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nationalgeographic.com Managing Director/Chief Executive Officer of Fidelity Bank Plc, Mr.
Nnamdi Okonkwo, here speaks on current issues in the economy and banking sector.
He also spoke on Fidelity Bank’s impressive half year
2017 performance. Excerpt:

By Emeka Anaeto, Business Editor

RECENTLY, the Nigeria Bureau of Statistics said Nigeria
is now out of recession. As a banker, can you tell
us some of the damages recession caused the economy?

Recession simply means negative growth in an economy over a specific period of time.
I am not in a position to quantify the damage but I am in a position to know that a lot of things
slowed down in line with the slowing economic growth, because the banking industry is a melting point of what goes on in the economy.

For instance, if my bank has a customer at Idumota in Lagos
who normally lodged in N1 million into his account daily and now he
is lodging in N200,000, it is because something or the engine of what was responsible for generating those revenues, is no longer firing as before.

Expandingproduction line

Also, if a bank gives out a consumer loan and it is
not performing, it is probably because that consumer, that government employee or corporate employee - is not getting his salary on time in line with the situation in the economy?
The same thing goes for when a bank finances a factory that was expanding its production line to increase output and suddenly that
factory realizes that it cannot kick off that line because there
is no longer demand for its products because of general slowdown in demand.

So I am not be able to calculate the quantum but
in terms of everyday impact on business, it was a thing everybody felt.
Having said that, let us take the news of being out of
recession with caution and not celebrate yet. The Federal Government started the economic recovery and growth plan. It is the disciplined execution of that plan that matters for now.

On the monetary side, I want to commend the Governor of the Central Bank of Nigeria (CBN), Mr.
Godwin Emefiele and his team because they were under intense
pressure to devalue the naira but they stayed focused to address the issue from
the retail end of the market by opening up a window where banks were given $2 million weekly to enable individuals buy foreign exchange to
pay the tuition fees of their children in foreign higher institutions and before you know it
the exchange rate dropped from N520 per dollar to about N370
presently.

Besides tuition fees, the apex also allowed SMEs and operators in the aviation industry to have access to foreign exchange but
perhaps the most significant move by CBN in stabilizing
the currency was the introduction of Investor/Exporter FX window which has resulted in major inflows
by portfolio foreign investors.

Why are banks reluctant to lend to agric and the real sector of the economy?

There has been so much talk about banks not
willing to fund agricultural sector of the economy and I have asked repeatedly
why would a bank that is set up to buy and sell
money see an opportunity to sell money that it
has bought and would not be willing to sell.

The answer is if a bank sees a bankable agricultural project
it will fund it. For instance, if a person has personal money to lend as a money lender, I
don’t think such a person will like to go to a village and lend the money to a
farmer who does subsistence farming, who does not know how to use herbicides, who does not understand book keeping and
who does not know that the money the lender gives to him is a debt that needs to be paid back.

Thankfully, we now have an avenue to fund such local farmers through Anchor
Borrower Scheme where their products are guaranteed off take by bigger
companies such as rice mills. And guess what the scheme is producing great quantities of rice in the country.

So if subsistence farmers in the villages could be put together by professional private sector
operators under cooperative societies and extension services are
being used like what obtains in the CBN’s Anchor Borrower Scheme, banks will be willing to fund such farmers because their produce have guaranteed off take
and there is some organized structure under which they operate.

Having said that there are lots of bankable
agricultural projects that banks had and are still funding across the country.
For instance, Fidelity Bank has a huge portfolio of agricultural projects it
has supported over the years. One of the best rice
mills in the country today, based in Kano, was funded by the bank and I am
not talking about now when everybody is talking about
agric. I am talking about as far back as 2010. If you go there today it
is a very solid company that we are proud of.

Despite remarkable performance of Fidelity Bank in the first half of the year, there was a slight decline in the deposit base what
was responsible for this?

We had a slight drop in deposits because of the high yield
in treasury bills and bonds which attracted depositors to migrate to such instruments.
Secondly, we deliberately took a decision to optimize our balance sheet because
we do not want to be known as a bank with a big
balance sheet without efficient returns.

Expensive deposits

Therefore, though we could grow our deposit grew by
say N20 billion, using expensive deposits but profit and returns will suffer.The half-year result showed that we are producing more revenue with less
assets and we are springing out more revenue with a more efficient Balance Sheet.

Finally, our numbers depict a substitution situation where the major area of growth
is now in low cost deposits which currently account for 75% of our total deposit base.

What is Fidelity Bank’s outlook for the end
of the year

Well, our half year audited accounts made us happy but we are not relenting in our quest to deliver even better
returns. Therefore we will stay focused on executing our strategies
so that full year will meet expectations.

How is the bank handling its investment in 9 Mobile?

As you are aware, the creditor banks came together to appoint a new Board and Management for the company with the Deputy Governor of
the CBN as chairman of the board.

The company has good fundamentals, with about 22
million subscribers and it also very strong in data.
Our interest is to ensure the company remains as a going concern so that it can attract
interested buyers. The banks are working collectively
on this.

What are your plans for your Eurobonds maturing next
year?

nationalgeographic.com On Eurobond, we have $300 million Eurobonds maturing in May
2018 and we advised the market that we are considering options:
Should we refinance? Should we issue another one or should we pay off the one that
is maturing? We have informed the market that come September 30, we would make announcement on the options we have chosen.

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