Why Fidelity Bank Is Recording Investors’ Rush

Fidelity Bank is recording investor’s rush due to its turnover of 1.73 billion shares worth N18.27 billion in 1,579 deals to emerge atop in the activities chart for the week

Consequently, investors’ interest in the bank’s ongoing rights public offers and voluminous trading at the stock market is recording massive subscriptions.

Fidelity Bank Plc as the leading commercial bank’s capital raising continues to gather momentum among all categories of investors.

The current weekly report also shows that Fidelity Bank remains the most active stock in the market, outperforming the banking sector and the overall market.

The Bank’s performance accounted for 51 percent and 35 percent of total volume and value traded during the week.

Total turnover for the week at the Nigerian Exchange (NGX) stood at 3.39 billion shares worth N52.30 billion in 44,814 deals.

Despite the overall negative performance of the market and the banking sector, Fidelity Bank’s share price rose by 0.05 percent to N10.75 per share.

The benchmark index that measures pricing trends for the equities market, the All Share Index (ASI) of the NGX, closed the week down by 0.46 percent.

The NGX Banking Index, the sectoral index that measures the performance of the banking sector, had closed lower by 0.48 percent.

The secondary market trading on Fidelity Bank’s shares underscored investment experts’ general view on the attraction of the bank’s ongoing rights and public offers.

Experts have categorized Fidelity Bank as the most attractive offer, carrying the “buy” recommendation in most investment research reports.

For instance, at the ongoing offer prices, the Bank is locking in an immediate double-digit gain of 11 to 18 percent for investors in ongoing rights and public offers, a substantial immediate return unique to the bank among other competitors.

Fidelity Bank started with a N127.1 billion hybrid offer including a rights issue of 3.2 billion ordinary shares of 50 kobo each at N9.25 per share and a public offer of 10 billion ordinary shares of 50 kobo each at N9.75 per share.

With the investors’ massive subscriptions and the offers heading to huge oversubscription, Fidelity Bank has received approvals to issue an additional 8.2 billion ordinary shares to absorb potential oversubscription.

Thus, the rights issue size was doubled with additional 3.2 billion shares while 5.0 billion shares were added to the public offer.

The application list for the offers closes on August 12, 2024. A minimum subscription of 1,000 shares or N9,250 for the rights issue and N9,750 shares for public offer ensures that the generality of the people can benefit from the bank’s ongoing offers.

Experts at Afrinvest West Africa said subscribing to the rights and public offers is cheaper as the issuing company bears the transaction cost compared to the secondary market where the buyer pays transaction charges and levies.

Afrinvest categorised Fidelity Bank as an “opportunity” for the investing public, citing the bank’s impressive historical capital gain and performance records.

Investment experts at Arthur Steven Asset Management said investors in Fidelity Bank’s ongoing rights and public offers stand to reap about 57 percent in capital gain over a short-term period, putting the bank’s shares as valuable inflation-hedging assets.

Analysts at Arthur Steven Asset Management outlined that with a return on equity of 23 percent, Fidelity Bank has consistently increased dividend payouts for the past three years.

Its shares rose from 35 kobo per share in 2021 to 40 kobo and 60 kobo in 2022 and 2023 respectively.

Analysts noted that the bank has a long-to-deposit ratio of 75 percent, underlining Fidelity Bank’s strong commitment to supporting businesses and national economic development.

The debt-to-equity ratio stands at 1.34 times, showing that the bank has no significant debt burden and thus easily, aggressive growths translate to higher returns to shareholders.

Fidelity Bank has delivered an average annual capital gain of more than 100 percent in the past five years and ranked among the elite stocks with the highest corporate governance rating in the Nigerian stock market.

The secondary or stock market performance has been driven by a massive expansion in business operations and strong growth in profitability. Fidelity Bank has recorded an average annual profit growth of 64 percent over the past three years.

The bank has seen rapid expansion in its customer base and assets with a total balance sheet size leaping from N2.1 trillion to N6.2 trillion, the sixth largest in the Nigerian banking industry.

The balance sheet was driven by a hefty total deposit of more than N4 trillion, the sixth biggest in the industry.