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Fidelity Bank outperforms banks, stock market with 507% gain in 5 years

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Investors in Fidelity Bank Plc have earned more than 507 per cent in capital gains over the past five years, ranking above all other major return benchmarks at the Nigerian stock market and the entire banking sector.

Trading reports at the Nigerian stock market for the five-year period between May 31, 2019 and May 31, 2024 showed that Fidelity Bank outperformed all key indices at the stock market.

Fidelity Banks share price rose by 507.14 per cent over the period, representing average annual capital gain of 101.43 per cent.

These returns underscore Fidelity Banks immense value as a stock for all times, helping investors to hedge against inflation while preserving significant long-term value.
With 507 per cent capital gain in five years and average annual gain of more than 100 per cent, the return analysis implies that investment in Fidelity Bank is more attractive than other class of assets, including fixed-income securities such as government and corporate bonds; real estate investment and mutual funds among others.

The high divisible nature of shares investment and high free float of Fidelity Bank, which makes the banks shares easily available, underline the bank as a most attractive investment option for all cadres of investors- small, medium and high networth; retail and institutional investors.

Comparative analysis showed that Fidelity Bank outperformed all other major market indices with the banks average annual return for the period twice the average return by the overall market and almost four times of average return in the banking sector.

The All Share Index (ASI) – the common, value-based index that tracks all share prices at the Nigerian Exchange (NGX), which is widely regarded as Nigerias benchmark for equities market, recorded a five-year return of 219.61 per cent, an average annual return of 43.9 per cent.

Contrary to the significantly above average performance of Fidelity Bank, the NGX Banking Index-which tracks the banking sector, doubled by 120.53 per cent over the five-year period, representing average annual return of 24.11 per cent, more than 77 percentage points below Fidelity Banks average return.

Two other major price indices- the NGX 30 Index and NGX Main Board Index, recorded five-year cumulative return of 185.73 per cent and 265.6 per cent respectively, representing average annual gain of 37.15 per cent and 53.1 per cent respectively.

The NGX 30 Index tracks share prices of the 30 largest companies at the stock market while the NGX Main Board Index represents the largest and most diversified group of listed companies at the stock exchange. Fidelity Bank is quoted on the main board, like most other major banks and companies at the stock market.

The average annual return of 101.43 per cent underlines that Fidelity Bank provides substantial return for investors, even where such investors had borrowed money at the ruling interest rate and the invested fund was adjusted for impact of inflation rate.

Nigerias inflation rate peaked at a high of 33.69 per cent in April 2024 while the Central Bank of Nigeria (CBN)s Monetary Policy Committee (MPC) recently increased the Monetary Policy Rate (MPR), otherwise known as benchmark interest rate, to 26.25 per cent.

Fidelity Banks share price, which closed May 31, 2019 at N1.68 per share, rose successively to N10.20 per share by the end of May 2024. The ASI had, during the period, rose from its opening index of 31,069.37 points to close weekend at 99,300.38 points. The NGX Banking Index rose from 361.57 points to 797.37 points. The NGX 30 Index, which opened the period at 1,286.68 points, closed the period at 3,676.44 points. The NGX Main Board Index appreciated from 1,267.54 points to close weekend at 4,634.31 points.

Market analysts are unanimous that share prices are illustrative of the fundamental values of quoted companies.

Managing Director, HighCap Securities Limited, Mr. David Adonri, said the price of any stock in the market is a correct reflection of the market value for the stock.

Managing Director, Globalview Capital Limited, Mr. Aruna Kebira, explained that the market price of a stock represents the disposition of the investing public to the stock at a given period, noting that there should be consideration for both the market value and the book value or fundamentals of a stock.

It could be summarized that the market price of a stock is premised on the psychology of the market, the markets mood as well as market sentiments, Kebira said.

Chief Executive Officer, Sofunix Investment and Communications, Mr. Sola Oni, said the stock market shows both the current and future prospects of shares.

Share price reflects the current value of a company but also reveals the future prospects, Oni said, noting that investment analysts traditionally combine market price and book values to determine the possible outlook of a stock.

Five-year review of the audited reports and accounts of Fidelity Bank showed strong correlation between the banks upwardly share pricing trend and expansive growth in its business operations.

The banks pre-tax profit had risen from N30.35 billion in 2019 to N124.26 billion in 2023, an increase of 309.4 per cent. Net profit after tax also grew by 203.3 per cent from N42.80 billion in 2019 to N129.80 billion in 2023. Earnings per share has risen successively from 98 kobo in 2019 to N3.11 per share in 2023.

The banks balance sheet had expanded by 195.26 per cent from N2.11 trillion in 2019 to N6.23 trillion in 2023, within the fastest growth in the industry. Customers deposits, which underlines the competitive market share, more than tripled from N1.225 trillion in 2019 to N4.01 trillion in 2023, an increase of 227.35 per cent. Shareholders funds had also grown from N234.03 billion to N437.31 billion.
Market pundits expected Fidelity Banks share price continue to rise, citing several factors that illustrated the upside potential for the stock.

Independent investment research reports by many market pundits showed that Fidelity Bank was assigned buy ticker, a recommendation to investors to consider the potential attractive returns of the bank.
The research reports were based on the historical and current operational performances of the bank as well as the clear-sighted implementation of the banks growth plan. The reports also considered the quality of board and management and the general human capital and resources of the bank.

The investment advisory reports included those of Afrinvest Group, FSDH Capital and CardinalStone among others.

Analysts were unanimous that Fidelity Banks share price could double in the period ahead given professional assessment of top traditional performance parameters including the companys operational reports, investors preference and projections.

Already, interim report and account of the bank for the first quarter ended March 31, 2024 showed that the bank started the current business year on stronger footing with three-digit growths across key performance indicators.

The three-month report, released at the NGX, showed that gross earnings increased by 89.9 per cent to N192.1 billion in first quarter 2024.

The banks top-line performance continued to be driven by broad-based growths across income lines with interest income rising by 90.7 per cent and non-interest income growing by 84 per cent in first quarter 2024.
Growth in interest income was primarily spurred by a higher yield environment and strong earning assets base, while the increase in non-interest income was led by double-digit growth in account maintenance charges, foreign exchange (forex)-related income, trade, banking services, and remittances, supported by increased customer transactions.

Profit before tax doubled by 120 per cent to N39.5 billion in first quarter 2024 as against N17.9 billion in first quarter 2023. The banks performance was driven by expanding market share with total deposit rising by 17 per cent within the three months to N4.7 trillion, compared with N4 trillion recorded at the end of 2023. The bank also increased its supports for national economic growth with net loans and advances rising by 21 per cent from N3.1 trillion at the end of 2023 to N3.7 trillion by March 2024.

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Banking and Finance

Fidelity Bank public offer, rights issue to open Thursday June 20

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Nigeria’s 6th largest bank, Fidelity Bank Plc will on Thursday, June 20, 2024 open its public offer and Rights Issue.

As part of this capital raising process, Fidelity Bank will same Thursday, June 20, 2024 at the NGX hold a Facts Behind the Offer presentation.

According to an article posted on the Businessday website and authored by Iheanyi Nwachukwu, 3.2 billion ordinary shares of 50 kobo each will be offered in the ratio of 1 new ordinary share for every 10 ordinary shares held as of 05 January 2024, at N9.25 per share under the Rights Issue,

For the public offer, 10 billion ordinary shares of 50 kobo each will be offered to the general investing public at N9.75 per share.

Stanbic IBTC Capital is the Lead Issuing House to the Combined Offer, whilst the Joint Issuing Houses include Iron Global Markets Limited, Cowry Asset Management Limited, Afrinvest Capital Limited, FSL Securities Limited, Futureview Financial Services Limited, Iroko Capital Market Advisory Limited, Kairos Capital Limited and Planet Capital Limited.

The acceptance and application lists for the rights issue and public offer which will open on Thursday, June 20 will close on Monday July 29, 2024.

The bank recently concluded all necessary arrangements to raise a total of up to N127.100billion by way of a rights issue to existing shareholders and a public offer (the combined offer).

The combined offer is a part of the bank’s strategy to increase its share capital base in compliance with the revised minimum capital requirements for Nigerian commercial banks introduced by the Central Bank of Nigeria (CBN) on March 28, 2024.

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Banking and Finance

WEMA BANK concludes 1st tranche of Capital Raise Programme

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LAGOS, NIGERIA – 14th June 2024 – Wema Bank PLC (Bloomberg: WemaBank: NL) (“Wema” or “the Bank”) announces the allotment of its N40billion Rights issue programme.

-Raises N40billion through a Rights Issuance process.
-Part of its larger 2-year; N150billion Capital programme.
Rights fully subscribed.
-Expected to Commence concluding tranche of additional Capital in Q4, 2024.
-Corporate Ratings affirmed by Fitch at BBB & Upgraded by Agusto to BBB+

Wema Bank, Nigeria’s foremost innovative bank and pioneer of Africa’s first fully digital bank, ALAT, has successfully concluded the first tranche of its recapitalisation exercise having secured all relevant regulatory approvals for the allotment of its N40bn Rights Issue which was initiated in December 2023.

In view of macroeconomic conditions, the Central Bank of Nigeria (CBN) in March 2024, launched a recapitalisation programme requiring commercial banks to raise fresh capital in alignment with the minimum requirement for their respective banking licenses, within a 24-month timeline spanning April 1, 2024, to March 31, 2026. The goal of this recapitalisation programme is to simultaneously boost the Nigerian economy and strengthen the Nigerian financial services industry.

As a forward-thinking and pioneering bank, Wema Bank in December 2023 launched a N40bn Rights issue which has now been approved by the Central Bank of Nigeria and the Securities and Exchange Commission (SEC). With this remarkable development, Wema Bank has now successfully raised the 1st tranche of its plan in the minimum requirement laid down by the CBN.

In a statement made to the public by the Bank, Moruf Oseni, Wema Bank’s Managing Director and CEO, iterated the Bank’s resolve in retaining its Commercial Banking license with National Authorisation, adding that the N40bn Rights Issue is a step in that direction. “We are delighted to announce the conclusion of the 1st tranche of our Capital Raise Programme, after obtaining the relevant approvals of all regulatory authorities. Our move to commence our Capital Raise Programme very early demonstrates our push for excellence and with a strong emphasis on our digital play, we are set to amass more successes in the coming months.”

“We were impressed by the vote of confidence given by our shareholders during the 1st Rights Issue exercise as our shares were fully subscribed. In addition, we obtained the approval of shareholders at our 2023 Annual General Meeting (AGM) to raise an additional N150billion to meet the capitalisation threshold set by the CBN. The process is expected to be completed within 12-18 months. We are committed to providing optimum returns for every stakeholder and the successful conclusion of this N40bn Rights Issue is a bold step in the right direction.”

In addition to the upward trend in the Bank’s financial performance and the success recorded so far in its recapitalisation exercise, Wema Bank’s corporate rating was recently upgraded to BBB+ by Pan African credit rating agency, Agusto and Co, and retained at BBB by international rating agency, Fitch. Over the medium to long term, Wema Bank is positioned to not only dominate the digital Banking space but also the Nigerian financial services industry at large as it translates its industry leadership to significant market share.

Wema Bank is a leading financial services entity with banking operations across Nigeria, its leadership position in the digital banking space speaks to its aspirations to liberate Nigerian businesses and entrepreneurs by making digital platforms widely available.

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Banking and Finance

Fidelity Bank records largest single-day turnover volume of over 600 million shares.

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Fidelity Bank was by far the most traded stock in the NGX on Monday, 10 June 2024, with a turnover volume of about 605.257 million shares, even as the stock gained 6.52% to close at N9.80.

Since announcing its public offer and rights issue program, the bank’s stock has seen significant market activity. For the week ending June 7, 2024, it emerged as the top-traded stock, with a turnover volume of 229.613 million shares.

After Fidelity Bank, Access Holdings recorded the highest turnover volume in the market with 93.067 million shares. It was followed by UBA, which recorded a 2.86% gain and a turnover volume of 58.726 million shares.

Nigerian Breweries which posted a 2.38% posted a turnover volume of 45.256 million shares, and Zenith Bank with a 4.66% gain posted a turnover volume of 16.079 million shares.

In terms of turnover value, Fidelity Bank posted a N6.025 billion turnover value, while Access Holdings posted a turnover value of N1.744 billion. Nigerian Breweries recorded N1.27 billion, UBA – N1.26 billion, and Stanbic IBTC posted a turnover value of N572.92 million with a 0.57% gain.

For stocks worth over one trillion, trading sentiment was quite positive, however, eight out of the ten stocks were left unchanged. GTCO Holdings posted a 0.13% and Zenith Bank posted a 4.66% gain.

Other members of the category, Airtel Africa, BUA Cement, BUA Foods, MTN Nigeria, Geregu Power, Transcorp Power, Seplat Energy, and Dangote Cement posted no price changes.

The top-tier banking stocks recorded gains all-round, as UBA, GTCO, Access Holdings, and Zenith Bank posted 2.86%, 0.13%, 9.86%, and 4.66% gains respectively. However, FBNH recorded no price change.

The FUGAZ stocks recorded a turnover volume of 181.488 million shares.

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