‘Economy poised for strong growth after 2016’
The Managing Director of Fidelity Bank, Mr Edward Effah has expressed optimism about the medium term prospects of the Ghanaian economy, citing measures by the government to reduce deficit and borrowing as well as some oil and gas projects which will go live this year .
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‘’The power crisis seems to have ended, measures by the government to reverse the twin deficits are yielding positive results and oil and gas projects such as Eni Sankofa Gas and TEN projects are also coming on stream. These should bring some economic growth and increased activities from 2016 onwards,” Mr Effah told the GRAPHIC BUSINESS right after the 9th annual general meeting of Fidelity Bank.
Although not a listed company, Fidelity Bank has local and international shareholders through private placements who attend the company’s AGM in Accra each year. The company maintains a high level of corporate governance and transparency that often attracts more interests from existing and new shareholders in crucial business decisions.
“I think we have made good progress as a country. When you look back to three years ago, the country had twin deficits and over the years, through some of the government efforts, in addition to the IMF programme, the deficit has come down to about 7.1 per cent and it is projected to come to five per cent this year,” he said.
He added, “with the power crisis which significantly affected a number of businesses, including traders and small and medium enterprises now behind us, I believe the country is poised for future strong growth after 2016.”
But even more dazzling is Fidelity Bank’s impressive performance amidst a challenging economic environment which saw many banks recording losses.
Strong growth
“The bank had a very strong year in 2015. We were able to grow our business significantly and all the shareholders are very happy with the performance of the economy in 2015,” he said.
The net profit of the company was GH¢145.43 million, up by 74.41 per cent over the 2014 figure of GH¢83.38 million, as its profit before tax increased by 83 per cent to GH¢206 million, up from GH¢112 million in 2014.
A strong performance in retail banking, buoyed by deposit campaigns and optimisation of electronic channels, led the bank to post strong growth in all segments of the business. Total assets of the bank grew from GH¢3.135 billion in 2014 to GH¢4.09 billion in 2015, driven mainly by 58.98 per cent growth in deposits from GH¢1.78 billion in 2014 to GH¢3 billion last year
The bank, however, maintained a conservative posture on credit creation, as it reduced its loan book from GH¢1.56 billion to GH¢1.49 billion last year, investing a large chunk in government treasuries. Fidelity Bank increased its investments in government securities from GH¢590.8 million in 2014 to GH¢1.36 billion at the end of last year.
Drivers
He said drivers of the growth included the acquisition of Procredit which integration and rebranding was completed in 2015. The former Procredit branches were profitable.
Again, the bank’s wholesale business was robust in acquiring a lot of new major accounts and customers, which helped it grow its balance sheet and profit significantly.
Above all, the bank invested strongly in information technology (IT) and embarked on massive deposit mobilisation which raked in cheaper sources of funds.
Dividend and outlook
Shareholders approved a dividend of GH¢1.27 per share, amounting to a payout of 22 per cent of the profit, but 53 per cent increase over the previous year in cedi terms and 41 per cent in dollar terms.
Mr Effah said the bank would continue to consolidate its gains this year, tightening its information technology infrastructure to scale up capacity, increase speed and customer experience as well roll out more products and services using technology.
“The digital journey and strengthening will make the bank stronger, more efficient and increase security and lower costs. We hope Ghana’s economy is well placed to grow in the medium term and we are in the right market for growth,” Mr Effah told shareholders of the bank.
Some shareholders of the bank took turns to commend the board, management and staff of the company for the sterling performance.
The Board Chairman, Mr William Panford Bray, a veteran banker and business executive, received a thunderous applause when he announced his intention to resign from the board during the course of the year.