Shareholders Support Fidelity Bank’s Plan to Increase Funding

Nigeria’s top shareholders’ associations have committed their strong support for the ongoing recapitalization of Fidelity Bank Plc. They cited the bank’s impressive performance over the years for their support.

They went on to express their intention to invest in any share offering, anticipating promising returns and a bright future for the bank. 

Fidelity Bank Recapitalization

This backing reflects market investors’ confidence in Fidelity Bank’s ability to successfully raise additional funds. Also, it highlights its position as one of Nigeria’s foremost retail banks with transnational authorization.

Fidelity Bank boasts a highly diverse shareholder base, with nearly 400,000 shareholders. This makes it one of the most diversified commercial shareholders’ bases among Nigerian banks. No single shareholder holds more than 5.0 percent of the issued share capital, aligning with extant laws and market regulations that consider five percent and above as material shareholding.

Fidelity Bank Shareholder Recapitalization Support 

This diversified shareholding base, though presenting challenges in corporate register management and stock volatility, demonstrates Fidelity Bank’s popularity as a stock. Additionally, the bank’s substantial free float emphasizes the stock’s pricing efficiency in the market, ensuring that the share price accurately reflects fundamental factors and investors’ expectations.

With an average annual return of more than 81 percent 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.

Shareholders are confident that the bank is poised for a major leap in the emerging Nigerian financial services sector. National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude, said Fidelity Bank has shown that shareholders can trust it for sustainable growth and returns.

“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 to sustain this growth,” Igbrude noted.

President of the Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr. Faruk Umar, who said Fidelity Bank’s performance over the years has been very encouraging, commended its corporate governance structure that reassures investors of the safety of their investments.

Shareholders Speak on Fidelity Bank Recapitalization 

Umar pointed out that the successful acquisition of Union Bank UK was a testimony to the financial strength of the bank. “The bank has since joined the league of banks paying an interim dividend, which shareholders are happy with,” he said while commending the board and management “for the good results they have been posting.”

“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 plan. The caliber of the independent non-executive directors on the board gives shareholders strong confidence in 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 recapitalization requirement set out by the Central Bank of Nigeria (CBN),” Umar added.

Processes and Impacts of the Recapitalization

The bank’s interim report and account for Q1 2024 revealed it started the current business year on a stronger footing with three-digit growths across key performance indicators. The three-month report, by the NGX, indicated gross earnings boosted by 89.9 percent to N192.1 billion in Q1. 

Growth in interest income was primarily spurred by a higher yield environment and strong earning assets base. However, the increase in non-interest income was led by double-digit growth in account maintenance charges, and foreign exchange (forex)-related income.  

Earnings before tax doubled by 120 percent to N39.5 billion in Q1 2024 as against N17.9 billion in Q1 2023. This performance was driven by expanding market share with total deposits rising by 17 percent within the three months to N4.7 trillion, compared with N4 trillion recorded at the end of 2023.  

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