…why investors are jostling for Fidelity Bank shares
By Chioma Obinagwam
The Nigerian Stock Exchange (NSE) assumed a downward swing at close of Monday’s trading as key measurement indicators- the NSE All Share Index and the Market Capitalisation of listed equities on the Exchange closed in red.
Specifically, the NSE All-Share index, which is a major stock market index that tracks the performance of all stocks listed on the NSE declined to 31,344.24 basis points (bps), a 0.26 percent loss from the 31,426.63 bps achieved on Friday, the 25th of January, 2019. Also, representing a Year-to-date loss of 0.27 percent.
The volatility experienced in the capital market lately is not unconnected to the tensions brewing up with respect to the upcoming general elections as well as events in the global sphere, particularly the interest rate hike in the United States.
Reacting, the acting Director General (DG) of the Securities and Exchange Commission (SEC), Mary Uduk, said, “We can see that the impact of increase in interest rate in advanced countries not just in the US, has impact on capital outflow thereby leading to reduced performance in our markets. I want to say that the interest rate increase in advanced economies not just the US, does not affect only Nigeria but also affects other emerging and frontiers market in the world.”
Notwithstanding the lull witnessed in the market, activities on the Nigerian bourse showed that Fidelity Bank Plc is one of the stocks that stood out in the previous week as well as on Monday’s trading emerging the most actively traded stock of Monday’s trading as investors traded 23.7 million shares valued at N56.6 million in 256 deals.
This patronage is coming on the heels of its position as the highest gainer in the week ended January 25, 2019 where it led other share price gainers adding 49 Kobo or 24.38 percent to its N2.01 opening price to close at N2.50 to top the chart.
Why investors are jostling for the stock?
The recent rally of the stock can be attributed to the bank’s reaffirmation of it’s commitment to its Five- year strategic plan, which has yielded tremendous fruits, boosting the bank’s balance sheet over the years.
Extracts from its third quarter 2018 (Q3, 2018) results is glaring as its key financial metrics closed in the green.
For instance, the nine-months results for the period ended September 30, 2018, showed a 6.9 per cent rise in gross earnings to N139 billion from N130.1 billion reported in the corresponding period in 2017
Similarly, the bank’s Profit Before Tax (PBT) also soared by 23.6 percent from N16.2 billion to N20.1 billion. Total Assets followed the same pattern, growing by 21.9 per cent to N1,680.8 billion from N1,379.2 billion during the review period.
Total Deposits, which is a measure of customers’ confidence, increased by 27.3 percent to close at N986.8 billion from N775.3 billion in 2017.
However, the bank’s expenses grew by 6.5 percent to N50.6 billion amidst high inflationary environment and due to increased technology investment and higher Asset Management Corporation of Nigeria (AMCON) Charges.
Its Cost to Income ratio remained relatively stable at 68.4 percent compared to 67.5 percent in 2017.
Moreover, its Non-performing Loans (NPLs) ratio improved to 6.0 percent from 6.4 percent in the 2017 Full Year (FY) despite a 3.4 percent growth in absolute NPL numbers, with the NPL coverage ratio at 109.9 percent.
More so, other regulatory ratios remained above the required thresholds with Capital Adequacy Ratio (CAR) at 17.0 percent, and Liquidity Ratio at 38.3 percent.
This impressive result could be sending good signals to investors on what to expect in the bank’s 2018 FY results, hence, the reason discerning/proactive investors are taking position in the stock.
Butressing on the performance of bank’s in the current year, which is not unconnected to Fidelity Bank, Former Chief Economist/Group Head, Research & Economic Intelligence Group at Zenith Bank Plc, Marcel Okeke has said, “The good bank’s, those who have been doing well, will continue to do well. The men will continue to be separated from the boys.”
Other volume notchers
Still on highest traded stocks by volume, UBA (United Bank for Africa) Plc followed with 21.8 million shares valued at N162 million were traded in 237 deals.
Diamond Bank Plc grabbed the third position among the top traded stocks with 21.2 million shares valued at N48.4 million were traded in 173 deals.
Who traded best?
Meanwhile, Nigerian Police Force (NPF) Microfinance Bank Plc topped the gainers’ chart, gaining 9.59 percent to close at N1.60. Union Diagnostics and Clinical Services was next with a 7.41 percent gain, closing at 29 kobo whereas Oando leaped 5.15 percent higher to close at N5.10.
On the laggards’ side, Berger Paints Plc was the worst performing stock, sheding 9.68 percent to close at N7. Trailing it was Hallmark Insurance Plc, which dipped by 8.57 percent to close at 32 kobo even as Mc Nichols Plc shaved 7.69 percent to closing at 36 Kobo.
