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Investors earn 406% gain in Fidelity Bank in 5 years

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Reasons Investors Might Purchase Fidelity Bank's Offerings, as Identified by Capital Market Stakeholders

Investors earn 406% gain in Fidelity Bank in 5 years

Investors in Fidelity Bank Plc have earned about 406% in capital gains over the past five years, ranking above all other major return benchmarks in the Nigerian stock market and the entire banking sector.

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

Fidelity Bank’s share price rose by 405.95% over the period, representing an average annual capital gain of 81.19 per cent.

These returns underscore Fidelity Bank’s immense value as a stock for all times, helping investors to hedge against inflation while preserving significant long-term value.

Comparative analysis showed that Fidelity Bank outperformed 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.

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 Nigeria’s benchmark for the equities market, recorded a five-year return of 215.83%, an average annual return of 43.17%.

Contrary to the significantly above-average performance of Fidelity Bank, NGX Banking which tracks the banking sector, doubled by 118.92% over the five years, representing an average annual return of 23.78 per cent, more than 57.4% points below Fidelity Bank’s average return.

Two other major price indices- the NGX 30 Index and NGX Main Board Index, recorded five-year cumulative returns of 182.38 per cent and 263.18% respectively, representing average annual gains of 36.48% and 52.64% respectively.

The NGX 30 Index tracks the share prices of the 30 largest companies in the stock market while the NGX Main Board Index represents the largest and most diversified group of listed companies on the stock exchange.

Fidelity Bank is quoted on the main board, like most other major banks and companies on the stock market.

The average annual return of 81.2 per cent underlines that Fidelity Bank provides a substantial return for investors, even where such investors had borrowed money at the ruling interest rate and the invested fund was adjusted for the impact of the inflation rate.

Nigeria’s 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%.

Fidelity Bank’s share price, which closed May 31, 2019, at N1.68 per share, rose successively to N8.50 per share by the end of May 2024.

The ASI had, during the period, risen from its opening index of 31,069.37 points to close the weekend at 98,125.73 points.

The NGX Banking Index rose from 361.57 points to 791.54 points.

The NGX 30 Index, which opened the period at 1,286.68 points, closed the period at 3,633.28 points.

The NGX Main Board Index appreciated from 1,267.54 points to close at 4,603.49 points.

Market analysts are unanimous that share prices are illustrative of the fundamental values of quoted companies.
Managing Director, of HighCap Securities Limited, Mr. David Adnori, said the price of any stock in the market is a correct reflection of the market value for the stock.

A five-year review of the audited reports and accounts of Fidelity Bank showed a strong correlation between the bank’s upwardly share pricing trend and expansive growth in its business operations.

The bank’s 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 have risen successively from 98 kobo in 2019 to N3.11 per share in 2023.

The bank’s balance sheet had expanded by 195.26 per cent from N2.11 trillion in 2019 to N6.23 trillion in 2023, which is 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 Bank’s share price to 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 a “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 bank’s growth plan.

The reports also considered the quality of the 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 Bank’s share price could double in the period ahead given a professional assessment of top traditional performance parameters including the company’s operational reports, investors’ preferences and projections.

Already, 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 the first quarter of 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 the first quarter of 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 the first quarter of 2024 as against N17.9 billion in the first quarter of 2023.

The bank’s performance was driven by expanding market share with total deposits 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 support 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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Federal Mortgage Bank of Nigeria disburses N440 billion, delivers 39,000 homes since 1993 – Shehu Osidi

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2 days ago

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July 25, 2024

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Federal Mortgage Bank of Nigeria disburses N440 billion, delivers 39,000 homes since 1993 – Shehu Osidi

Federal Mortgage Bank of Nigeria disburses N440 billion, delivers 39,000 homes since 1993 – Shehu Osidi

The Federal Mortgage Bank of Nigeria (FMBN) has revealed it has disbursed N440 billion and delivered approximately 39,000 new homes under the National Housing Fund (NHF) scheme since its re-establishment in 1993.

This achievement was highlighted by the bank’s Managing Director and Chief Executive, Mr. Shehu Osidi, during his presentation at the 18th Africa International Housing Show in Abuja.

His presentation, titled “Financing the Housing We Need: A New Dawn at FMBN as an Institutional Enabler,” detailed the bank’s accomplishments in housing finance.

Osidi noted that, in addition to the N440 billion disbursed and the 39,000 new homes delivered, FMBN has provided around 25,500 mortgages and extended over 120,000 micro-housing loans, all offered under a single-digit interest rate lending regime.

“Since its re-establishment in 1993, the Bank has delivered about 39,000 new homes, about 25,500 mortgages and over 120,000 micro housing loans, all within a single-digit interest rate lending regime.

“Under the National Housing Fund (NHF) Scheme, it has registered 26,350 organisations and over 5.8 million cumulative contributors with over 1 million accounting for the self-employed sector.

“The Bank has disbursed the cumulative of N440 billion under its various loan windows to drive affordable housing finance for the Nigerian economy,” Osidi said.

Additionally, the FMBN Managing Director disclosed that in compliance with the provisions of the National Housing Fund Act, the bank has refunded N84.8 billion to 492,604 contributors who exited the scheme.

More insights
Highlighting more achievements of the Federal Mortgage Bank of Nigeria (FMBN), Osidi noted the recovery of N12 billion from the Federal Ministry of Finance.

This recovery was part of the N19 billion in wrongful deductions of National Housing Fund (NHF) contributions, which had been previously misconstrued as revenue under the 40% deduction regime. He further mentioned that FMBN continues to engage with relevant authorities to halt these deductions and recover the remaining balance of the trapped NHF funds.

Additionally, he explained that FMBN has expanded its loan products from mortgage financing to include housing construction, micro-housing financing, and rent-to-own options. New additions such as Home Improvement and Rent Assistance loans specifically target the non-salaried informal sector.

Osidi highlighted that the bank’s clientele now includes primary mortgage banks, real estate developers, housing cooperatives, and individual NHF contributors. Despite modest numbers, he emphasized that FMBN remains a key player in the housing sector.

He also outlined the executive management’s seven-point agenda, which focuses on enhancing automation, promoting cost efficiency, improving credit quality, effective project management, and expanding strategic partnerships to transform FMBN into a responsive and reliable institution.

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Analysis: Fidelity Pension Managers 2023 audited company and fund accounts

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3 days ago

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July 24, 2024

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Analysis: Fidelity Pension Managers 2023 audited company and fund accounts

Analysis: Fidelity Pension Managers 2023 audited company and fund accounts

Fidelity Pension Managers recently published its 2023 audited accounts, providing a summary overview of its financial health and fund performance.

This report provides a summary review and presents key financial highlights, financial ratios, fund performance, and the trend in the number of Retirement Savings Account (RSA) holders.

Financial Highlights
Total Revenue: Total revenue for the company rose 23% to ₦2.59 billion in 2023, up from ₦2.1 billion in 2022. From the reports, this increase is attributed majorly to higher fee income generated from the pension funds it has under management.
Profit After Tax (PAT): PAT rose 26% to ₦666 million, up on the previous year’s 21% rise.
Operating Expenses: Operating expenses rose slower than revenue and PAT by 22% to ₦1.76 billion from ₦1.44 billion, leading to a slight drop in the company’s cost-to-income ratio, which fell to 67.98% from 68.57%. The company seems to be relatively prudently managing financial resources, amidst rising costs and inflationary pressures.
Shareholder’s Funds: The company’s shareholders funds ended the year at ₦5.95 billion in 2023 up 5% from the ₦5.64 billion in 2022.
Return on Equity (ROE): ROE was a very low 11.21%. Whilst this is a slight improvement on 2022’s 9.41%, the company does not seem to be efficiently deploying shareholders’ equity to generate profits.

 

Financial and Fund Highlights

Corporate Audited Annual Results

Financial Ratios

Fund Performance Highlights
RSA Funds Performance: Fidelity Pensions offers six of the seven regulated RSA pension funds to the public. Notably, all six funds put in a better performance than the previous year, whilst only four funds out-performed the industry benchmark returns (see our article on benchmark returns here).

5-Year Audited Pension Funds Performance

Number of RSA Holders
RSA Growth: The growth in the number of RSA holders was another highlight of the year. Fidelity Pension Managers saw an increase of 2.48% in RSA holders, adding 8,005 new accounts to close the year at 331,124 RSA holders.

Demographic Analysis
Age Distribution: The majority of 330,000 RSA holders (83.9%) registered in 2023 fell within the age bracket of <30 years to 39 years, indicating a young and growing industry subscriber base. Of the 2023 registrations, Fidelity Pension Managers recorded 2.43% of this growth.


Conclusion
Fidelity Pension Managers has demonstrated improved financial growth in 2023, marked by increased revenue, higher profitability, and a growing RSA customer base. However, the company remains constrained by low assets under management, which limits its fee-generating potential. To overcome this challenge, Fidelity Pension Managers must focus on enhancing the performance of the funds it manages and attracting more RSA holders. Improved fund performance will not only benefit current RSA holders but also make Fidelity Pensions an attractive option for those looking to transfer their pensions.

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Zenith Bank maintains its position as Nigeria’s top bank in terms of Tier-1 capital for the 15th consecutive year.

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5 days ago

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July 22, 2024

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Zenith Bank maintains its position as Nigeria's top bank in terms of Tier-1 capital for the 15th consecutive year.

Zenith Bank maintains its position as Nigeria’s top bank in terms of Tier-1 capital for the 15th consecutive year.

Zenith Bank Plc for fifteenth consecutive year has retained its position as the Number One Bank in Nigeria by Tier-1 Capital in the 2024 Top 1000 World Banks’ Rankings, published by The Banker Magazine.

This ranking places Zenith Bank Plc as the 565th Bank globally with a Tier-1 Capital of $2.01 billion. The rankings, published in the July 2024 edition of The Banker Magazine of the Financial Times Group, United Kingdom, recognise Zenith Bank’s continued financial strength and stability.

They are based on the 2023 year-end Tier-1 capital of banks globally and remain the primary source for global bank financials used by most international organisations in their assessments of banks.

Tier-1 Capital describes capital adequacy, the core measure of a bank’s financial strength from a regulator’s perspective. According to the ranking, Tier-1 Capital, as defined by the latest Bank for International Settlements (BIS) guidelines, includes loss-absorbing capital, i.e., common stock, disclosed reserves, retained earnings, and minority interests in the equity of subsidiaries that are less than wholly owned. A strong Tier-1 capital ratio boosts investor and depositor confidence, indicating the Bank is well-capitalised and financially stable.

Commenting on this achievement, the Group Managing Director/CEO of Zenith Bank Plc, Dame (Dr.) Adaora Umeoji, OON, said, “We are deeply honoured to be recognised as the Number One Bank in Nigeria by Tier-1 Capital for the fifteenth consecutive year.

“This recognition is a testament to our strategic focus on sustainable growth, innovation, and customer satisfaction. It also emphasises our resilience and strength in navigating the ever-evolving financial landscape.

“Our dedicated team of professionals has remained steadfast in ensuring that we maintain our position at the forefront of the banking industry.” She extended her profound and sincere appreciation to the Founder and Chairman, Dr. Jim Ovia, CFR, whose visionary and transformative leadership has played a pivotal role in cultivating a resilient and thriving establishment.

“She also expressed her deep appreciation for the board’s insightful governance, the staff’s relentless dedication, and the unwavering loyalty of the bank’s esteemed customers to the Zenith brand.

Zenith Bank’s financial performance for the year was driven by a remarkable triple-digit growth of 125% in gross earnings, from N945.6 billion reported in 2022 to N2.132 trillion in 2023.

This growth led to an improved market share in both the retail and corporate segments despite a persistently challenging macroeconomic environment. The increase in gross earnings was primarily due to growth in interest and non-interest income. Interest income growth was attributed to the increase in the size of risk assets and their effective repricing, while non-interest income was driven by significant trading gains and gains from the revaluation of foreign currencies.

Zenith Bank recently commenced recapitalisation efforts with the conclusion of its Capital Markets Day held on 11th July 2024. It aims to raise the least amount of capital amongst its peers at N230 billion, considering it already maintains a robust capital base of N270.7 billion.

The Bank remains dedicated to supporting the growth of the Nigerian economy and providing its numerous customers with innovative and efficient banking solutions.

Zenith Bank’s track record of excellent performance has continued to earn the brand numerous awards, with these latest accolades coming on the heels of several recognitions. These include being recognised as the Number One Bank in Nigeria by Tier-1 Capital for the fourteenth consecutive year in the 2023 Top 1000 World Banks Ranking, published by The Banker Magazine.

The Bank was also awarded the Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards for 2020 and 2022; and Most Sustainable Bank, Nigeria in the International Banker 2024 Banking Awards.

Further recognitions include Best Bank in Nigeria for three consecutive years from 2020 to 2022 in the Global Finance World’s Best Banks Awards and Best Commercial Bank, Nigeria for three consecutive years from 2021 to 2023 in the World Finance Banking Awards.

Additionally, Zenith Bank has been acknowledged as the Best Corporate Governance Bank, Nigeria, in the World Finance Corporate Governance Awards for 2022 and 2023, and ‘Best in Corporate Governance’ Financial Services’ Africa for four consecutive years from 2020 to 2023 by the Ethical Boardroom.

The Bank’s commitment to excellence saw it being named the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands for 2020 and 2021, and Retail Bank of the Year for three consecutive years from 2020 to 2022 at the BusinessDay Banks and Other Financial Institutions (BAFI) Awards.

The Bank also received the accolades of Most Sustainable Bank, Nigeria, in the International Banker 2023 Banking Awards, Best Commercial Bank, Nigeria and Best Innovation in Retail Banking, Nigeria, in the International Banker 2022 Banking Awards.

Zenith Bank was named Bank of the Decade (People’s Choice) at the ThisDay Awards 2020, Bank of the Year 2021 by Champion Newspaper, Bank of the Year 2022 by New Telegraph Newspaper, and Most Responsible Organisation in Africa 2021 by SERAS Awards.

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