#1Fidelity Fidelity Bank Investor Presentation Audited Financial Results for the 6 months ended June 30, 2020 www.fidelitybank.ng#2Outline 1. Overview of Fidelity Bank 2. The Operating Environment 3. Financial Highlights 4. Financial Review 5. H1 2020 Actual Vs. 2020FY Guidance 2 www.fidelitybank.ng#31. Overview of Fidelity Bank ✓ Fidelity 3 CONGRATS IVY, NO. 1 CHATBOT IN NIGERIA KPMG Digital Channel Scorecard, 2020#4Overview of Fidelity Bank Ownership Total Assets: N2,403bn $6.2bn 32.0bn Authorized Shares Issued And Fully Paid 28.96bn Operations & Contact Channels Governance 14 Board Members Non-Executives: 7 Executives: 7 Listings: 28.96bn Shares THE Nigerian STOCK EXCHANGE FMDQ OTC Securities Exchange RC: 2321 7yr N30bn May 2022 NGN Bonds Irish Stock Exchange $400m Oct 2022 Eurobond 834 ATMs Bank Ho 2.2m Cards Professional Staff 2.869 Male: 55% Female: 45% 5.4 Million Accounts 2.7m Mobile Customers CARDHOLDER 250 Branches 5 Board Committees 11,653 POS Fitch Ratings B- (Watch) S&P Global B- (Stable) Executive Management Team 9 GCR GLOBAL CREDIT RATING CO. A-NG (Watch) Local Expertise Global Presence www.fidelitybank.ng#5Overview of Fidelity Bank Retail And Digital Banking Evolution / Progress Report Number of Customer Accounts (#'m) Savings deposits (N'bn) 17% 2% 15% 8% 5.3 5.4 4.5 3.6 3.9 Retail Risk Assets (N'bn) -22% -16% 32% 21% 28% 363.9 15% 57.2 275.2 228.0 44.8 155.0 178.6 37.6 43% -5% 53.8 51.2 2016 2017 2018 2019 H1 2020 2016 2017 2018 2019 H1 2020 2016 2017 2018 2019 Hồ 2020 Mobile/Internet Banking Cust. (#'000) Number of Debit Cardholders (#'000) 10% 31% 2% 11% 1% 38% 2,741 14% 2,488 2,206 2,230 69% 1,937 1,982 1,906 795 906. 1,701 1,382 513 820 345 184 1,036 1,393 1,693 1,835. 636 2016 2017 2018 2019 H1 2020 2016 2017 2018 2019 H1 2020 ■Internet Banking ■Mobile Banking 5 Commentary Sustained annual double-digit growth in savings deposits and on course to achieve the 7th consecutive double-digit growth. ►87.3% of customers transactions are now done on electronic banking channels. ► Fidelity chatbot, Ivy was rated as the clear leader amongst Nigerian banks in the 2020 KPMG Digital Channel Scorecard. ▸ Our flagship mobile banking product (*770%) was also rated in the top tier category in the scorecard. www.fidelitybank.ng#62. The Operating Environment Fidelity Dial *770# To Pay Bills *770# 9 www.fidelitybank.ng#7The Operating Environment Stable - Improving - Declining - GDP dropped by -6.1% in Q2 from 1.9% in Q1 2020. Moderate growth in credit to the Private Sector due to rising risk Improving opportunities for key select sectors as the economy recovers Yields have stabilized at a new normal-level Hike in pump price / electricity tariff could spike political risk Naira still under pressure though the CBN has commenced FX sale Declining FDI on account of Covid-19 and market outlook Deposit growth remains positive as economic activities return Increased uncertainty around the stability of monetary policy rates Oil prices stabilized above $40 per barrel; Brent spot currently at $42.4pb. 7 www.fidelitybank.ng#8COVID - 19: Notable Measures Implemented Two Committees headed by Executive Directors were setup to focus on the impact of the pandemic on our Business Strategy and Business Continuity Business Strategy Conducted early assessment of the pandemic based on 3 scenarios: Base Case: the pandemic is contained within 3M and the economy reopens in July Moderate Case: the pandemic is contained in 6M and the economy reopens in Oct. Worst Case: the pandemic remains above 6M but the economy reopens in 2021. ✰ Stress test revealed a 15% - 30% negative impact on PBT from the Base Case to the Worst Case Scenario. Granted moratorium and reviewed lending rate downward for specific sector/customers. * Obtained varying palliatives from DFIs on on- lending facilities granted to customers. Business Continuity Introduced new Covid-19 protocol that limited both staff and customers' footprint at our business locations. Implemented new health and safety measures for staff and customers. Commenced remote working with at least 50% of staff working from home. Prior investment in technology enabled seamless remote working & collaboration. Migrated additional services to the cloud in line with the remote working protocol. Activated new IT Security protocols in view of the changing cyber-risk landscape. 8 www.fidelitybank.ng#93. Financial Highlights Sore Throat Sneezing Corona Virus Symptoms Coughing Fever Headache If you have any of these symptoms, please do well to isolate yourself. Contact Nigerian Center for Disease Control on 0800 970000 (Toll-Free) For more information contact: Human Resources f You O Tube in ✓ Fidelity#10Financial Highlights ☐ Gross earnings increased by 2.0% YoY to N105.8bn driven largely by a combination of 17.8% growth in non- interest income to N18.3bn and 2.1% increase in interest and similar income to N87.6bn which accounted for 82.9% of total earnings. Net interest margin (NIM) improved to 6.4% from 6.2% in 2019FY (Q1 2020: 6.6%) on account of a 200bpts drop in average funding cost to 4.3% from 6.3% in 2019FY. This translated to a 19.7% drop in total interest expenses despite a 11.4% increase in interest bearing liabilities. ☐ Total operating income increased by 27.1% to #66.6bn while total operating expenses increased by 8.3% to N46.8bn largely due to increased regulatory costs. However, growth in operating expenses remains below headline inflation rate with cost-to-income ratio moderating to 70.3% from 73.4% in 2019FY. ☐ PBT increased by 21.9% to N12.0bn from №9.8bn in H1 2019, despite a N8.5bn increase in impairment charge from a write-back of NO.6bn in H1 2019 to №7.8bn. □ We restated our H1 2019 Numbers to reflect first-time adoption of IFRIC 21 – Levies which led to a reduction in H1 2019 PBT from N15.1bn to №9.8bn and the recognition of Full-Year 2020 AMCON Cost in H1 2020. PBT would have come in at N17.9bn in H1 2020 Vs. N15.1bn in H1 2019 without the adoption of IFRIC 21. 10 www.fidelitybank.ng#11Financial Highlights □ Consistent with recent naira devaluations, we now mark our FCY books with an exchange rate of N386.75/$ which had a 1.4% and a 2.8% growth impact on total deposits and net loan book respectively. □ Total deposits increased by 14.8% YTD to #1,405.9bn from ¥1,225.2bn in 2019FY as we recorded strong growth across all deposit products. LCY deposits came in at N1,105.2bn representing 76.1% of total deposits while FCY deposits increased by 4.2% to N300.8bn and now accounts for 21.4% of total deposits. □ Savings deposits increased by 32.2% YTD to #363.9bn from N275.2bn in 2019FY and now accounts for 25.9% of total deposits from 22.5% in 2019FY. Savings was responsible for 49.1% growth in total deposits. ☐ Net loan book increased by 7.3% YTD to N1,209.1bn from N1,127.0bn in 2019FY. However, actual growth in loans was 4.5% while the impact of naira devaluation resulted in 2.8% growth. Loan to funding ratio is now 65.9% (while the weighted position is 69.8%) from 68.2% in 2019FY which stood well above the new minimum LDR threshold of 65.0%. □ Capital adequacy ratio (CAR) improved to 18.8% from 18.3% in 2019FY with the capitalization of H1 2020 profit. CAR remains well above of our internal guidance of 16.0% and the regulatory minimum of 15.0%. 11 www.fidelitybank.ng#12Performance Highlights Revenue and Efficiency Ratio ☐ Net Interest Income up by 31.0% to N48.3 billion in H1 2020 (H1 2019: N36.9 billion) Operating Expenses up by 8.3% to N46.8 billion in H1 2020 (H1 2019: N43.3 billion) ☐ Cost to Income Ratio dropped to 70.3% in H1 2020 from 73.4% in 2019FY PBT up by 21.9% to N12.0 billion in H1 2020 (PAT came in at N11.3 billion) Asset Quality Cost of Risk was up to 1.3% in H1 2020 from -0.1% in 2019FY ☐ NPL Ratio up to 4.8% in H1 2020 from 3.3% in 2019FY ☐ Coverage Ratio was down to 112.7% in H1 2020 from 169.1% in 2019FY □ FCY Loans accounted for 45.7% of Net Loan Book from 41.2% in 2019FY Capital Adequacy and Liquidity Capital Adequacy Ratio (IFRS 9 - Full Impact) improved to 18.8% from 18.3% in 2019FY ☐ Liquidity Ratio of 32.1% remains above the regulatory minimum of 30.0% □ Gross Loans to Funding Ratio stood at 65.9% (Weighted: 69.8%) from 68.2% in 2019FY Total Equity at N250.7 billion compared to N234.0 billion in 2019FY 12 www.fidelitybank.ng#13Financial Highlights Summary of Income Statement: YoY Change N'million H1 2019 H1 2020 VAR % VAR Gross Earnings 103,655 105,755 2,100 2.0% Interest Income Loans 62,085 63,713 1,628 2.6% Interest Income Liquid Assets 23,745 23,909 164 0.7% Total Interest Income 85,830 87,622 1,792 2.1% Interest Expense Customer Deposits (35,672) (26,268) (9,404) -26.4% Interest Expense Borrowings (13,259) (13,034) (225) -1.7% Total Interest Expense (48,931) (39,302) (9,629) -19.7% Net Interest Income 36,899 48,320 11,421 31.0% FX Income 4,501 8,319 3,818 84.8% Digital Income 4,469 3,170 (1,299) -29.1% Other Fee Income (Net) 6,582 6,836 254 3.9% Net Fee Income 15,553 18,325 2,772 17.8% Operating Income 52,452 66,645 14,193 27.1% Total Expenses (43,261) (46,841) 3,580 8.3% Net Impairment Losses 621 (7,841) 8,462 1362.6% Profit Before Tax 9,812 11,963 2,151 21.9% Please note: Gross earnings was calculated based on total fees & commission income Net fee income includes net gains/(losses) from financial instruments 13 www.fidelitybank.ng#14Financial Highlights Summary of Income Statement: QoQ Change N'million Q1 2020 Q2 2020 VAR % VAR Gross Earnings 51,159 54,596 3,437 6.7% Interest Income Loans 32,340 31,373 (967) -3.0% Interest Income Liquid Assets 11,586 12,323 737 6.4% Total Interest Income 43,926 43,696 (230) -0.5% Interest Expense Customer Deposits (12,673) (13,595) 922 7.3% Interest Expense Borrowings (6,653) (6,381) (272) -4.1% Total Interest Expense (19,326) (19,976) 650 3.4% Net Interest Income 24,600 23,720 (880) -3.6% FX Income 1,965 6,354 4,389 223.4% E-banking Income 1,624 1,546 (78) -4.8% Other Fee Income (Net) 2,126 4,710 2,584 121.5% Net Fee Income 5,715 12,610 6,895 120.6% Operating Income 30,315 36,330 6,015 19.8% Total Expenses (21,628) (25,213) 3,585 16.6% Net Impairment Losses (2,103) (5,738) 3,635 172.8% Profit Before Tax 6,583 5,380 (1,204) -18.3% Please note: Gross earnings was calculated based on total fees & commission income Net fee income includes net gains/(losses) from financial instruments 14 www.fidelitybank.ng#15Financial Highlights Statement of Financial Position: YTD Change N'million 2019FY H1 2020 VAR % VAR Total Assets Earning Assets Bank Placements Treasury Bills Bonds Customer Loans (Naira) 2,114,037 2,403,234 289,197 13.7% 1,474,252 1,578,092 103,840 7.0% 55,812 70,443 14,631 26.2% 183,363 206,816 23,453 12.8% 108,103 91,731 (16,372) -15.1% 662,214 656,165 (6,049) -0.9% Customer Loans (FCY) 464,760 552,937 88,177 19.0% Non-Earning Assets 639,785 825,142 185,357 29.0% Cash 31,658 30,430 (1,228) -3.9% Cash Reserve 343,346 487,861 144,515 42.1% Bal. with other Banks/Settlement Acct 179,932 217,362 37,430 154.0% Fixed Assets 38,392 38,275 (117) -0.3% All Other Assets 46,457 51,214 4,757 10.2% Interest Bearing Liabilities 1,726,938 1,923,814 196,876 11.4% Demand 691,610 706,356 14,746 2.1% Savings Time Deposits Other Borrowings 275,219 363,920 88,701 32.2% 258,384 335,669 77,285 29.9% 76,308 75,788 (520) -0.7% On-lending Facilities 250,139 255,996 5,857 2.3% Debt Securities 175,278 186,085 10,807 6.2% All Other Liabilities 153,069 228,731 75,662 49.4% Equity 234,030 250,689 16,659 7.1% Please note: The Balance Sheet was converted at an exchange rate of #386.75/USD 15 www.fidelitybank.ng#16Gross Earnings Analysis N'million H1 2019 Hồ 2020 VAR % VAR Total Earnings: H1 2019 Total Earnings: H1 2020 Total Earnings 103,655 105,755 2,100 2.0% Maint. Fee, 2% Trade, 1% Maint. Fee, 1% Interest Income Loans 62,085 63,713 Digital, 4% Others, 6% Digital, 3% Trade, 1% Others, 4% 1,628 2.6% FX Income, 4% FX Income, 8% Int. Inc. Liquid Assets 23,745 23,909 164 0.7% FX Income 4,501 8,319 3,818 84.8% Digital Income 4,469 3,170 (1,299) -29.1% A/C Maintenance fee 1,683 1,248 (435) -25.9% Trade Income 1,204 783 (421) -35.0% Other Income 5,967 4,613 (1,354) -22.7% Int. Inc. Liquid Assets, 23% Int. Income Loans, 60% Int. Inc. Liquid Assets, 23% Int. Income Loans, 60% N'million Q1 2020 Q2 2020 VAR % VAR Total Earnings: Q1 2020 Total Earnings: Q2 2020 Total Earnings 51,159 54,596 3,437 6.7% Maint. Fee, 1% Trade, 1% Maint. Fee, 1% Trade, 0% Digital, 3% Interest Income Loans Int. Inc. Liquid Assets 11,586 32,340 31,373 (967) 12,323 -3.0% Others, 5% Digital, 3% Others, 4% FX Income, 4% FX Income, 12% 737 6.4% FX Income 1,965 6,354 4,389 223.4% Digital Income 1,624 1,546 (78) -4.8% A/C Maintenance fee 735 513 (222) -30.2% Trade Income 543 240 (303) -55.8% Other Income 2,366 2,247 (119) -5.0% Int. Inc. Liquid Assets, 23% Int. Income Loans, 63% Int. Inc. Liquid Assets, 23% Int. Income Loans, 57% Though interest income on loans grew by 2.6% YoY in H1 2022, it dropped by 3.0% QoQ in Q2 due to further downward review of our lending rates especially on loans backed by DFI funds. QoQ drop in specific non-interest income lines (e.g. trade income & acct. maintenance) reflects the slowdown in the economy in Q2. 16 www.fidelitybank.ng#17Net Interest Margin Analysis ▸ NIM improved to 6.4% from 6.2% in 2019FY, largely due a 200bps drop in average funding cost despite a drop in yields on earnings assets. ► Drop in average funding cost was due to a combination of 270pbts decline in average cost of deposits to 4.0% and 40bpts drop in average borrowing cost to 5.1%. ► Moderation in yields on earning assets was largely caused by a lower average lending rate which stood 11.0%. NIM Trend 6.6% 5.8% 6.0% 6.2% 6.4% ▸ We expect the recent downward review of savings rate would have about 20bpts positive impact on NIM. H1 2019 9M 2019 2019FY Q1 2020 H1 2020 Yield on Earning Assets Funding Cost 13.5% 13.8% 13.6% 6.6% 6.7% 6.3% 11.8% 11.5% 4.4% 4.3% H1 2019 9M 2019 2019FY Q1 2020 H1 2020 H1 2019 9M 2019 2019FY Q1 2020 H1 2020 17 www.fidelitybank.ng#18Total Expense Analysis N'million H1 2019 H1 2020 VAR % VAR Total Expenses: H1 2019 Total Expenses: H1 2020 Total Expenses 43,261 46,841 3,580 8.3% Others Exp., Staff Cost 32% Staff Cost, 27% Others Exp., 31% Staff Cost, 26% 11,675 12,190 515 4.4% Depreciation 2,377 3,030 653 27.5% NDIC/AMCON Cost 12,844 14,615 1,771 13.8% Technology Cost 1,696 1,755 59 3.5% Energy Cost 750 612 -138 -18.4% Energy, 2% Energy, 1% Security 453 666 213 47.0% Technology Cost, 4% Branding & Advert 4,430 4,645 215 4.9% Depreciation, 5% Technology Cost, 4% Depreciation, 6% Other Expenses 9,036 9,328 292 3.2% Regulatory, 30% Regulatory, 31% N'million Q1 2020 Q2 2020 VAR % VAR Total Expenses: Q1 2020 Total Expenses: Q2 2020 Total Expenses 21,628 25,213 3,585 16.6% Others Exp., 38% Staff Cost 6,398 5,792 -606 -9.5% Staff Cost, 30% Others Exp., 25% Staff Cost, 23% Depreciation 1,415 1,615 200 14.1% NDIC/AMCON Cost 4,285 10,330 6,045 141.1% Technology Cost 920 835 -85 -9.2% Energy, 1% Energy, Energy Cost 330 282 -49 -14.8% 2% Security 335 331 -4 -1.2% Branding & Advert 2,659 1,986 -673 -25.3% Other Expenses 5,286 4,042 -1,244 -23.5% Technology Cost, 4% Depreciation, 7% Technology Cost, 3% Depreciation, 6% Regulatory, 20% Regulatory, 41% Regulatory Costs (AMCON/NDIC) was responsible for about 50.0% YoY growth in OPEX in H1 2020. Most operating expense lines dropped on QoQ due to cost savings from remote working as staff reliance on the banks physical infrastructure as well as maintenance moderated. 18 www.fidelitybank.ng#194. Financial Review - SFP Please do not miss it! FIDELITY WEEKLY BY FIDELITY BANK A Weekly Dose of Entertainment 19 DELITY WEEKLY f in U @fidelitybankplc#20Funding Base Analysis N'million 2019FY H1 2020 VAR % VAR Funding Structure: 2019FY Demand Deposits 691,610 706,356 14,746 2.1% Debt, 9% Funding Structure: H1 2020 Equity, 12% Debt, 9% Equity, 12% Savings Deposits 275,219 363,920 88,701 32.2% Tenor Deposits 258,384 335,669 77,285 29.9% Demand, 32% Other Borrowings On-Lending 76,308 75,788 250,139 255,996 (520) -0.7% 5,857 2.3% On-lending, 13% Demand, 35% On-lending, 12% Debt Securities 175,278 186,085 10,807 6.2% Equity Savings, 17% Total 234,030 250,689 1,960,968 2,174,503 16,659 7.1% Savings, 14% 213,535 10.9% Other Borrowings, 4% Time, 13% Other Borrowings, 3% Time, 15% N'million H1 2019 H1 2020 VAR % VAR Funding Structure: H1 2019 Funding Structure: H1 2020 Demand Deposits 561,066 Savings Deposits 247,672 Tenor Deposits Other Borrowings On-Lending 288,273 89,578 234,903 Debt Securities Equity 46.9% 335,669 47,396 16.4% 75,788 (13,790) -15.4% 255,996 21,093 9.0% 173,420 186,085 12,665 215,566 250,689 35,123 706,356 363,920 116,248 145,290 25.9% Debt, 10% Equity, 12% Debt, 9% Equity, 12% Demand, 32% On-lending, 13% Demand, 31% On-lending, 12% Total 1,810,478 2,174,503 364,025 7.3% 16.3% 20.1% Savings, 14% Savings, 17% Other Borrowings, 5% Time, 16% Other Borrowings, 3% www.fidelitybank.ng Time, 15% Total funding base was boosted by 14.8% YTD growth in total deposits; low-cost deposits accounted for 57.2% of the growth in deposits. Total deposits now represents 64.7% of total funding base (2019FY: 62.5%) and 73.1% of interest-bearing liabilities (2019FY: 70.9%) 20 20#21Deposits Analysis ► Total customer deposits increased by 14.8% to N1,405.9bn from N1,225.2bn in 2019FY. ► However, actual growth was 13.4% while the impact of FX rate adjustment accounted for 1.4% growth in deposits. ► LCY deposits grew by 18.0% to 1,105.2bn and was responsible for 93.2% of the absolute growth in total deposits. ▸ FCY deposits increased by 4.2% and now accounts for 21.4% of total deposits. ▸ FCY deposits dropped by 6.2% QoQ due to late withdrawals from customers to bridge temporary liquidity strain for trade. Deposits by Products - 2019FY Vs. H1 2020 N'billion 691.6 706.4 363.9 275.2 335.7 258.4 Total Deposits N'billion 19.6% 23.6% 23.6% 23.7% 21.4% 1,352.3 1,405.9 1,225.2 1,097.0 1,116.4 300.8 320.8 288.6 215.5 263.2 881.6 853.2 936.6 1,031.4 1,105.2 H1 2019 ■LCY Deposits 9M 2019 2019FY Q1 2020 H1 2020 ■FCY Deposits ■% FCY Deposits Time Deposit 23.9% 1,405.9 1,225.2 Demand Savings Time Total Deposits 2019FY TH1 2020 24 21 Deposits by Products - H1 2020 Savings Deposit 25.9% Demand Deposit 50.2% www.fidelitybank.ng#22Retail Banking Analysis (Personal Banking) ▸ Savings deposits grew by 32.2% YTD and now represent 25.9% of total deposits from 22.5% in 2019FY. ► Savings has continued to benefit from the current low yield environment especially in the fixed income market. ► Current growth in retail loans was largely through a combination of our proprietary online retail platform and partnership with FINTECHS. ► Retail assets will tick up further QoQ in H2 2020 as economic activities increase gradually. Savings Deposits Trend N'billion 22.6% 22.3% 22.5% 23.1% 25.9% 363.9 312.1 275.2 247.7 248.9 H1 2019 9M 2019 ■Savings Deposits 2019FY Q1 2020 H1 2020 % Share of Total Deposits Retail Low Cost Deposits Retail Assets Trend N'billion N'billion 40.9% 37.7% 37.0% 37.7% 41.8% 3.7% 4.2% 4.6% 4.1% 4.0% 446.9 53.8 50.4 51.2 395.1 47.2 358.2 330.6 331.8 39.2 H1 2019 9M 2019 2019FY ■Retail Deposits Q1 2020 H1 2020 H1 2019 9M 2019 2019FY Q1 2020 H1 2020 ■% Share of Low Cost Deposits ■Retail Assets ■% Share of Total Loan Book 22 22 www.fidelitybank.ng#23Liquid Assets Position Short-term Funds Placements Treasury Bills Bonds 30.6% 2.9% As a % of Total Assets Liquidity Ratio 8.6% 3.8% As a % of Total Assets As a % of Total Assets As a % of Total Assets Gross Loans to Funding Ratio 34.8% 35.0% 68.4% 68.2% 65.8% 66.0% 65.9% 32.6% 31.6% 32.1% 30.0% 30.0% 30.0% 30.0% 30.0% H1 2019 9M 2019 Fidelity LR 2019FY Q1 2020 Regulatory Minimum H1 2020 H1 2019 9M 2019 2019FY Q1 2020 H1 2020 Liquidity Ratio has been sustained above the regulatory minimum of 30.0% with 69.4% of eligible liquid assets invested in T-bills and FGN bonds from 60.0% in 2019FY. LDR stood at 65.9% from 68.2% in 2019FY but it improved to 69.8% after weighting all permissible loans: Mortgage | SME | Consumer loans. 23 www.fidelitybank.ng#24Loan Portfolio Analysis Breakdown of Loans & Advances to Customers: 2019FY Vs. H1 2020 N'million Communication Oil and Gas 2019FY 32,416 H1 2020 VAR % VAR 31,521 -895 - 2.8% 244,799 309,576 64,778 26.5% Upstream - Downstream Services Power 132,860 145,864 13,003 9.8% 52,203 88,587 36,383 69.7% 59,735 75,126 15,391 25.8% 118,413 127,925 9,512 8.0% Manufacturing 215,707 209,632 -6,075 - 2.8% General Commerce 98,976 115,244 16,268 16.4% Transport 135,991 144,476 8,484 6.2% Consumer (Individuals) 53,786 51,197 -2,589 - 4.8% Government 150,086 137,442 -12,644 - 8.4% Construction 35,594 37,000 1,406 4.0% Agriculture 32,931 37,896 4,965 15.1% Real Estate 26,495 26,508 13 0.1% Education 5,159 5,644 485 9.4% Finance and Insurance 4,508 1,743 -2,764 - 61.3% Others 23,529 31,483 7,955 Total 1,178,389 1,267,289 88,900 33.8% 7.5% 24 24 www.fidelitybank.ng#25Loan Portfolio Analysis Breakdown of Loans & Advances to Customers by Currency N'million Communication FCY 1,561 LCY Total % FCY % LCY 29,961 31,521 0.3% 4.2% Oil and Gas Upstream - Downstream Services 235,255 74,321 309,576 42.9% 10.3% 144,916 948 145,864 26.4% 0.1% 33,627 54,959 88,587 6.1% 7.6% 56,712 18,414 75,126 10.3% 2.6% Power 63,540 64,385 127,925 11.6% 9.0% Manufacturing 97,192 112,439 209,632 17.7% 15.6% General Commerce 21,056 94,188 115,244 3.8% 13.1% Transport 123,813 20,663 144,476 22.6% 2.9% Consumer (Individuals) 608 50,589 51,197 0.1% 7.0% Government 0 137,442 137,442 0.0% 19.1% Construction 2,237 34,764 37,000 0.4% 4.8% Agriculture 795 37,101 37,896 0.1% 5.2% Real Estate 0 26,508 26,508 0.0% 3.7% Education 32 5,611 5,644 0.0% 0.8% Finance and Insurance 1,743 1,743 0.0% 0.2% Others 2,678 28,806 31,483 0.5% 4.0% Total 548,767 718,522 1,267,289 43.3% 56.7% 25 www.fidelitybank.ng#26Loan Portfolio Analysis Breakdown of Loans & Advances to Customers Agriculture, 3.0% Others, 5.2% N'million Q3 2019 Q4 2019 Q1 2020 Q2 2020 Communication Construction, 2.9% 29,203 Oil and Gas 30,121 254,790 244,799 281,720 32,416 31,521 309,576 Oil & Gas: Service, 5.9% Upstream 131,307 132,860 139,742 145,864 - Downstream 62,358 52,203 68,551 88,587 Loan Analysis - H1 2020 Government, 10.8% Communication, 2.5% Oil & Gas: Upstream, 11.5% Power, 10.1% - Services 61,125 59,735 73,426 75,126 Consumer, 4.0% Power 117,900 118,413 127,068 127,925 Oil & Gas: Downstream, 7.0% Manufacturing 216,710 215,707 210,770 209,632 Gen. Commerce 94,314 98,976 100,915 115,244 Transport, 11.4% Manufacturing, 16.5% Gen. Commerce, 9.1% Transport 131,777 135,991 142,072 144,476 Loan Analysis - 2019FY Consumer 47,185 53,786 50,375 51,197 Construction,. Government 108,690 150,086 137,674 137,442 3.0% Agriculture, 2.8% Others, 5.1% Construction 34,995 35,594 36,736 37,000 Agriculture 29,773 32,931 35,954 37,896 Oil & Gas: Service, 5.1% Real Estate 28,347 26,495 27,076 26,508 Government, 12.7% Education 5,082 5,159 5,029 5,644 Consumer, 4.6% Fin. & Insurance 4,634 4,508 1,471 1,743 Others 23,061 23,529 31,918 31,483 Total 1,126,460 1,178,389 1,218,897 1,267,289 Oil & Gas: Downstream, 4.4% Communication, 2.8% Oil & Gas: Upstream, 11.3% Power, 10.0% Manufacturing, 18.3% Gen. Commerce, 8.4% Transport, 11.5% 26 www.fidelitybank.ng#27Loan Book Analysis Net loans & advances increased by 7.3% YTD to N1,209.1bn, with 84.1% of the loan book in term loans. ▸ Adjustment of the exchange rate from N364.7 to N386.8 accounted for 38.4% (N31.5bn) of the loan growth. Net Loans and Advances to Customers N'billion 60.9% 56.4% 58.8% 57.0% 54.3% 1,127.0 1,165.8 1,209.1 1,074.1 999.3 ▸ FCY loans now constitute about 45.7% of the net loan book (total loan book: 43.3%) from 41.2% in 2019FY. 464.8 501.2 552.9 390.9 468.1 ► Drop in LCY loans by 0.9% YTD came from 4 key sectors: Manufacturing, Consumer, Finance and Insurance, and Public Sector. Total Loans by Type – 2019FY Lease Finances,. 3.9% Term Loans, 84.7% 608.5 606.0 662.2 664.6 656.2 H1 2019 9M 2019 2019FY Q1 2020 H1 2020 ■LCY Loans ■FCY Loans ■% LCY Loans Total Loans by Type - H1 2020 Overdrafts, 11.5% Lease Finances, 2.5% 27 Term Loans, 84.1% Overdrafts, 13.4% www.fidelitybank.ng#28Loan Book Breakdown - Stage 1|2|3 Breakdown of Loans & Advances to Customers N'million Communication Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total 25,936 1,571 4,014 31,521 82.3% 5.0% 12.7% 2.5% Oil and Gas 177,433 112,834 19,309 309,576 57.3% 36.4% 6.2% 24.4% Upstream 70,937 74,926 0 145,864 48.6% 51.4% 0.0% 11.5% - Downstream 58,835 10,909 18,843 88,587 66.4% 12.3% 21.3% 7.0% Services 47,661 26,998 467 75,126 63.4% 35.9% 0.6% 5.9% Power 2,631 125,294 0 127,925 2.1% 97.9% 0.0% 10.1% Manufacturing 184,759 15,267 9,606 209,632 88.1% 7.3% 4.6% 16.5% General Commerce 106,789 4,277 4,178 115,244 92.7% 3.7% 3.6% 9.1% Transport 108,175 26,352 9,949 144,476 74.9% 18.2% 6.9% 11.4% Consumer 46,853 332 4,012 51,197 91.5% 0.6% 7.8% 4.0% Government Construction 136,178 1,100 164 137,442 99.1% 0.8% 0.1% 10.8% 33,138 0 3,863 37,000 89.6% 0.0% 10.4% 2.9% Agriculture 34,027 685 3,184 37,896 89.8% 1.8% 8.4% 3.0% Real Estate 25,811 314 383 26,508 97.4% 1.2% 1.4% 2.1% Education 4,741 435 468 5,644 84.0% 7.7% 8.3% 0.4% Finance & Insurance 1,739 0 1,743 99.7% 0.0% 0.3% 0.1% Others 25,379 3,906 2,198 31,483 80.6% 12.4% 7.0% 2.5% Total 913,588 292,367 61,334 1,267,289 72.1% 23.1% 4.8% 100.0% % Share of Total 72.1% 23.1% Coverage Ratio 0.9% 5.1% 4.8% 57.2% 100.0% 4.6% 28 28 www.fidelitybank.ng#29CBN Forbearance: Scenario Analysis Breakdown of CBN Forbearance N'million Total Loans Base Moderate Worst Base Moderate Worst Communication 31,521 2,287 4,573 6,860 7.3% 14.5% 21.8% Oil and Gas 309,576 73,428 146,855 220,283 23.7% 47.4% 71.2% - Upstream Downstream 145,864 46,581 93,162 139,742 31.9% 63.9% 95.8% 88,587 10,638 21,276 31,914 12.0% 24.0% 36.0% Services 75,126 16,209 32,417 48,626 21.6% 43.2% 64.7% Power 127,925 42,110 84,219 126,329 32.9% 65.8% 98.8% Manufacturing 209,632 46,699 93,399 140,098 22.3% 44.6% 66.8% General Commerce 115,244 22,718 45,436 68,154 19.7% 39.4% 59.1% Transport 144,476 46,447 92,895 139,342 32.1% 64.3% 96.4% Consumer 51,197 476 951 1,427 0.9% 1.9% 2.8% Government Construction 137,442 45,542 91,084 136,626 33.1% 66.3% 99.4% 37,000 12,261 24,523 36,784 33.1% 66.3% 99.4% Agriculture 37,896 9,774 19,549 29,323 25.8% 51.6% 77.4% Real Estate 26,508 8,634 17,267 25,901 32.6% 65.1% 97.7% Education 5,644 604 1,208 1,812 10.7% 21.4% 32.1% Finance & Insurance 1,743 109 218 327 6.3% 12.5% 18.8% Others 31,483 8,881 17,761 26,642 28.2% 56.4% 84.6% Total 1,267,289 319,969 639,938 959,907 25.2% 50.5% 75.7% We modelled for the scenarios above by considering any change in the 4 parameters below for each obligor in the Loan book: Interest Rate Review | Tenor Extension | Principal Moratorium | Interest Moratorium 29 www.fidelitybank.ng#30NPL Analysis ➤ NPL ratio (Stage 3 Loans) increased to 4.8% in H1 2020 from 3.3% in 2019FY due to 58.8% increase in absolute NPL book to №61.3bn. ▸ NPL growth is primarily due to the early identification of sectors likely to be impacted by the pandemic and economic lockdown. ▸ FCY NPL accounts for 11.5% of total NPL and largely in the Oil & Gas Downstream and the Transport Sector. ▸ Coverage remains high at 112.7% with specific provisions on Stage 3 Loans currently at 57.2% from 52.8% in Q1. NPL Coverage Ratio N' billion % Ratio N'billion Gross Loans and Advances 1,050.2 1,126.5 53.9 1,178.4 38.6 1,218.9 58.1 1,267.3 61.3 56.6 993.6 1,072.6 1,139.8 1,160.8 1,206.0 H1 2019 9M 2019 2019FY Q1 2020 H1 2020 ■Performing Loans ■Non-performing Loans Non-performing Loans 169.1% 61.3 58.1 56.6 4.8% 53.9 4.8% 38.6 15.2% 3.3% 3.3% 4.8% 112.7% 94.9% 102.4% H1 2019 9M 2019 2019FY Q1 2020 H1 2020 H1 2019 9M 2019 2019FY Q1 2020 H1 2020 Non-performing Loans -Coverage Ratio 30 www.fidelitybank.ng#31NPL Portfolio Analysis Breakdown of Non-performing Loans: 2019FY Vs. H1 2020 2019FY H1 2020 N'million N'million VAR N'million % VAR % 2019FY NPL Ratio H1 2020 NPL Ratio Communication Oil and gas 1,198 4,014 2,816 235.0% 3.7% 12.7% 15,336 19,309 3,973 25.9% 6.3% 6.2% - Oil & Gas Upstream 175 (175) -100.0% 0.1% 0.0% - Oil & Gas Downstream 13,624 18,843 5,219 38.3% 26.1% 21.3% - Oil & Gas Services 1,538 467 (1,071) -69.7% 2.6% 0.6% Power 0 0 0.0% 0.0% 0.0% Manufacturing 3,020 9,606 6,586 218.1% 1.4% 4.6% General Commerce 2,391 4,178 1,787 74.8% 2.4% 3.6% Transport 6,973 9,949 2,976 42.7% 5.1% 6.9% Consumer (Individuals) 2,663 4,012 1,349 50.7% 5.0% 7.8% Government 0 164 164 100.0% 0.0% 0.1% Construction 3,087 3,863 775 25.1% 8.7% 10.4% Agriculture 2,647 3,184 537 20.3% 8.0% 8.4% Real Estate 0 383 382 100.0% 0.0% 1.4% Education 435 468 34 7.8% 8.4% 8.3% Finance and Insurance 9 4 (4) -49.4% 0.2% 0.3% Others 874 2,198 1,324 151.5% 3.7% 7.0% Total 38,633 61,334 22,700 58.8% 3.3% 4.8% 31 www.fidelitybank.ng#32NPL Portfolio Analysis Breakdown of Non-performing Loans by Currency N'million FCY LCY Total % FCY % LCY Communication Oil and Gas Upstream - Downstream Services 4,014 4,014 0.0% 7.4% 3,881 15,429 19,309 54.9% 28.4% 0.0% 0.0% 3,803 15,040 18,843 53.8% 27.7% 78 388 467 1.1% 0.7% Power 0.0% 0.0% Manufacturing 9,606 9,606 0.0% 17.7% General Commerce 23 4,155 4,178 0.3% 7.7% Transport 3,026 6,923 9,949 42.8% 12.8% Consumer (Individuals) 135 3,876 4,012 1.9% 7.1% Government 164 164 0.0% 0.3% Construction 3,863 3,863 0.0% 7.1% Agriculture 3,184 3,184 0.0% 5.9% Real Estate 383 383 0.0% 0.7% Education 468 468 0.0% 0.9% Finance and Insurance 4 4 0.0% 0.0% Others 2,198 2,198 0.0% 4.1% Total 7,065 54,268 61,334 11.5% 88.5% 32 32 www.fidelitybank.ng#33NPL Analysis - H1 2020 Communication, 6.5% Power, 0.0% Oil & Gas: Upstream, 0.0% Manufacturing, 15.7% NPL Portfolio Analysis Breakdown of Non-performing Loans N'million Communication Oil and Gas 9M 2019 2019FY Q1 2020 H1 2020 Others, 10.2% 2,417 1,198 3,291 4,014 Construction, 6.3% 15,621 15,336 16,161 19,309 Upstream 175 347 Oil & Gas: Service, 0.8% Downstream 14,525 13,624 15,301 18,843 Govt., 0.3% - Services 1,096 1,538 514 467 Consumer Power 6.5% Manufacturing 7,784 3,020 10,029 9,606 Oil & Gas: ✶ Downstream, 30.7% Gen. Commerce 7,698 2,391 4,849 4,178 Transport 9,419 6,973 14,317 9,949 Consumer 3,083 2,663 2,792 4,012 Others, 10.3% Government 25 0 0 164 Construction_ Construction 1,087 3,087 856 3,863 8.0% Oil & Gas: Agriculture 2,557 2,647 3,553 3,184 Service, 4.0% Real Estate 1,970 0 251 383 Govt., 0.0% Education 960 435 454 468 Fin. & Insurance 9 9 6 4 Others 1,223 874 1,556 Consumer 6.9% 2,198 Total 53,852 38,633 58,116 61,334 33 Gen. Commerce, 6.8% Transport, 16.2% NPL Analysis - 2019FY Communication, 3.1% Power, 0.0% Oil & Gas: Upstream, 0.5% Manufacturing, 7.8% Gen. Commerce, 6.2% X Oil & Gas: Downstream, 35.3% Pressure NPL Sectors Transport, 18.0% www.fidelitybank.ng#34Capital Adequacy Fidelity CAR is currently at 18.8% which is well above the regulatory minimum requirement of 15.0%. ► Regulatory adjustment increased to N14.6bn due to the impact of currency adjustments, though it dropped by 4.7% QoQ. ▸ Excluding the regulatory adjustment, CAR would have come in at 20.0%. ► Tier 1 CAR is now 15.6% and only 20.0% (N6.0bn) of our N30.0bn local bond is recognized in Tier II Capital. - Capital Adequacy Ratio Computation – Basel II N'billion 2019FY H1 2020 VAR Tier 1 Capital 191.7 204.4 12.7 Regulatory Adjustment (10.6) (14.6) 4.0 Adjusted Tier 1 Capital 181.1 189.8 8.7 Tier 2 Capital 33.0 38.1 5.1 Total Qualified Capital 214.1 227.9 13.8 Capital Adequacy Ratio Credit Risk 920.6 959.4 38.8 N'billion % Ratio Market Risk 64.2 69.4 5.2 250.7 234.0 242.4 Operational Risk 185.8 185.8 0.0 215.6 221.7 17.0% 18.3% 18.8% Risk Weighted Assets 1,170.7 1,214.6 43.9 17.7% 16.4% 15.0% 15.0% 15.0% 15.0% 15.0% Capital Adequacy Ratio Tier 1 15.5% 15.6% H1 2019 9M 2019 2019FY Q1 2020 H1 2020 Tier 2 2.8% 3.1% Overall CAR 18.3% 18.8% Total Equity - Fidelity CAR -Regulatory Minimum 34 === www.fidelitybank.ng#35Strategic Business Units Analysis Business Description Corporate & Investment Banking Lagos & SW Bank Handles the bank's institutional clients with turnover in excess of 5.0 billion and treasury business PBT ➤ Key focus sectors include: □ Treasury Conglomerates □ Energy (Oil & Gas) Telecoms Power ☐ FMCG ☐ Fintechs □ Manufacturing Handles retail, commercial, SME customers, and clients not matching the corporate banking criteria etc. ➤ Drives retail deposits, lending, payroll and e-products etc. Operates at 101 locations Location Based Analysis Deposits 13.5% 41.1% Loans 32.4% 33.1% 21.6% 31.1% ➤ Handles retail, commercial, SME customers, and clients not matching the corporate banking criteria etc. North Bank ➤ Drives retail deposits, lending, payroll and e-products etc. 11,1% 15.3% 22.3% Operates at 59 locations including FCT. Handles retail, commercial, SME customers, and clients not matching the corporate banking criteria etc. 26.3% 31.0% 21.2% South Bank ➤ Drives retail deposits, lending, payroll and e-products etc. Operates at 90 locations 35 www.fidelitybank.ng#365. H1 2020 Actual Vs. 2020FY Guidance Hey It's IVY Let's Vibe On WhatsApp Chat with IVY today on 090-3000-0302 to get your banking needs sorted instantly Hello Hello you Fidelity Holla at me for: • Bill Payments Complaints • My Balance • Send Money • ATM/Branch Locator & so much more Add me up and get chatting with IVY. 36 :) Let's vibe! A#37H1 2020 Actual Vs. 2020FY Guidance S/N Index 1 Net Interest Margin 2 Tax Rate GROWTH EXPECTATIONS ON KEY INDICATORS H1 2020 Actual 6.4% 2020FY Target Comment 5.5% - 6.0% On Track 5.5% 10.0% 15.0% On Track 3 Loan Growth (YTD) 7.3% 5.0% - 7.5% On Track 4 Deposit Growth (YTD) 14.8% 5.0% - 10.0% On Track 5 Cost to Income Ratio 70.3% 70.0% N/A 30-50% (of PAT) band 6 Proposed Dividends 7 NPL Ratio 4.8% 8 Cost of Risk 1.3% 9 ROAE - Post Tax 9.4% 37 Below 5.0% On Track N/A On Track 1.5% On Track 11.3% Behind Target www.fidelitybank.ng#38Thank You Fidelity Bank Plc 2 Kofo Abayomi Street, Victoria Island, Lagos, Nigeria +234 (01) 4480853 [email protected] www.fidelitybank.ng