Fidelity Bank Pops Value, Raised N14bn from Private Investors
Fidelity Bank Plc’s market capitalisation slumped to N147.481 billion on Friday, data from the Nigerian Exchange show following profit-taking activities in the local bourse. Market data showed that over the last six months, the bank share has appreciated by 50%.
In the last seven trading sessions, the bank gave up some of the gains, down by more than 4% amidst notice that management has successfully raised N13.972 billion from private placements.
From the beginning of the year to date, Fidelity Bank’s share has returned a 17.55% gain to shareholders. It was up by 246% all-time high, trading data show.
This feat makes the bank stock one of the best performing tickers in the local bourse – and rated high as a positive contributor to the banking index movement.
At the close trading session on Friday, the banking index slumped as investors began to move funds to safe havens following yields repricing in the fixed income segment.
Last week, the bank announced it has successfully raised about #14 billion via private placement. The offer was picked by two major investors, a placement the management said is part of efforts to raise the bank’s capital position.
In the fourth quarter of 2022, Fidelity Bank repaid $400 million Eurobond due. MarketForces Africa reported that the tier 2 lender issued the 5-year bond in October 2017 at a 10.50% coupon.
Fidelity Bank is among tier 2 lenders impacted by the Central Bank of Nigeria cash reserves debits for failing to meet 65% loans to deposit target.
In the financial year 2022, the bank reported an improved earnings performance while it raise borrowing levels amidst a high-interest rate environment that started in May 2022.
The audited result for 2022, showed that Fidelity Bank grew its earnings strongly, resulting in higher earnings per share and stable dividend payments to shareholders was maintained.
Details from its audited financial statement for 2022 showed that earnings per share printed at N1.63, up by 40 kobo from N1.23.
According to analysts, over the last 3 years on average, earnings per share has increased by 17% per year but the company’s share price has increased by 41% per year, which means it is tracking significantly ahead of earnings growth.
The market has priced in its improved market footprint amidst its plan to become a TIER 1 capital lender.
Fidelity Bank’s tier 1 dream has been preached over years, first launched by its erstwhile Chief Executive Nnamdi Okonkwo and reaffirmed by Nneka Onyeali-Ikpe, the current CEO.
With the market dynamics, some, analysts feel that plan to join the Tier I class could be a pipe dream for years. Rivalry in the banking sector is expected to peak following interest rate adjustments.
Deposit money banks need cheap funding sources to stem possible increases in funding costs while maximizing the upside to a higher interest rate environment engineered by the apex bank’s fight against rising inflation.
By industry average, Tier 2 capital banks have higher costs of funds and costs to income ratios compared to their Tier I counterparts.
Also, Tier 1 banks finance most of the high tickets transactions, accounting for about 80% of aggregate loans in the economy. # Fidelity Bank Pops Value, Raised N14bn from Private Investors
