E-Financial
Fidelity Bank Delights Investors with 507 Percent Gain in 5 Years
Fidelity Bank’s Investors 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.
Nigeria Deposit Insurance Corporation (NDIC), has strengthened its partnership with the judiciary aimed at enhancing the prosecution of failed banks, according to Bello Hassan, managing director of the corporation.
Hassan stated this at the ongoing 19th Abuja International Trade Fair with the theme: “Mobility: Options for Transport, Trade Finance, and Taxation,” in Abuja.
He said the NDIC’s swift response in the case exemplifies its critical role in maintaining financial stability and protecting depositors from the impacts of bank failures.
NDIC also reaffirmed its dedication to safeguarding the deposits of Nigerians, especially to the recent closure of Heritage Bank.
Hassan explained that the initiative has allowed the NDIC to successfully compensate 84.98% of depositors with linked accounts, ensuring that insured amounts of up to N5 million were credited without requiring physical visits to NDIC offices.
He said: “The importance of deposit insurance cannot be overstated in a financial system where confidence is essential. It acts as a safety net that reassures depositors, builds trust in the banking system, and helps to prevent bank runs during periods of uncertainty.
“Over the years, the NDIC has been instrumental in promoting stability by ensuring that when banks fail, depositors are promptly compensated.
“The recent closure of Heritage Bank, following the Central Bank of Nigeria’s revocation of its operating licence on June 3, 2024, underscores the crucial role of the NDIC in protecting depositors. In line with the provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and the NDIC Act 2023, the NDIC was appointed liquidator to oversee the resolution of the bank and the payment of its depositors.
“In an unprecedented achievement, the NDIC commenced payments to depositors within four days of Heritage Bank’s closure. By leveraging depositors’ Bank Verification Numbers (BVN) as a unique identifier, the Corporation was able to identify alternate accounts and credit the insured amounts of up to N5 million directly, without the need for forms or physical visits to NDIC offices. This innovative approach has enabled the payment of 84.98% of depositors with BVN linked accounts to date.
“This prompt response, alongside the recent increase in deposit insurance coverage from N500,000 to N5 million, has significantly mitigated the impact of the bank’s failure on depositors.
“Significant progress has been made in protecting depositors’ funds, with the recent increase in maximum deposit insurance coverage providing enhanced protection across various financial institutions.
“This increase ensures that 98.98 per cent of total depositors in Deposit Money Banks (DMBs), 99.27 per cent in Microfinance Banks (MFBs), 99.34 per cent in Primary Mortgage Banks (PMBs), and 99.99 per cent in Payment Service Banks (PSBs) are covered. reinforcing NDIC’s commitment to fulfilling its mandate.
“While our immediate focus remains on insured deposits, the NDIC is also committed to ensuring that depositors with balances exceeding N5 million are compensated. These larger, uninsured deposits, represent a significant portion of the total deposits in Heritage Bank.
“The Corporation has already initiated the process of realising the bank’s assets and recovering debts to ensure the timely payment of the uninsured depositors through liquidation dividends.”
Hassan also urged depositors affected by bank closures to stay informed and submit their claims through official NDIC channels, reinforcing the corporation’s commitment to ensuring that all depositors receive the protections they deserve.
The NDIC’s renewed focus on collaboration with judicial authorities marks a significant step towards enhancing regulatory oversight and promoting a more resilient banking environment in Nigeria.
Taiwo Oyedele, chairman of the Presidential Taskforce on Fiscal Policy and Tax Reforms Committee, on Tuesday disclosed that the Withholding Tax Regulations 2024 has been gazetted.
Taiwo Oyedele, chairman of the Presidential Taskforce on Fiscal Policy and Tax Reforms Committee,
Disclosing this on Channels Television’s Independence Day special event which was tagged, “Nigeria’s Challenging Economy: Strategies For Recovery”, Oyedele said the gazetted regulation will be published on Wednesday.
“We have seen some of the processes within government are very slow, the bureaucracy can be better. So, one of the positives is that by going through this process of trying to do a holistic fiscal reform, we have also identified those areas where we can make things easier such that next time when there is an approval by the government almost immediately you can feel the impact.
“I do have some good news, the good news is that the withholding tax regulation has now been gazetted. So, the only reason it hasn’t been published today is because it is public holiday, so first thing tomorrow you will see a copy of the gazette and that provides a lot of relief not just for manufacturers but also every other business in terms of taking away some of the burdens of funding their working capital,” Oyedele said.
The Deduction of Tax at Source (Withholding) Regulations 2024 was announced by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, on July 1, 2024 as part of President Bola Tinubu’s economic reforms.
Withholding tax is a tax collection mechanism that serves as an advance payment of income tax. It is deducted at source directly from payments for required transactions.
Speaking further, Oyedele emphasised how his committee is working to improve the ease of doing business in Nigerian, saying that it is one of the three pillars of the work of his committee.
“Essentially when you are talking about ease of doing business, it is one of the three pillars of the work of my committee along with so many Nigerians who are members of that committee, putting in everything that they can without asking for anything in return because they love their country and that gives us hope.”
The tax committee chairman also disclosed that the Economic Stabilization Bill which his committee has been working on for some months has been approved by the Federal Executive Council.
He said the bill will go to the National Assembly in a couple of days where it is expected to be passed into law.
PalmPay, one of Nigeria digital banks processes over 300 million volume of transactions every month worth N6trillion.
Chika Nwosu, managing direction, PalmPay stated this at the 5th anniversary event of the Fintech company held on Monday in Lagos.
Chika Nwosu, managing direction, PalmPay
He said that, the past 5 years have been about problem solving, innovative thinking and enabling Nigerians for a digital economy. “We have grown immensely as an organization by launching diverse range of financial products making payments solutions more accessible and reliable.
“We are bigger, stronger and better in every way having been recognized as one of the world top 250 Fintech companies in 2024 by CNBC and Statista’.
“We have established ourselves as a top player in Nigeria Fintech space. Our impact is tangible with products like money transfer, e-payment, credit services and saving. PalmPay contribution to financial inclusion is very significant, as the country achieved 74 percent inclusion rate as at last year and we are just getting started,” he said.
He noted that the recently launched USSD service *861# is an innovative solution designed to bring financial services to Nigerians without smartphones. “This innovation is driven by our understanding of local needs and our commitment to delivering real solutions.
“Looking ahead of us in the next 5 years of our operation, will be about sterling innovations and deepening our impact, we are not just looking at adding zeros to our user base but bringing financial empowerment to every nooks and crane of Nigeria. We want to continue to prioritize security, innovation and user experience, enhancing our anti-fraud features in collaborating closely with regulators.
“As we want to deepen financial inclusion in Nigeria, we want to reach especially the last mile, – the people who don’t use smartphones. This is actually our major target going forward.
“For us in PalmPay our major objective is to use technology to support financial inclusion not just in Nigeria but in other African countries. We are promising our customer that we will give them the best of service and so, they should stick with us, ” he added.
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