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By Chukwuma Umeorah
Investors in Fidelity Bank Plc have earned about 406 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.
From May 31, 2019, to May 31, 2024, trading reports indicate that the share price of Fidelity Bank surged by 405.95 per cent, resulting in an average annual capital gain of 81.19 per cent. These returns highlight the enduring value of Fidelity Bank as a resilient stock option, offering investors both a hedge against inflation and a means to preserve substantial long-term value.
Comparative analysis reveals that Fidelity Bank has outperformed all major market indices, with the bank’s average annual return being twice that of the overall market and nearly four times that of the banking sector on average.
The All-Share Index (ASI), a widely recognized value-based index that tracks all share prices on the Nigerian Exchange Limited (NGX), recorded a five-year return of 215.83 per cent, translating to an average annual return of 43.17 per cent.
In sharp contrast, the NGX Banking Index, which monitors the banking sector, saw a 118.92 per cent increase over the same period, representing an average annual return of 23.78 per cent, significantly lower than the bank’s average return by over 57.4 percentage points.
Other major price indices like the NGX 30 Index and NGX Main Board Index experienced five-year cumulative returns of 182.38 per cent and 263.18 per cent with average annual gains of 36.48 per cent and 52.64 per cent, respectively.
Fidelity Bank’s impressive average annual return of 81.2 per cent underscores the substantial returns it offers to investors even when they have borrowed funds at prevailing interest rates and adjusted for the impact of inflation.
The bank’s share price soared from N1.68 per share on May 31, 2019, to N8.50 by the end of May 2024. Over the same period, the ASI climbed from 31,069.37 points to 98,125.73 points.
The NGX Banking Index rose from 361.57 points to 791.54 points, with the NGX 30 Index and NGX Main Board Index also showing significant increases from 1,286.68 points to 3,633.28 points and 1,267.54 points to 4,603.49 points, respectively.
According to market analysts, share prices are indicative of the fundamental values of listed companies. Managing Director of HighCap Securities Limited, David Adnori, emphasized that “the price of a stock accurately reflects its market value.”
Analysis of Fidelity Bank’s audited reports over the past five years demonstrates a strong correlation between the bank’s rising share price and its substantial business growth. Pre-tax profit surged from N30.35 billion in 2019 to N124.26 billion in 2023, marking a 309.4 per cent increase.
Net profit after tax also witnessed a significant growth of 203.3 per cent, climbing from N42.80 billion in 2019 to N129.80 billion in 2023. Earnings per share rose consecutively from 98 kobo in 2019 to N3.11 per share in 2023, with book balance expanding by 195.26 per cent from N2.11 trillion to N6.23 trillion over the same period.
Customer deposits, a key indicator of market share, more than tripled from N1.225 trillion in 2019 to N4.01 trillion in 2023, depicting a 227.35 per cent increase. Shareholders’ funds also grew from N234.03 billion to N437.31 billion during the same period.
Analysts predict that Fidelity Bank’s share price could potentially double in the near future, based on a professional evaluation of key performance indicators, operational reports, investor sentiment, and future projections.
The interim report for the first quarter ending March 31, 2024, indicates a promising start to the year for Fidelity Bank, with substantial growth across critical performance indicators.
In Q1 2024, gross earnings surged by 89.9 per cent to N192.1 billion. This growth was fueled by across-the-board increases in income, with interest income rising by 90.7 per cent and non-interest income growing by 84 per cent during the same period.
Profit before tax doubled to N39.5 billion in Q1 2024 compared to N17.9 billion in Q1 2023, driven by an expanding market share that saw total deposits rise by 17 per cent to N4.7 trillion within three months.
Fidelity Bank also bolstered its support for national economic growth, with net loans and advances increasing by 21 per cent from N3.1 trillion at the end of 2023 to N3.7 trillion by March 2024.
