Fidelity Bank Targets Strategic Growth Plan with Public Offer
Being the first quoted bank to open its public offer this year ahead of the banking sector recapitalisation directive of the Central Bank of Nigeria, Fidelity Bank is already enjoying massive support on the back of its streak of impressive performance, reports FESTUS AKANBI
Recently, the Central Bank of Nigeria (CBN) released new guidelines on the minimum capital requirement for banks operating in Nigeria. This ranges from N50billion to N500billion depending on the type of licence held by the bank. In total, approximately N4.14trillion is expected to be raised between now and March 31, 2026.
Bookmakers said factors like speed, strategy, and good calculation will determine the chunk of the gains that will be accrued to individual investors and the banks as the investing community gets set for the reinvention of the 2005 banking consolidation exercise.
This is why the ongoing Fidelity Bank Plc’s N127.10 billion capital raising initiative at the capital market has continued to draw reactions from the investing public who admitted that Fidelity Bank is already counting the gains of its proactive measures.
While some other banks are still deliberating on what to do to raise their capital, Fidelity Bank, which had announced its desire to shore up its capital well ahead of the CBN’s announcement, is now on the verge of having its N127.10billion capital target fully realised.
Analysts said the bank is banking on its stream of impressive performance to woo potential investors to its public offer. For instance, a recent review has shown that Fidelity Bank outperformed all major market indices for measuring returns in the Nigerian stock market.
Marketable Performance
A review of official trading reports at the Nigerian stock market showed that investors in Fidelity Bank have earned more than 507 per cent in capital gains over the past five years, between May 31, 2019, and May 31, 2024.
Fidelity Bank’s share price rose by 507.14 per cent over the period, representing an average annual capital gain of 101.43 per cent. This significantly exceeds all other major return benchmarks, including the banking sector.
With 507 per cent capital gain in five years and an average annual gain of more than 100 per cent, the return analysis implies that investment in Fidelity Bank is more attractive than other classes of assets, including fixed-income securities such as government and corporate bonds; real estate investment and mutual funds among others.
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.
The bank’s CEO, Nneka Onyeali-Ikpe, disclosed that the funds would drive regional expansion, technological transformation, and business diversification to support growth and deliver value to shareholders and customers.
Strategic Growth Plan
Stating that the proceeds from the capital raising exercise would be instrumental in achieving its strategic growth plan, Onyeali-Ikpe said the funds will be deployed to drive the following growth aspiration, business and regional expansion within and outside Nigeria, technological transformation, diversification, and growth our earning base and lastly, it will help us to increase our capacity to support our customers.”
The bank’s management would not want to be caught up in the looming frenzy, thus deciding to throw its hat in the ring as the first bank to begin its offer for its recapitalisation.
Addressing the investing public at the NGX, the bank’s chief executive reiterated the commitment of the bank to delivering impressive returns to shareholders and supporting the growth of the Nigerian economy.
A Proactive Business Plan
She explained that the new capital raising by Fidelity Bank was driven by its proactive business expansion plan having secured shareholders’ approval to raise new equity funds as early as August 2023. The Central Bank of Nigeria (CBN) directive on new minimum capital was released in March 2024.
She assured that with its groundswell of support from enthusiastic shareholders, customers, and stakeholders, the bank is on course to achieving the N500 billion new minimum capital base, which will confirm the bank, beyond any doubt, as one of the biggest banks in Nigeria.
She highlighted that the funds, firstly, would be deployed to drive, business growth and regional expansion.
“We will strategically expand our footprints within and outside Nigeria to serve a broader customer base and unlock new market opportunities.
“Secondly, we will have what we call technological transformation. We are committed to leveraging proprietary technology to improve operational efficiency and deliver exceptional customer service.”
From the Nigerian Exchange (NGX) to stockbrokers, investors, and customers; the N127.1 billion combined rights and public offer have continued to receive unreserved recommendations, with industry thought leaders citing the performance of Fidelity Bank in its core banking operations and as a quoted company at the stock market.
Fidelity Bank is offering a rights issue of 3.2 billion ordinary shares of 50 kobo each at N9.25 per share. The bank is also simultaneously offering 10 billion ordinary shares of 50 kobo each to the general investing public at N9.75 per share.
Shareholders’ Nod
President, of the Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr. Faruk Umar, said the performance of Fidelity Bank over the years has been very encouraging.
According to him, the bank has a very good corporate governance structure that reassures investors of the safety of their investments.
He pointed out that the successful acquisition of Union Bank UK was a testimony to the financial strength of the bank.
National Coordinator, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, said investment in Fidelity Bank has proven to be all positive for investors, with good immediate returns and long-term capital appreciation.
According to him, a good investment serves the dual purpose of helping the investors with a good stream of income and preserving long-term value.
“I will take my right issues in Fidelity Bank, considering the bank’s performance over the years. It has been delivering delivered excellent returns to investors. We’ve not regretted putting our hard-earned money in the bank. That is the reason why I’m going to reinvest more into the bank for further income into my pocket because we are seeing higher dividends from the bank year in and year out. That is what average investors look out for before making their decisions to invest in any company, first and foremost,” Okezie said.
The Doyen of Stockbrokers, the oldest practising stockbroker, Alhaji Rasheed Yussuff, said the bank has good records going for it with its history of impressive growth profitability and dividend payments.
According to him, the bank is known to the market as a good investment, with evident records of impressive returns and corporate responsibility.
Chairman of the Association of Securities Dealing Houses of Nigeria (ASHON), Mr Sam Onukwue, who recalled the founding days of Fidelity Bank in 1987, said he had watched Fidelity Bank sustain a commendable growth trajectory over the years.
Onukwue, also managing director of Mega Equities Limited, said Fidelity Bank’s history of performance underlines the strength of its management, noting that the bank has proven to be able to keep investors’ trust.
In its 2023 full-year Audited Financial Statements, the bank reported a 131.5% growth in Profit Before Tax to N 124,26 billion.
According to the results, the bank grew Gross Earnings by 64.9% YoY to N555.83 billion, driven by 81.6% growth in Net interest income which increased from N152.7 billion to N277.37 billion. This led to a Profit After Tax of N99.45 billion representing a 112.9% annual growth.
Onyeali-Ikpe said, “We closed the financial year with strong double-digit growth across key income and balance-sheet lines. Our performance in 2023 is an attestation of our capacity to deliver superior returns to shareholders despite the difficulties in our operating environment. Profit before tax grew by 131.5% to N124.3bn from N53.7bn in 2022FY, leading to an increase in Return on Average Equity (RoAE) of 26.5% from 15.6% in 2022FY.”
A review of the financial performance showed that the bank grew Net interest income by 81.6% to N277.4bn driven by a 55.5% increase in interest income, thus reflecting a steady rise in asset yield throughout the year. The average funding cost dropped by 20bps to 4.4% due to increased low-cost funds that grew from 83.6% in 2022FY to 97.4% in 2023. The combination of higher asset yield and lower funding cost led to an increase in Net Interest Margin (NIM) of 8.1% from 6.3% in 2022FY.
Fidelity Bank has consistently paid dividends since 2006. With the proposed final dividend of 60 kobo per share, Fidelity Bank would be paying investors a total dividend of 85 kobo per share for the reporting period, a 70.0% increase compared to the 50 kobo per share paid to its shareholders in the previous year.
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