• ‘Buying more shares means bigger returns’
Fidelity Bank Plc has received a major boost for its N500 billion recapitalisation drive as shareholders expressed firm commitments to buy into new share issuances by the commercial bank.
Shareholders, under the auspices of Nigeria’s leading shareholders’ associations, said they would buy into any share offering by Fidelity Bank as the bank holds exciting future for above-average returns.
With nearly 400,000 shareholders, Fidelity Bank has the most diversified retail shareholders’ base among Nigerian banks. No single shareholder held up to 5.0 per cent of the issued share capital of the bank. Five per cent and above are considered the material shareholding under extant laws and market regulations.
The massive support is important for Fidelity Bank as a retail shareholders-based company.
In what appeared to be positioning for expected rights issue by the bank, Fidelity Bank has been one of the most active and highest-gaining stocks at the Nigerian Exchange (NGX).
Fidelity Bank’s share price opened the week as one of the five highest gainers with a gain of 8.43 per cent to close at N9 per share. It was the fourth most active stock at the market. It was one of the top 10 gainers yesterday with a gain of 5.56 per cent to close at N9.50 per share.
Rights issue is traditionally pre-allotted on the basis of existing shareholdings to the possible number of new shares a shareholder can buy under the new issue. All things being equal, rights issue is also relatively cheaper than other share offerings and market price as rights are considered as additional compensation to shareholders.
Shareholders said Fidelity Bank has shown strong resilience over the years and demonstrated its investors’ friendliness with significant dividends and capital gains.
The shareholders’ endorsements underlined market pundits’ expectations that Fidelity Bank would easily raise additional funds and retain its status as one of Nigeria’s leading commercial banks with international authorisation.
The highly diversified shareholding base, while it has its challenges of corporate register management and stock volatility, shows Fidelity Bank as a popular stock. Its huge free float also underscores the pricing efficiency of the stock at the stock market, ensuring that the share price is a reflection of the bank’s fundamental and investors’ expectation.
With average annual return of more than 81 per cent over the past five years, comparative analysis shows that Fidelity Bank outperforms all other major market indices with the bank’s 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.
Shareholders said the performance of Fidelity Bank has endeared them to the bank, expressing optimism that the bank is poised for major leap in the emerging Nigerian financial services sector.
National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude, said Fidelity Bank has shown that shareholders can trust it for sustainable growth and returns.
“Fidelity Bank is a promising bank that is growing organically, it is servicing its niche and share of the market. My appeal to the board is to continue to imbibe good corporate governance in order to sustain this growth,” Igbrude said.
President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr. Faruk Umar said the performance of Fidelity Bank over the years has been very encouraging.
According to him, the bank has a very good corporate governance structure that reassures investors of the safety of their investments.
He pointed out that the successful acquisition of Union Bank UK was a testimony to the financial strength of the bank.
“The bank has since joined the league of banks paying interim dividend, which shareholders are happy with,” Umar said.
He commended the board and management of the bank “for the good results they have been posting”, noting that investors have confidence in the future of the bank.
“The appointment of Dr Nneka Onyeali-Ikpe as the Group Managing Director, after serving as Executive Director, indicates that the bank has a good succession planning in place. The calibre of the independent non-executive directors on the board gives shareholders strong confidence of the kind of board oversight they will be expecting.
“Now that the bank is coming out with a rights issue offer, we are very confident shareholders will take their rights , and we are sure the bank will meet the recapitalisation requirement set out by the Central Bank of Nigeria (CBN),” Umar said.
National Coordinator, Pragmatic Shareholders Association of Nigeria, Mrs. Bisi Bakare, said Fidelity Bank has created a “very excellent impression” in the minds of shareholders.
According to her, the bank has continually showcased exemplary leadership with continuous impressive results, with successive growths over the past five years.
“Despite various challenges and economic uncertainty and other unforeseen occurrences, Fidelity Bank weathers the storm with strong performances,” Bakare said.
She cited the 2023 business year when the bank doubled its pre-tax profit by 131.5 per cent to N124.2 billion on the back of 64.9 per cent growth in gross earnings to N555.8 billion. The bank’s deposits increased by an impressive 56 per cent from N2.6 trillion in 2022 to N4.0 trillion while total assets grew by 56 per cent from N3.9 trillion to N6.2 trillion.
“Furthermore, Fidelity Bank paid a dividend of 85 kobo, including interim dividend of 25 kobo and final dividend of 60 kobo. Considering the share price of Fidelity Bank, their dividend policy is very robust.
“It is evident that our bank has not only weathered the storm of economic challenges but has also managed to thrive. Fidelity Bank is a very good bank that shareholders are very happy with their investments and we have never regretted buying into Fidelity Bank.
“I believe their right issue is going to be oversubscribed considering their past performances,” Bakare said.
National Coordinator, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie said Fidelity Bank’s growth has been “very amazing as it has delivered good returns in terms of good dividends to shareholders”.
According to him, shareholders are proud of the bank’s balance sheet, which is something that gives shareholders hopes for better rewards in the years ahead.
“All that average investors look for in a company is the fundamental, and Fidelity Bank is very strong in this. They are poised to surpass what they have projected. I should say the sky is their limit despite the headwinds.
“Fidelity Bank remains one of the best stocks that investors should look forward to invest in for better returns. I’m very optimistic of the bank’s healthy strong assets. With its good corporate governance and excellent customers’ service, there is every reason to hope for more promising future,” Okezie said.
The 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 bank’s 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 bank’s 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.
