Fidelity Bank reclassified as medium price stock
By Emma Ogbuehi
Following bullish run in the stock market in recent months, the Nigerian Exchange Limited (“NGX”) on Friday announced the reclassification of Fidelity Bank Plc. from small price stock to medium price stock.
A statement by Joseph Kadiri, Media Relations, Corporate Communications of the NGX, which was made available to TheNiche on Friday said the reclassification became necessary because Fidelity Bank Plc. shares have been trading above the N5.00 mark since February 2023.
“Rule 15.29 of the Rulebook of The Exchange, 2015 (Dealing Members’ Rules) notes that equities priced above N5 per share for at least four of the most recent six months of trading, or new security listings priced above N5 per share at the time of listing on NGX are classified as medium price stock,” the statement said.
“According to NGX, Fidelity Bank Plc. traded above the N5.00 mark on 20 February 2023 and has remained above the N5 mark up until close of business on 30 June 2023.
“This indicates that FIDELITYBK has been trading above N5 for at least four (4) months in the last six (6) months. Therefore, it should be reclassified from small price stock to medium price stock.”
In April, the bank released its audited financial statement and accounts to the investing public.
A major highlight of the report was a recommendation of a 42.9 per cent increase in dividend payout by the board of directors of the bank.
In one of the highest return growths in the stock market, Fidelity Bank, which set a personal record with its first interim dividend in 2022, increased cash dividends payable to shareholders for the 2022 business year from N10.137 billion in 2021 to N15.7 billion in 2022.
According to regulatory filing at the Nigerian Exchange (NGX), shareholders, who received interim dividend of 10 kobo per share earlier in 2022, received a final dividend per share of 40 kobo, totaling a payout of 50 kobo for the 2022 business year as against 35 kobo paid for the 2021 business year.
Key extracts of the audited statement and accounts for the year ended December 31, 2022 showed a double in profitability, driven by strong growths in the top-line and the structural balance of the bank’s operations.
Gross earnings rose by 34.4 per cent in 2022 to N337.05 billion as against N250.78 billion in 2021. Segmental topline analysis showed that the bank’s performance was driven largely by its core commercial banking operations.
Gross interest income rose by 45.2 per cent from N203.57 billion to N295.58 billion, representing 87.7 per cent and 81.2 per cent of gross earnings in 2022 and 2021 respectively.
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After interest expenses, net interest income stood at N152.70 billion in 2022 compared with N94.88 billion in 2021, an increase of 60.94 per cent.
Total operating expenses stood at N120.78 billion in 2022 as against N96.31 billion in 2021, an increase of 25.4 per cent; lagging behind top-line growth.
Expenses were driven by more than a quarter growth in other non-personnel operating expenses, reflecting the impact of spiraling hyperinflation that characterised the 2022 business year.
After taxes, net profit rose from N23.10 billion to N46.72 billion, an increase of 102.2 per cent. With these, earnings per share rose correspondingly from 80 kobo in 2021 to N1.61 in 2022.
Total assets touched the N4 trillion mark at N3.99 trillion in 2022 as against N3.28 trillion in 2021, an increase of 21.65 per cent. Customer deposits, which underlines public acceptance and market status, grew by 27.7 per cent from N2.02 trillion to N2.58 trillion.
The financial statement showed key ratios underlining corporate efficiency, profitability, asset management, sustainability, shareholders’ value creation, among others, all trended upward.
Net Interest Income, which measures the profitability of the core banking operations, improved from N94.88 billion in 2021 to N152.70 billion in 2022.
Pre-tax profit margin, which indicates the institutional profitability as a corporate entity, increased by about six percentage points from 10.05 per cent in 2021 to 15.93 per cent in 2022.
Net profit margin also improved from 9.21 per cent to 13.86 per cent. Return on total equity- which denotes value creation as a business owned by shareholders, grew from 8.1 per cent in 2021 to 14.86 per cent in 2022.
Return on total assets almost doubled in 2022 at 1.35 per cent as against 0.77 per cent in 2021. Dividend cover, which measures return sustainability and dividend outlook, stood at 3.22 times in 2022 as against 2.29 times in 2021.
This implies that in spite of about 43 per cent increase in dividend payout in 2022, the bank has a stronger prospect of sustaining such increased dividend payout, on the back of its enhanced earnings.
Managing Director, Fidelity Bank Plc, Mrs Nneka Onyeali-Ikpe said the 2022 performance reflected the bank’s continuing focus on its execution strategy, despite global and national macroeconomic headwinds.
Nneka Onyeali-Ikpe pointed out that improvements in the profitability was driven by a business-wide understanding of the key goals and strategies as the bank continued to prioritise investments in human capital and technology as enablers for growth.