Investors are clamoring for shares of Fidelity Bank Plc, driven by the commercial bank’s ongoing capital raising efforts, which have garnered widespread enthusiasm across all investor categories. The bank’s rights and public offers are attracting massive subscriptions, and its stock has dominated the Nigerian Exchange (NGX) market, reflecting the strong investor appetite.
In the most recent weekly report, Fidelity Bank emerged as the most active stock on the NGX, outperforming both the banking sector and the broader market. The bank recorded a turnover of 1.73 billion shares valued at N18.27 billion across 1,579 deals, accounting for 51% of the total volume and 35% of the total value traded during the week. Overall, the NGX reported a turnover of 3.39 billion shares worth N52.30 billion in 44,814 deals.
Fidelity Bank’s stock performance is a testament to the positive sentiment surrounding the bank’s ongoing offers. Despite the broader market downturn, the bank’s share price increased by 0.05% to N10.75 per share, contrasting with the NGX All Share Index (ASI), which declined by 0.46%. Similarly, the NGX Banking Index fell by 0.48% during the week.
Investment experts have highlighted Fidelity Bank’s attractiveness, noting that the bank’s ongoing rights and public offers present a unique opportunity for investors. The bank’s hybrid offer, initially valued at N127.1 billion, includes a rights issue of 3.2 billion ordinary shares at N9.25 per share and a public offer of 10 billion ordinary shares at N9.75 per share. Due to overwhelming demand, the bank has received approval to issue an additional 8.2 billion ordinary shares, doubling the rights issue to 6.4 billion shares and increasing the public offer by 5 billion shares.
The application period for the offers closes on August 12, 2024. Investors can participate with a minimum subscription of 1,000 shares, making it accessible to a broad spectrum of the public. Experts at Afrinvest West Africa have pointed out that subscribing to the rights and public offers is more cost-effective than purchasing shares in the secondary market, as the issuing company absorbs transaction costs.
Afrinvest has labeled Fidelity Bank as an “opportunity” for investors, citing the bank’s impressive historical performance and capital gains. Similarly, analysts at Arthur Steven Asset Management predict that investors could see a capital gain of approximately 57% over a short period, making the bank’s shares valuable assets for hedging against inflation.
Fidelity Bank’s strong financials further bolster investor confidence. The bank has consistently increased its dividend payouts over the past three years, with dividends rising from 35 kobo per share in 2021 to 60 kobo in 2023. The bank’s return on equity stands at 23%, and its debt-to-equity ratio is a manageable 1.34 times, indicating a low debt burden and the potential for higher returns to shareholders.
The bank’s growth trajectory has been impressive, with an average annual capital gain of over 100% in the past five years. Fidelity Bank has also seen substantial expansion in its operations, with its total assets increasing from N2.1 trillion to N6.2 trillion, making it the sixth largest bank in Nigeria. This growth has been driven by a significant increase in customer deposits, now exceeding N4 trillion.
As Fidelity Bank continues to expand and enhance its profitability, it remains a top choice for investors seeking substantial returns and stability in Nigeria’s banking sector.
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