Fidelity Bank 2020-9M: Positive Bottom Line, Despite Rising Headwinds

Rating: Hold
Current Market Price: N2.56
NPL RATIO: 4.10%
Year High: N2.60
Year Low: N1.50
Fair Value: N4.10
Equity AnalystTunde Segun Jeariogbe


  • This report observed the financial performance statistics of Fidelity Bank Plc for the first nine months of 2020, compared same with the similar quarter of 2019 and established growth accordingly.
  • We also observed few valuation metrics, and achieved conservative projections using the full-year performance indices for the year ended 31st December, 2019.
  • Generally, the result can be rated average when put side-by-side with figures released in the similar quarter of last year.
  • Non-Performing Loan jumped to 4.10% from 2.96% in the corresponding period.
  • Performance indices stood at marginal gap from the comparable periods, while Total Comprehensive Income improved substantially over the prior comparable period.
  • See below for other financial indices comparison.
BourseNigerian Stock Exchange
Market ClassificationMain Board
Nature of BusinessCommercial Banking
Date of IncorporationNovember 19th 1987
Date ListedMay 17th 2005
End of Accounting Year31st December
RegistrarFirst Registrars Nigeria Limited
AuditorErnst & Young / PKF Professional Services
Share Price@Relsd (N)                                                         2.29
Earnings per Share                                                         0.70
Intrinsic Value(N)                                                         4.10
Share Outstanding28,974,797,023
Market Capitalisation                                       66,352,285,183

Company figures

  • Gross Earnings stood at N155.03 billion, down from the N161.05 billion at the end of 2019 third quarter business session.
  • Interest Income stood at N128.25 billion, as against the N132.55 billion in 2019 third quarter.
  • Interest Expenses was estimated at N57.46 billion, same as 25.24% below the previously reported N76.87 billion.
  • Net Interest Income was estimated at N70.78 billion as against the N55.68 billion achieved last year.
  • Operating Expenses grew by 5.01% above the N59.27 billion reported in the comparable period, as against N56.39 billion.
  • Profit before Tax stood at N21.34 billion, same as 3.64% above the N20.59 billion posted earlier.
  • Having considered the Tax Expense for the period, a total of N20.40 billion was reported as Profit, which is 7.08% above the N19.05 billion earned at the end of the first nine months in 2019.
Statement of Comprehensive Income
GROSS EARNINGS               155,030           161,0553.74
INTEREST INCOME               128,250           132,5583.25
INTEREST EXPENSES                 57,469              76,87025.24
NET INTEREST INCOME                 70,781              55,68827.10
OPEX                 59,217              56,3945.01
DEPRECIATION                    4,573                3,88917.59
PBT                 21,348              20,5983.64
TAX                       943                1,54238.85
PAT                 20,406              19,0567.08
TOTAL COMP INCOME                 33,937              26,08130.12
Statement of Financial Position
Total Assets           2,575,198        1,970,62130.68
Total Liabilities           2,313,024        1,748,89332.26
Net Assets               262,174           221,72818.24
Property Plan & Equipment                 38,738              37,6392.92
Retained Earnings                 58,968              54,9957.22
Total Deposits           1,498,419        1,116,41634.22
Total Loans and Advances           1,455,843        1,214,55019.87
STAGE3 ECL                 59,724              35,99465.93
  • Total Assets is currently valued at N2.575 trillion, 30.68% above the N1.970 trillion valuation corresponding period.
  • Similarly, due to the improved deposit mobilised, Total Liabilities during the period was N2.313 trillion, as against N1.748 trillion in 2019 third quarter.
  • Net Assets is therefore estimated at N262.17 billion, which is 18.24% above the N221.72 billion estimated last year.
  • Retained Earnings remained positive at N58.96 billion compared to N54.99 billion of the last third quarter.
  • Total Deposit is same as N1.49 trillion, higher than the N1.11 trillion deposit reported in the corresponding quarter of 2019.
  • Total Loans and Advances amounted to N1.45 trillion, up from N1.21 trillion in the preceding third quarter.

Financial Strength/Solvency Ratios

  • Debt Ratio which compares Total Assets to Total Liabilities stood at 89.82%, implying that the Total Liabilities is 89.82% of Total Assets. Understand that Total Liabilities is inclusive of Total Deposits for the period.
  • Total Debt to Equity for the quarter stood at 8.82x, same as 11.85% above the 7.88x estimated in 2019. This implies that the company used Debt equivalent to 8.82 replicate of its equity through the period.
  • Equity Ratio, which compares Equity to Total Assets, stood at 10.18% as against 11.25% in the corresponding quarter; implying that the reported Equity at the end of the period is 10.18% of Total Assets.
  • Estimated Beta value for Fidelity Bank as at the time this report was compiled stood at 1.33 this stood above market beta the industrial average of 1.11.
Financial Strength/Solvency Ratio
Debt Ratio89.82%88.75%1.21
Total Debt to Equity Ratio (MRQ)882.25%788.76%11.85
Equity Ratio10.18%11.25%9.52
Beta Value                                       1.33                                   1.1119.82
Non-Performing Loan Ratio4.10%2.96%38.43

Profitability Ratios

  • Pre-Tax Margin inched north by a marginal 7.67% to 13.77%, as against the 12.79% estimated at the end of 2019 nine months business session.
  • Interest Expenses to Gross Earnings declined by 22.33% to 37.07% against the previously estimated 47.73% in the corresponding period.
  • Return on Average Equity through the first nine months of 2020 was 7.78%, as against the 8.59% estimated from 2019 nine months numbers.
  • See the table below for detailed profitability ratios and comparison:
PRE-TAX MARGIN13.77%12.79%7.67
EFFECTIVE TAX RATE4.42%7.49%40.99
IE TO GE37.07%47.73%22.33

Efficiency Ratios

  • Operating Expenses at the end of the period is estimated at 38.20% of the estimated Gross Earnings, this is slightly above the 35.02% achieved in the 2019 nine months financials. Please note that this implies marginal adjustment in rate of expenses.
  • Gross Earnings estimated from the bank’s financials is same as 6.02% of the Total Assets value posted for the period under analysis.
  • Total Loan and Advances for the quarter is 97.16% at Total Deposit, which is a 10.69% downward adjustment over the 108.79% estimate in 2019. Please note that this is far above the regulators’ standard for Nigerian banks.
OPEX TO GE38.20%35.02%9.09
GE TO TA6.02%8.17%26.34
Capex/Share                                       0.20                                   0.187.61

Investment/Valuation Ratios

  • The profit earned per unit of Fidelity Bank shares is estimated at N0.70, representing 7.08% above the N0.66 reported in similar quarter of 2019.
  • Total Comprehensive Income per share is estimated at N1.17, 30.12% above the N0.80 TCI/share achieved last year.
  • Adjusted P/E-Ratio for the nine months dropped to 1.08x from 0.85x, This can also be seen as reduced investment period for investors.
  • The said earnings per share is a yielded 30.75% of the price of each units of Fidelity Bank’s shares on the floor of the exchange on the day the result was made available to the investing public through the exchange.
  • Estimated value of each units of Fidelity Bank shares in its book is N9.05, 18.24% improvement over the previous estimate of N7.65.
  • Confirming the academic under-priced stand of Fidelity Bank’s shares on the floor of the exchange is the Price to Book Value estimate that stood far below unity
Investment/Valuation Ratios
Earnings Yield30.75%39.15%21.44


Exploring our blend of valuation tools, we conservatively valued each unit of Fidelity Bank at N4.10, thus, we rated it a Hold.