Fidelity Bank Plc may soon be classified as a tier 1 Nigerian bank, as management of the bank is working earnestly towards this goal.

The bank’s Managing Director, Mr Nnamdi Okonkwo, who disclosed this on Thursday, also noted that the bank has just finished putting together its ‘four-year strategic growth plan’, a move he said would ultimately help with the actualisation of its quest for tier 1 status.

He also hinted that the bank’s growth plan may entail the acquisition of other entities, especially if such an opportunity presents itself.

What are the implications of this move?

Fidelity Bank’s quest to become a tier 1 bank is a move in the right direction. After all, the Nigerian financial system can do with banks with much more stronger capitalisation and asset strength.

The move would also enable the bank to better position itself as far as profitability is concerned.

However, the bank may have to ready itself for the challenges that come with being a tier 1 bank, particularly the need for adequate capitalisation. This is important, seeing as the bank would be competing with the likes of Zenith Bank, First Bank, etc.

Meanwhile, it appears the bank’s CEO already has a solution for this. He had noted while speaking to journalists yesterday that even though the bank’s capital adequacy ratio was currently at 16%  it would not hesitate to raise more capital if need be.

Okonkwo also stated that the bank is now mostly digitised, as nearly 79% of all transactions are done electronically. As a result, cash holding declined by as much as 30% over the last fifteen months, he said.

Fidelity Bank Plc is currently the leading tier 2 Nigerian bank, thanks to impressive performance in its 2017 full year financial report, as well as the first quarter of 2018.

The company had achieved some 18% revenue increase in its 2017 full year financial report, having recorded  ₦180 billion as against ₦152 billion year on year. In the same vein, its profit after tax grew by as much as 94%, having stood at ₦18.86 billion compared to ₦9.73 billion reported in 2016.

Note that tier 1 banks (otherwise known as FUGAZ) are categorised by their capital base. There are currently five of them in Nigeria, including First Bank, United Bank for Africa, Guarantee Trust Bank, Access Bank, and Zenith Bank.

Fidelity Bank Plc was incorporated in 1988. Its shares traded at ₦2.06 during yesterday’s NSE trading session.

 

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