Fidelity Bank says its loan to deposit ratio above CBN 60% limit

Fidelity Bank Plc on Tuesday expressed continous support to the growth of Small and Medium Enterprises (SMEs).

The bank said that its loan to deposit ratio (LDR) was above the 60 per cent stipulated by the Central Bank of Nigeria (CBN).

Mr Gbolahan Joshua, the bank’s Chief Operation and Information Officer said this at the company’s SMEs forum in Lagos ahead of its Funding Connect Initiative.

The CBN recently mandated banks to maintain 60 per cent LDR effective Sept. 30, 2019, saying that the measure would ramp up growth in the Nigerian economy through adequate funding and investment in the real sector.

The apex bank in the circular to the banks, explained that SMEs, retail, mortgage and consumer lending would be assigned a weight of 150 per cent in computing the LDR in order to encourage them.

It noted that failure to meet the above minimum LDR by the specified date would result in a levy of additional Cash Reserve Requirement equal to 50 per cent of the lending shortfall on the target LDR.

Joshua said that the bank’s LDR was already above the apex bank’s 60 per cent limit.

“The LDR limit is 60 per cent, we are already above the LDR limit, we don’t need to do any new lending to meet the LDR limit.

“If you look at Fidelity in the last five years, every single year even during recession we have always grown our loan book.

“We never stop lending, so we are not affected by this minimum policy and that doesn’t mean that we are going to scale down, we will still continue to lend, as you can see we are having a programme, the SMEs Funding Connect.

“This programme is not about growing our loan book, its actually about supporting the SMEs,’’ he said.

Joshua said that the bank had maintained healthy non-performing loans (NPLS) books due to robust risk management framework.

“Our NPLS are below six per cent, our cost of risk below one per cent last year, actually about 0.5 per cent.

“In a normalised level, our cost of risk is usually about one per cent.

“We do risk in a very structured manner, before we lend to any sector, we first evaluate the sector and we have a much defined sector limit and very robust risk management framework,’’ he added.

Speaking on the bank’s SMEs Funding Connect Initiative, Joshua said that the programme with the theme; “Entrepreneurs Meet Capital’’ would enable SMEs to meet with funders, business models and business people.

He said that the programme slated for Aug. 7, would offer SMEs networking opportunities aimed at taking their businesses to the next level.

Joshua said that the selection and short listing of successful SMEs would be done by the bank’s partners, PwC.

“PwC who are our partners will shortlist about 50 people and those 50 SMEs will be on intensive training at the experience centre with PwC,’’ he added.

Joshua noted that 10 people out of the 50 would be shortlisted for the semi-final.

He noted that the number would be trimmed down to five finalists that would compete for prizes.

“Those finalists will now go for the event on Aug. 7, and pitch to panel of judges where three winners will be selected. First person wins N2 million, while second and third N1 million each,’’ Joshua said.

Also speaking, Mr Kenneth Opara, the bank’s Regional Head, Ikeja branch, said that Fidelity Bank recognised the value of the Micro-Small Medium Enterprises (MSMEs) to the economy.

Opara said that MSMEs were agents of growth in every economy across the world.

“SMEs in Nigeria contribute more than 48 per cent to the country’s Gross Domestic Product (GDP) and 80 per cent to the workforce and that is very important.

“For us at Fidelity Bank, we think that it is important to support these critical sectors and provide them with a platform,’’ he said.