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Recession would have lasted if CBN had devalued naira—Okonkwo, Fidelity Bank MD

More reasons why Nigeria’s exit from recession was seamless are still emerging.

Explaining issues during a recent interactive session with select editors and publishers in Lagos, the managing director of Fidelity Bank Plc, Mr. Nnamdi Okonkwo said one of the best steps taken by the Central Bank of Nigeria’s (CBN) Governor, Mr. Godwin Emefiele at the heat of recession was not falling to the pressure of devaluing the naira.

He said “On the monetary side, I want to commend the Governor of the CBN, Mr. Godwin Emefiele, and his team because they were under intense pressure to devalue the Naira, but they stayed focused to address the issue from the retail end of the market by opening up a window where banks were given $2million weekly to enable individuals buy foreign exchange (FX) to pay the tuition fees of their children in foreign higher institutions, and before you knew it, the exchange rate dropped from N520 per dollar to about N370 presently”.

“Besides tuition fees, the apex bank also allowed SMEs and operators in the aviation industry to have access to foreign exchange, but perhaps the most significant move by CBN in stabilising the currency was the introduction of Investor/Exporter FX window, which has resulted in major inflows by portfolio foreign investors.

However, Okonkwo was quick to caution that it is not yet uhuru as the exit from recession is still at embryonic stage, saying “Let us take the news of being out recession with caution and not celebrate yet”.

“The Federal Government has started the Economic Recovery & Growth Plan (ERGP). It is the disciplined execution of that plan that matters for now,” Fidelity bank boss averred.

Giving more insights of the bank following its good half year performance, Okonkwo noted that “Despite the remarkable performance of Fidelity Bank in the first half of the year, there was a slight decline in the deposit base what was responsible for this”.

“We had a slight drop in deposits because of the high yield in treasury bills and bonds, which attracted depositors to migrate to such instruments. Secondly, we deliberately took a decision to optimise our balance sheet because we do not want to be known as a bank with a big balance sheet without efficient returns.

“Therefore, although we could grow our deposit by say N20 billion, using expensive deposits but profit and returns will suffer. The half-year result showed that we are producing more revenue with fewer assets, and we are springing out more revenue with a more efficient Balance Sheet.

Finally, our numbers depict a substitution situation where the major area of growth is now in low cost deposits, which currently account for 75 per cent of our total deposit base.

On the bank’s outlook for the rest of the year, the managing director disclosed that “our half year audited accounts made us happy, but we are not relenting in our quest to deliver even better returns. Therefore, we will stay focused on executing our strategies so that the full year results will meet expectations”.

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