Company Analysis

Fidelity Bank 2021-9M: Robust Loan-Deposit Ratio, Profit, Better Dividend Prospects

Rating: Buy
Current Market Price: N2.56
Year High: N2.80
Year Low: N2.08
Fair Value: N4.36
Equity Analyst:  Tunde Segun Jeariogbe


  • This report observes the financial performance statistics of Fidelity Bank Plc for the first nine months of 2021, compared same with the similar period in 2020, and establish growth accordingly.
  • We also observed a few valuation metrics and achieved conservative projections using the full-year performance indices from the year ended 31st December 2020.
  • Generally, the result can be rated average when placed side-by-side with figures released in the corresponding period of 2020.
  • Performance indices stood at the appreciable gap from the comparable periods, though the Total Comprehensive Income dropped substantially against that of the comparable period of 2020.
  • See below for a comparison of other financial indices.
Sources: Company report, NGX, Investdata Research

Company figures

  • Gross Earnings posted for the period stood at N174.35 billion up from the N155.03 billion posted at the end of 2020 nine months.
  • Interest Income stood at N137.41 billion, up from N128.25 billion in 2020 preceding nine months.
  • Interest Expenses was estimated at N72.45 billion, the same as 26.07% above the reported N57.46 billion in 2020.
  • Net Interest Income was estimated at N64.95 billion, down from N70.78 billion in the corresponding period.
  • Operating Expenses dropped by 6.98% to N55.03 billion from N59.21 billion in the comparable period of last year.
  • Profit before Tax stood at N28.05 billion, same as 31.40% above the N21.34 billion posted last year.
  • Having considered the Tax Expense for the period, a total of N26.51 billion was reported as Profit for the period, this is 29.92% above the N20.40 billion earned at the end of the first nine months in 2020.
Sources: Company report, NGX, Investdata Research
  • Total Assets is currently valued at N3.182 trillion, the same as 23.59% above that of the N2.575 trillion in the full-year ended December 31, 2020.
  • Similarly, due to improved deposit, the Total Liabilities posted for the period was N2.900 trillion against N2.313 trillion in 2020 full-year.
  • Net Assets is therefore estimated at N282.65 billion, which is 7.81% above the N262.17 billion estimated in the last full year.
  • Retained Earnings remained positive at N53.70 billion, against N58.96 billion of last full-year.
  • Total Deposit at the end of the period is the same as N1.972 trillion, higher than the N1.498 trillion deposit reported in 2020 audited full-year.
  • Total Loans and Advances stood at N1.766 trillion from N1.455 trillion in 2020 full-year.

Financial Strength/Solvency Ratios

  • Debt Ratio which compared Total Assets to Total Liabilities stood at 91.92%, implying that the Total Liabilities is 91.92% of Total Assets. Note that Total Liabilities is inclusive of Total Deposits for the period.
  • Total Debt to Equity for the period stood at 10.26x, same as 16.30% above the 8.82x estimated in 2020, which implies that the company used Debt equivalent to 10.26 replicate of its equity through the period.
  • Equity Ratio which compares Equity to Total Assets stood at 8.88%, as against 10.18% in the corresponding quarter; implying that the reported Equity at the end of the period is 8.88% of Total Assets.
  • Estimated Beta value for Fidelity Bank as of the time this report was compiled stood at 1.01x, slightly above the market beta but lower than the 1.11 industry average.
Sources: Company report, NGX, Investdata Research

Profitability Ratios

  • Pre-Tax Margin inched north by 16.84% to 16.09%, against the 13.77% estimated at the end of 2020 nine months.
  • Interest Expenses to Gross Earnings grew by 12.10% as it is now estimated at 41.56%, against the previously estimated 37.07% in the corresponding period of last year.
  • Return on Average Equity through the first nine months of 2021 was 9.38% against 7.78% estimated from 2020 nine months numbers.
  • See the below table for detailed profitability ratios and comparison.
Sources: Company report, NGX, Investdata Research

Efficiency Ratios

  • Operating Expenses at the end of the period is estimated at 31.59% of the estimated Gross Earnings, which is below the 38.20% achieved in the 2020 nine-month financials.
  • Gross Earnings estimated from the bank’s financials is the same as 5.48% of the Total Assets value posted for the period under analysis.
  • Total Loan and Advances posted for the quarter is 89.54% of Total Deposit, this is 7.84% downward adjustment over the 97.16% estimate in 2020. Note that this is far above the regulators’ standard for Nigerian banks.
Sources: Company report, NGX, Investdata Research

Investment/Valuation Ratios

  • The profit earned per unit of Fidelity Bank is estimated at N0.92, 29.92% above the N0.70 earned in a similar period of 2020.
  • Total Comprehensive Income per share is estimated at N0.53, which is 54.36% below the N1.17 TCI/share achieved in 2020.
  • Adjusted P/E Ratio for the nine months dropped to 1.00x from 1.08x, which can also be interpreted as a reduced investment period.
  • The said earnings per share yielded 33.39% of the price of each unit of Fidelity Bank’s on the exchange on the day the result was released to investors through the exchange.
  • The estimated value of each unit of Fidelity Bank in its book is N9.76, representing a 7.81% improvement over the previous estimate of N9.05 per share.
  • Confirming the academic under-priced stand of Fidelity Bank’s shares on the exchange is the Price to Book Value estimated at far below unity.
Sources: Company report, NGX, Investdata Research


Exploring our blend of valuation tools, we conservatively valued each unit of Fidelity Bank at N4.36, thus, we rate it a Buy.

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