank plans to do;
RenCap said Fidelity’s management acknowledges the current challenges and its initial focus will be on reducing the funding costs by continuous downward re-pricing of costly term deposits, which is under way and increasing the proportion of staff in market-facing roles while also rewarding them appropriately. It also plans to increase branch footprint (e-branches mainly) to increase market reach.
“Overall, there will be significantly more focus on driving e-banking products for customer mobilisation and service and an merger and acquisition deal could happen for the right target and price,” it said.
On the asset side, Fidelity is positioning itself to be a Small and Medium Enterprise-focused bank, and, coupled with its payroll lending retail book, management expects combined exposure to rise to 50 per cent over the medium term (2017), from 28 per cent in 2013.
RenCap said management has also been re-pricing the existing loan book and plans to periodically review all concessions and lending rates.