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Q & A with MD and CEO of Fidelity Bank Edward Effah

Edward Effah - MD,Fidelity Bank
Edward Effah - MD,Fidelity Bank

Edward Effah established the Fidelity Group in October 1998.

Fidelity is a financial services group comprising of Fidelity Bank Limited, Fidelity Capital Partners Limited, Fidelity Asset Management Limited, Fidelity Equity Fund 1 Limited and Fidelity Equity Fund 2 Limited. Edward Effah is the MD and CEO of Fidelity Bank Limited.

Under Edwards’ leadership Fidelity has been able to establish itself as a leader in its markets in Ghana in terms of reputation, profitability and assets under management.
Edward Effah is a Chartered Accountant by profession and is a member of the Institute of Chartered Accountants in England and Wales.

In this interview with Citi Business News Edward Effah explains why the bank performed creditably well in 2015 despite the many challenges that affected most banks.

Edward Effah - MD,Fidelity Bank

Edward Effah – MD,Fidelity Bank

Citi Business News: Fidelity Bank performed very well in 2015, making a profit of over 100% as against that of 2014, what led to this impressive performance?

Edward Effah:  We were able to grow our profit from 112 million cedis to 205million cedis in 2015 and a number of factors contributed towards this. As you are aware, we acquired Procredit in 2015, we saw significant growth in our business from both personal customers and from the SME sector, so the additional 25 branches we acquired contributed significantly towards the growth in the deposits portfolio.

We also launched a number of campaigns.

There was the save for gold campaign, we had an airtime campaign and these campaigns have all helped in bringing in incremental business and additional customers so we currently have a million customers, and that is from about 600,000 customers about a year and a half ago.

So all that has contributed towards our growth in the year 2015.

Citi Business News: A lot of banks were affected by the power crises as well as the country’s economic challenges. I’m sure you also faced those challenges, how were you able to sail through and record this impressive performance?

Edward Effah: Yes all banks have been affected by the difficult economic circumstances.

 In the last three years we have seen the country implement a number of austere measures, increases in utility prices, introduction of deregulation of the petroleum sector among others.

The power crises affected everybody and so we saw a number of SME’s and large corporates having to spend a lot of money on power.

We have seen a significant increase in the non-performing loan sector and the energy oil and gas sector and these are monies payable by VRA, ECG and other power utilities.

So we have also seen a deterioration of loans from the BDC’s, this is because government owes the BDC foreign exchange losses and under recoveries.

So the BDC’s are unable to pay the loans.

 But I believe this is being resolved through the energy sector levy act which has been passed and we hope that by the end of the year, a lot of progress would have been made towards this resolution.

effah 1

Citi Business News:  If you scan across quite a lot of local banks, many of them are talking about the same issue, the BDC’s. Many of them are trying to avoid giving out loans for 2016, will we see a similar situation from your bank?

Edward Effah:  Different banks have different exposures. In the energy, oil and gas sector, different banks have different exposures to Tema Oil Refinery to VRA, to ECG, to GRIDCO and even within the same entity, some loans are current, some loans are not. So I think it is very difficult to generalise.

Citi Business News:  What are you doing to push down the NPL figures for 2016?

Edward Effah:  We are focusing a lot on recoveries. I think the bank is focusing significantly on recoveries in 2016 as opposed to expanding our loan book.

So we are working very hard to recover a lot of outstanding loans.

Citi Business News:  We have seen quite a number of banks also increase their charges in terms of fees and commissions due to the cost in operations and economic challenges. Have your rates gone up yet?

Edward Effah:  We have different fees and charges in different segment of our business. Some of them are affected by power, some of them are affected by other costs which have gone up. So we will review each area and take a view depending on the economic circumstances.

So for example, if the cedi depreciates and you are buying ATM’s, you will probably have to increase your pricing for ATM because the cedi has depreciated.

If the cedi is stable, you may not have to.

So these are all the issues we take into account in pricing.

But as at now, we don’t have any plans to increase our pricing, but we could decide in three months’ time.

We need to increase this price because it is no longer economic. So we look at economic factors.

In one case for example, the taxes on cards went up, so we had to increase our card pricing so at least we recover something for our shareholders.

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Citi Business News: With the need to focus on loan recoveries following 2015’s challenges will we see you give a lot of attention to revenue growth?

Edward Effah: We do not plan significant growth in our revenues. This year we are focusing a lot on some recoveries, some cost cutting, building our infrastructural technology platform and modest growth in revenue.

Citi Business News: What returns should your shareholders expect in 2016?

Edward Effah:   If we look at our shareholders, they could have invested their money in treasury bills, in a house to earn rent. So it is important that we try and pay them something.

Those decisions, all these issues are taken into account in determining the level of dividend that we pay them. So we pay them something and we will review it on a case by case basis, year by year, depending on the strength of the economy, depending on the needs of the business and what we can afford to pay.

Citi Business News : How has the first quarter’s economic stability affected your operations?

Edward Effah:  We believe 2016 should be a stable year. As you are aware, we have seen stability with the power issue that should help business. We have seen the currency more stable. The cedi is one of the best performing currencies over the last six months and we hope that it will continue, it’s been around four for quite some time now. We have seen the government’s improvement in the finances of the government so the deficit is trending downwards. It was 7.1% in 2015 and we expect it to go down in 2016. So all these factors should augur well for the private sector and we hope it will mean the economy will stabilise and take off soon.

Citi Business News: The general election is coming up in November, some businesses have asserted they will withhold investment because they cannot really gauge how things will go, will it be the same for you?

Edward Effah:  Yes I think in every election year, one needs to take into account the election, but Ghana has had smooth elections year in, year out so we are optimistic that we will have a smooth election  and there is no cause for alarm.

Edward Effah - MD,Fidelity Bank

Edward Effah – MD,Fidelity Bank

Citi Business News: You want to invest heavily in technology this year, how much are you looking at?

Edward Effah:  We have embarked on a digital journey where we are seeing globally that people are using technology a lot, they deposit money, they transact so we are investing heavily in our internet banking portal and platform, we are investing heavily in our corporate banking platform, in mobile banking impulse and a lot of technology that will enable our customers bank at their convenience without having to go to the branch.

This is a trend, it will continue and we expect to see also a lot of Financial Technology (FINTEC), coming into the market so that we might be able to transfer money on Facebook and other things.

So with these new trends, it is important that we are positioned to be a leader in this area.


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