Fidelity’s Performance Highlights Robust Investment Climate Amidst Nigerian Fiscal Trials

By Jemimah Wellington, JKNMedia Reporter

AN EXCEPTIONAL return for its investors via achieving 507% increase in capital gains over the past five years has been delivered by the Fidelity Bank Plc.

Described as a remarkable performance, it is noted to have placed Fidelity Bank at the forefront of the Nigerian stock market and the banking sector, outshining all major return benchmarks.

Data from the Nigerian stock market for the period between May 31, 2019, and May 31, 2024, reveals that the bank has significantly outperformed all key indices, making its share price to surge by 507.14%, translating to an average annual capital gain of 101.43%.

This impressive return also raise the bank’s value proposition, offering investors a reliable hedge against inflation and preserving substantial long-term value.

The analysis highlights that investing in the bank has been more lucrative than other asset classes, including fixed-income securities, real estate, and mutual funds.

For its shares, the bank is said to be known for high divisibility and substantial free float, are easily accessible, making the bank an attractive option for a diverse range of investors, from small and medium-sized investors to high net-worth individuals and institutional investors.

Comparative analysis shows that Fidelity’s performance is unparalleled, with its average annual return for the period doubling the overall market’s average return and nearly quadrupling the average return of the banking sector.

Also, the All-Index (ASI), which tracks all share prices on the Nigerian Exchange (NGX) and serves as Nigeria’s equity market benchmark, posted a five-year return of 219.61%, with an average annual return of 43.9%.

In stark contrast, the NGX Banking Index, which monitors the banking sector, grew by 120.53% over the five-year period, averaging an annual return of 24.11%, significantly trailing Fidelity Bank’s average return by over 77 percentage points.

Two other notable indices, the NGX 30 Index and the NGX Main Board Index, recorded five-year cumulative returns of 185.73% and 265.6%, respectively, with average annual gains of 37.15% and 53.1%.

The NGX 30 Index represents the 30 largest companies on the stock market, while the NGX Main Board Index encompasses the largest and most diversified group of listed companies. Like other major banks and companies, Fidelity Bank is listed on the main board.

The bank’s average annual return of 101.43% indicates substantial returns for investors, even after accounting for inflation and interest rates. Nigeria’s inflation rate peaked at 33.69% in April 2024, while the Central Bank of Nigeria’s (CBN) Monetary Policy Committee recently raised the Monetary Policy Rate (MPR) to 26.25%.

Its share price, which was N1.68 per share on May 31, 2019, increased to N10.20 per share by the end of May 2024.

During this period, the ASI rose from 31,069.37 points to 99,300.38 points, the NGX Banking Index grew from 361.57 points to 797.37 points, the NGX 30 Index increased from 1,286.68 points to 3,676.44 points, and the NGX Main Board Index appreciated from 1,267.54 points to 4,634.31 points.

Market analysts agree that share prices reflect the fundamental values of quoted companies. Mr. David Adonri, Managing Director of HighCap Securities Limited, affirmed that a stock’s market price accurately reflects its market value. Mr. Aruna Kebira, Managing Director of Globalview Capital Limited, noted that the market price of a stock represents the investing public’s sentiment towards the stock at a given time, taking into account both market and book values.

Mr. Sola Oni, CEO of Sofunix Investment and Communications, highlighted that share prices indicate both current value and future prospects, with investment analysts combining market and book values to assess a stock’s outlook.

A five-year review of Fidelity Bank’s audited reports and accounts shows a strong correlation between the bank’s rising share price and its expansive business growth. Pre-tax profit increased from N30.35 billion in 2019 to N124.26 billion in 2023, a 309.4% rise. Net profit after tax grew by 203.3%, from N42.80 billion in 2019 to N129.80 billion in 2023. Earnings per share increased from 98 kobo in 2019 to N3.11 per share in 2023.

The bank’s balance sheet expanded by 195.26%, from N2.11 trillion in 2019 to N6.23 trillion in 2023, marking one of the fastest growth rates in the industry. Customer deposits tripled from N1.225 trillion in 2019 to N4.01 trillion in 2023, a 227.35% increase, while shareholders’ funds grew from N234.03 billion to N437.31 billion.

Market experts predict that the bank’s share price will continue to rise, driven by several factors that illustrate the stock’s potential. Independent investment research reports from Afrinvest Group, FSDH Capital, and CardinalStone, among others, have assigned a “buy” recommendation to Fidelity Bank, citing its attractive returns.

A statement issued notes that these reports are based on the bank’s historical and current operational performance, the implementation of its growth plan, and the quality of its board, management, and overall human capital and resources, as analysts agree that the bank’s share price could double in the future, given the bank’s strong performance indicators, investor preference, and growth projections.

On its interim report for the first quarter of 2024, the bank shows continued robust performance with three-digit growth across key indicators.

Its gross earnings reportedly rose by 89.9% to N192.1 billion, driven by broad-based growth across income lines. Interest income increased by 90.7%, while non-interest income grew by 84% in the first quarter of 2024.

Similarly, its profit before tax doubled to N39.5 billion, up from N17.9 billion in the first quarter of 2023, showing that the bank’s market share expanded, with total deposits rising by 17% to N4.7 trillion and net loans and advances growing by 21% to N3.7 trillion by March 2024.

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