Shareholders expect significant capital appreciation of the stock price of Fidelity Bank, which has N1.2 trillion assets, N178 billion total equity, and an unbroken record of dividends payment for 10 years.
Fundamental performance indices maintained a stable growth over the past 27 years of operation, with the bank’s annual financials result posting impressive profits and returns on equities to over 400,000 shareholders.
With gross earnings up 4.3 per cent to N132.4 billion in 2014, from N126.9 billion in 2013, profit before tax of N15.5billion, and profit after tax of N9 billion, the returns on equity as of December 31, 2014 stood at 9.0 per cent.
This indicates that an investor who invests in the stock now trading at about N2 per share on the Nigerian Stock Exchange (NSE) may over a short period of time recoup his investment, and the rest will be gains and more gains.
Figures obtained from the bank during its “Facts behind the Figures” presentation at the NSE showed that Capital Adequacy Ratio (CAR) based on Basel II computation, stood at 23.2 per cent, above the 15 per cent minimum requirement of the Central Bank of Nigeria (CBN); and at 38.0 per cent, its liquidity ratio is above regulatory minimum 30.0 per cent
Earning assets remained high at N819.0 billion in 2014, from N751.7 billion (2013), but came down to 69.0 per cent from 69.5 per cent when earning assets are compared to total assets.
With the impressive numbers, stockbrokers expect the share price of the stock to rise to about N7.0 per share, above the current price of N1.98 per share as of Tuesday, May 12, blaming its undervalued price on the bearish situation of the stock market.
Fidelity Bank Managing Director and Chief Executive Officer, Nnamdi Okonkwo, disclosed that it targets a proposed dividend of 50 per cent of profit after tax in 2015, against 37.8 per cent in 2014, and would continue to ensure regular payment of dividends to all shareholders.
Fidelity targets deposit growth of 10 per cent for the financial year ending December 31, 2015 up from a deposit growth of 1.7 per cent in 2014.
Okonkwo said this would be achieved through branch expansion (25 branches in 2015) and aggressive growth in retail customer base, as well as use of electronic channels to reach out to more customers.
The bank targets a non-performing loan (NPL) ratio of 4.0 per cent, against 4.4 per cent in 2014, on a net interest margin of 7 per cent. The cost of risk by the tier two lender normalised at 0.8 per cent in 2014 from 1.8 per cent in 2013.
Okonkwo reiterated commitment to the four growth strategies of enhanced balanced sheet, growth in retail and small and medium enterprises (SME) growth, migration of customers to electronic channels, and efficiency in customer service.
He disclosed that N80 million was disbursed to three SME firms under the N220 billion Micro Small and Medium Enterprises (MSME) fund established by the CBN in 2014 for lending to MSMEs at 9 per cent interest rate.
The three companies are Petters & Daniels Industries, Uzo-Best Nigeria, and Pecho Plastics.
On the bank’s recent bond, Okonkwo said the N30 billion, 16.48 per cent fixed rate subordinated unsecured bonds due in 2022 was fully subscribed.
The bond, which was closed on May 13, will enable the bank to be a dominant player in the SME sector of the economy.
The fund will expand support to the SMEs and retail segments of the market.