Shareholders Okay Fidelity Bank’s Recapitalisation Plan

• Applaud impressive performance by board, management 

BY CHINYERE OBIORA, LAGOS – Amid commendations for its impressive performance over the years, shareholders have expressed readiness to massively mobilise and support the ongoing recapitalisation efforts of Fidelity Bank Plc.

Shareholders were unanimous that the Bank has shown strong resilience over the years and demonstrated its investors’ friendliness with significant dividends and capital gains.

The endorsement is coming from Nigeria’s leading shareholders’ associations as they promised to buy into any share offering by Fidelity Bank because the opportunity holds an exciting future for above-average returns.

The shareholders’ endorsements underlined market pundits’ expectations that Fidelity Bank would easily raise additional funds and retain its status as one of Nigeria’s leading commercial banks with international authorisation.

With nearly 400,000 shareholders, Fidelity Bank has the most diversified retail shareholders’ base among Nigerian banks and no single shareholder held up to 5.0 per cent of the issued share capital of the bank.

Currently, five per cent and above are considered the material shareholding under extant laws and market regulations.

Despite its challenges of corporate register management and stock volatility, the highly diversified shareholding base shows Fidelity Bank as a popular stock with its huge free float also underscoring the pricing efficiency at the stock market, indicating that the share price reflects the bank’s fundamental and investors’ expectation.

According to the shareholders, they are impressed by the bank’s performance, expressing optimism that it is poised for major leap in the emerging Nigerian financial services sector.

National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude, said current events showed that shareholders can trust the bank for sustainable growth and returns, adding; “Fidelity Bank is a promising bank that is growing organically, it is servicing its niche and share of the market.

“My appeal to the board is to continue to imbibe good corporate governance in order to sustain this growth”.

On his part, President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr. Faruk Umar said the bank’s performance over the years has been very encouraging, noting that its good corporate governance structure which reassures customers of the safety of their investments.

Describing the successful acquisition of Union Bank UK as a testimony of the bank’s financial strength, Dr Umar said; “The bank has since joined the league of banks paying interim dividend, which shareholders are happy with”.

He commended the bank’s Board and management “for the good results they have been posting”, noting that investors have confidence in the future of the bank.

Speaking further, he said; “The appointment of Dr Nneka Onyeali-Ikpe as the Group Managing Director, after serving as Executive Director, indicates that the bank has a good succession planning in place. The calibre of the independent non-executive directors on the board gives shareholders strong confidence of the kind of board oversight they will be expecting.

“Now that the bank is coming out with a rights issue offer, we are very confident shareholders will take their rights , and we are sure the bank will meet the recapitalisation requirement set out by the Central Bank of Nigeria (CBN)”.

Similarly, National Coordinator, Pragmatic Shareholders Association of Nigeria, Mrs. Bisi Bakare, said Fidelity Bank has created a “very excellent impression” in the minds of shareholders.

According to her, the bank has continually showcased exemplary leadership with continuous impressive results, with successive growths over the past five years.

“Despite various challenges and economic uncertainty and other unforeseen occurrences, Fidelity Bank weathers the storm with strong performances,” Bakare said.

She cited the 2023 business year when the bank doubled its pre-tax profit by 131.5 per cent to N124.2 billion on the back of 64.9 per cent growth in gross earnings to N555.8 billion. The bank’s deposits increased by an impressive 56 per cent from N2.6 trillion in 2022 to N4.0 trillion while total assets grew by 56 per cent from N3.9 trillion to N6.2 trillion.

“Furthermore, Fidelity Bank paid a dividend of 85 kobo, including interim dividend of 25 kobo and final dividend of 60 kobo. Considering the share price of Fidelity Bank, their dividend policy is very robust.

“It is evident that our bank has not only weathered the storm of economic challenges but has also managed to thrive. Fidelity Bank is a very good bank that shareholders are very happy with their investments and we have never regretted buying into Fidelity Bank.

“I believe their right issue is going to be oversubscribed considering their past performances,” Bakare said.

National Coordinator, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie said Fidelity Bank’s growth has been “very amazing as it has delivered good returns in terms of good dividends to shareholders”.

According to him, shareholders are proud of the bank’s balance sheet, which is something that gives shareholders hopes for better rewards in the years ahead.

“All that average investors look for in a company is the fundamental, and Fidelity Bank is very strong in this. They are poised to surpass what they have projected. I should say the sky is their limit despite the headwinds.

“Fidelity Bank remains one of the best stocks that investors should look forward to invest in for better returns. I’m very optimistic of the bank’s healthy strong assets. With its good corporate governance and excellent customers’ service, there is every reason to hope for more promising future,” Okezie said.

Meanwhile, the bank’s interim report and account for the first quarter ended March 31, 2024 showed it started the current business year on stronger footing with three-digit growths across key performance indicators.

The three-month report, released at the NGX, showed that it’s gross earnings increased by 89.9 per cent to N192.1 billion in first quarter 2024, even as the top-line performance continued to be driven by broad-based growths across income lines with interest income rising by 90.7 per cent and non-interest income growing by 84 per cent in first quarter 2024.

Growth in interest income was primarily spurred by a higher yield environment and strong earning assets base, while the increase in non-interest income was led by double-digit growth in account maintenance charges, foreign exchange (forex)-related income, trade, banking services, and remittances, supported by increased customer transactions.

With its Profit Before Tax doubling by 120 per cent to N39.5 billion in first quarter 2024 as against N17.9 billion in first quarter 2023, the bank’s performance was driven by expanding market share with total deposit rising by 17 per cent within the three months to N4.7 trillion, compared with N4 trillion recorded at the end of 2023.

The bank also increased its supports for national economic growth with net loans and advances rising by 21 per cent from N3.1 trillion at the end of 2023 to N3.7 trillion by March 2024.

With average annual return of more than 81 per cent over the past five years, comparative analysis shows that Fidelity Bank outperforms all other major market indices with the bank’s average annual return for the period twice the average return by the overall market and almost four times of average return in the banking sector.