By Chukwuma Umeorah

Fidelity Bank Plc has maintained its position as one of Nigeria’s key financial institutions, accounting for 5 per cent of the country’s domestic banking system assets in 2023, according to a recent report by Fitch Ratings.

The credit rating agency revised the outlook on Fidelity’s LongTerm Issuer Default Rating (IDR) to Positive from Stable, while affirming the rating at ‘B-’ and it’s National Long-Term Rating at ‘A(nga)’ with a Stable Outlook.

Fitch attributed the positive outlook revision to Fidelity Bank’s efforts to strengthen its capitalization, including core capital issuances aimed at meeting the new paid-in capital requirement of N500 billion for banks with an international license by the end of the first quarter of 2026.

“Fidelity’s IDRs are driven by its standalone creditworthiness, as expressed by its Viability Rating (VR) of ‘b-’.

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“The VR balances the concentration of operations in Nigeria’s challenging operating environment, very high credit concentration, and high Stage 2 loans against a growing franchise, sound profitability metrics, good capital buffers, and reasonable foreign-currency liquidity coverage.”

Despite the challenges posed by Nigeria’s operating environment, Fidelity Bank has demonstrated resilience, with strong balance-sheet growth in recent years, increasing its market share while maintaining good capital buffers.

Fitch noted that Fidelity Bank’s single-borrower credit concentration is high but expects it to moderate relative to capital due to capital raising activities.

The bank’s operating profit to risk-weighted assets (RWA) improved significantly in 2023, driven by a wider net interest margin, foreign exchange revaluation gains, and a declining RWA density. Additionally, Fitch expects Fidelity’s capital adequacy ratio to strengthen materially in the near term due to planned capital issuances.

While key reforms pursued by President Bola Tinubu have been positive for Nigeria’s creditworthiness and foreign exchange market liquidity, they may pose near-term macroeconomic challenges for the banking sector, according to Fitch.

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