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.
0 Comments