–Acquires Union Bank UK Plc
The Nigerian banking industry, and the global financial space has just witnessed the entry of one of the leading financial institutions into the class of the first-tier banks, and top 6 category in the industry, making the headlines this time around is Fidelity Bank Plc.
The Fidelity franchise, a full-fledged commercial bank operating in Nigeria and quoted on the Nigerian Stock Exchange (NGX), began operations in 1988 as a Merchant Bank. In 1999, the latest tier 1 bank converted to a commercial bank and became a universal bank in February 2001.
The MSME-focused bank has a broad reach across all channels of distribution, including over 240 business offices nationwide, 7m+ customer accounts, 3, 108 professional staff, 135 call center agents, 20,000 banking agents and a robust digital banking platform.
Niched down on corporate banking business segments as well as Micro, Small and Medium Enterprises (MSMEs), Fidelity Bank is rapidly implementing a digital based retail banking strategy which has resulted in increased customer base and double-digit growth in Savings Deposits for over eight consecutive years.
The bank was recently recognized as the Best SME Bank Nigeria 2022 by the Global Banking & Finance Awards. The bank has also won awards for the “Fastest Growing Bank” and “MSME & Entrepreneurship Financing Bank of the Year” at the 2021 Business Day Banks and Other Financial Institutions (BAFI) Awards.
LAUDABLE H1 2022 REPORT – FIGURES IN THE RIGHT DIRECTION
The double-digit growth has become very consistent with the fast growing bank, a remarkable 21.6% growth in profit to N25.1bn, as well as decent growth in most key ratios has been recorded in the banks H1 2022 results.
According to the report released on the Nigerian Stock Exchange (NGX) on Tuesday, 30 August, 2022, the bank grew Total Deposits by 13.1% YTD to N2,290.1bn from N2,024.8bn in 2021FY, driven by double-digit growth in low-cost deposits. Low-cost deposits increased by 26.1% YTD to N1,902.4bn and now represents 83.1% of total deposits from 74.5% in 2021FY, which explains the drop in funding cost.
Gross Earnings increased by 37.9% YoY to N154.8bn on account of 52.9% growth in interest income to N136.2bn from N89.1bn in H1 2021. The increase in Interest Income was driven by improved yield on earnings assets and 14.9% YTD expansion in earnings base to N2,546.5bn.
Similarly, Net Interest Margin improved to 6.4% from 4.7% in 2021FY, due to a combination of improved yields on average earning assets and a decline in average funding cost. Average yields on earning assets increased by 211bps YoY to 11.5% while average funding cost declined by 84bps to 4.0% YoY, which resulted in 50.4% growth in net interest income to N75.6bn.
The highly capitalized bank also recorded a 19.8% increase in its Capital Adequacy Ratio (CAR). On the back of the positive H1 2022 performance, the Board of Fidelity Bank also approved an interim dividend of N10,000 per share, making it the first time the bank will pay an interim dividend in its 34years history.
The H1 2022 performance report has placed the bank amongst the top 6 banks in the country, with over N3.5tr in total assets, N2.3tr in customer deposits and N19.3tr in capital adequacy ratio.
EXPANSION DRIVE – FIDELITY ACQUIRES UNION BANK UK PLC
Fidelity Bank was able to enter Tier 1 with no business operation outside the shores of Nigeria, they have equally announced plans to acquire Union Bank Plc in the United Kingdom as they recently executed a binding agreement for the acquisition of 100.0% equity stake in Union Bank UK Plc in line with their strategic objectives and their short to medium term aspirations and international expansion drive.
Thankfully, Union Bank UK offers a compelling synergy that Fidelity will build on, and create a scalable and more sustaining service franchise that will support the wider ecosystem of their trade businesses and diaspora banking services.
The acquisition holds several benefits for Fidelity, many of which are; business opportunity for UBUK from Fidelity Bank existing foreign currency transactions in Nigeria and revenue and cost optimization through cross-selling and shared services.
Complementary business operations will enable strong value creation for shareholders and clear benefits for customers, staff, and other key stakeholders. UBUK will service other subsidiaries of Fidelity Bank under the proposed Holdco structure.
Fidelity Bank will also enjoy the potential for stronger customer loyalty and stickiness through integrated financial services, bundled products for diaspora customers and corporate banking clients etc., as well as end-to-end customer experience especially for commercial customers / HNIs.
THE TAKEOVER – ALL YOU NEED TO KNOW ABOUT UNION BANK UK PLC
Union Bank UK Plc, a UK incorporated and regulated commercial Bank – wholly owned operating subsidiary on Union Bank Nigeria. Commenced operation from the heart of the City of London in 1983. Following authorization from the UK FSA and approval from PRA & FCA in 2013, Union Bank UK became independently incorporated as a UK Deposit-Taking Bank.
Its competitive range of banking services include Personal Banking, Trade Finance, Treasury Management, Structured Trade, and Commodity Finance which it offers to individual and corporate clients. It is licensed to accept current, savings, time deposits from retail and corporate customers (unlike other Nigerian Banks in UK).
Union Bank United Kingdom also offers a range of diversified business lines for Fidelity bank and product services for the customers, this has under its scope; personal banking services in different denominations, deposit products & card services. Deposits are protected up to £85K (individuals) or £170K (joint accounts) under the UK Financial Services Compensation Scheme (FSCS). Current accounts in GBP, USD, EUR, Savings and fixed deposit Accounts, Direct Debit, Standing Order Instructions, Counter services – Buy to Let (BLT) Mortgages, Payment services and money transfer.
Union Bank UK also provides extensive trade financing to businesses and individuals, this includes secure tracking of physical risks and events in the chain between importers and exporters, L/C Issuance, L/C Confirmation & Refinancing, L/C & Bill Discounting, Invoice Discounting, Post Shipment Finance.
The Bank also provides transaction and liquidity management services to individuals and businesses, helping clients trade across borders and ensuring timely delivery and collection of payments, Foreign Exchange, Fixed Income, Money Market and A-L Management.
Union Bank UK provides structured trade and commodity finance services to clients that may need to access funding to carry out said services, Pre-Export Finance, Structured – Import Finance, Prepayment Finance and Receivables Discounting.
With the impressive H1 2020 performance of Fidelity bank, all the indications are pointing in the direction of an even better performance at the year’s end.