Company Analysis

Fidelity Bank: Bigger Loan Book, Better Margins, Raise Hope For Fatter Payout

Rating: Hold
Current Market Price: N2.29
Year High: N2.79
Year Low: N2.08
Fair Value: N4.18
Equity Analyst: Tunde Segun Jeariogbe


  • This report observes the performance statistics of Fidelity Bank Plc for the first quarter of 2021, compared same with that of the similar quarter of 2020, and established a growth pattern accordingly.
  • We also observed few valuation metrics and achieved conservative projections using the full-year performance indices for the year ended 31st December 2020 with growth estimated through the use of few other performance indices.
  • Generally, the result can be rated impressive when put side-by-side figures released in the similar quarter of 2020.
  • We have estimated Non-performing loan at 2.89%, down from last year’s 4.20%.
  • See below for other financial indices.
Sources: Company, Nigerian Exchange Ltd, Investdata Research

Company figures

  • Gross Earnings reported for the period stood at N55.12 billion, up from the N51.15 billion posted at the end of the 2020Q1.
  • Interest Income stood at N43.06 billion, as against N43.92 billion in 2020 first quarter.
  • Interest Expenses was estimated at N14.26 billion, the same as 26.19% below the reported N19.32 billion in 2020.
  • Net Interest Income stood at N28.79 billion from N24.60 billion achieved at the end of 2020 first quarter.
  • Operating Expenses grew by 5.26% above the comparable period, as it is currently valued at N21.27 billion against N20.21 billion.
  • Profit before Tax stood at N10.13 billion, same as 53.94% above the N6.58 billion posted in the corresponding period.
  • Having considered the Tax Expense for the period, a total of N9.59 billion was reported as Profit for the period, which is 63.68% above the N5.85 billion earned at the end of the first three months in 2020.
  • Note that the Total Comprehensive Income for the period is negative, to the tune of N9.10 billion, as against N7.26 billion in the comparable period.
Sources: Company, Nigerian Exchange Ltd, Investdata Research
  • Total Assets is currently valued at N2.893 trillion, same as 28.77% above the corresponding period valuation of N2.246 trillion.
  • Similarly, due to improved deposit, Total Liabilities for the period was N2.628 trillion, from N2.004 trillion in 2020 first quarter business session.
  • Net Assets is estimated at N264.42 billion, which is 9.09% above the N242.38 billion estimated last year.
  • Retained Earnings remained positive at N76.29 billion, as against N50.22 billion last year.
  • Total Deposit at the end of the period is same as N1.75 trillion, higher than the N1.35 trillion deposit reported in the corresponding quarter of 2020.
  • Total Loans and Advances stood at N1.74 trillion, as against N1.31 trillion in 2020.

Financial Strength/Solvency Ratios

  • Debt Ratio which compares Total Assets to Total Liabilities stood at 90.86%, implying that Total Liabilities is 90.86% of Total Assets. Note that Total Liabilities includes Total Deposits for the period.
  • Total Debt to Equity for the quarter stood at 10.8x, same as 108.5% above the 8.27x estimated in 2020, implying that the company used Debt equivalent to 10.85 replicate of its equity through the period.
  • Equity Ratio which compares Equity to Total Assets stood at 8.38%, as against 10.79% in the corresponding quarter; implying that the reported Equity at the end of the period is 8.38% of Total Assets.
  • The estimated Beta value for Fidelity Bank as at the time this report was compiled stood at 1.15, higher than the industry average of 1.11.
Sources: Company, Nigerian Exchange Ltd, Investdata Research

Profitability Ratios

  • Pre-Tax Margin grew by 42.87% to 18.38%, up  from the 12.87% estimated at the end of first three months of 2020.
  • Interest Expenses to Gross Earnings declined by 31.49% to 25.88%, as against the previously estimated 37.78% in the corresponding period.
  • Return on Average Equity through the first three months of 2021 was 3.96% against 2.42% estimated from 2020 three months numbers.
  • See below for detailed profitability ratios and comparisons
Sources: Company, Nigerian Exchange Ltd, Investdata Research

Efficiency Ratios

  • Operating Expenses at the end of the period is 38.60% of the estimated Gross Earnings, slightly below the 39.51% achieved in 2020 three months financials. Please note that this implies marginal adjustment in expenses rate.
  • Gross Earnings estimated from the financials is same as 1.91% of the Total Assets value posted for the period under analysis.
  • Total Loan and Advances during the quarter is 99.43% of Total Deposit, representing a 2.03% upward adjustment over the 97.45% estimate in 2020. We note also that this is far above the 65% regulatory threshold for Nigerian banks.
Sources: Company, Nigerian Exchange Ltd, Investdata Research

Investment/Valuation Ratios

  • Profit earned per unit of Fidelity Bank is estimated at N0.33, a 63.68% improvement over the N0.20 earned in similar quarter of 2020, and an indication that the Mustafa Chike-Obi-led board could offer a juicier dividend at the end of current year, if the management is able to sustain this momentum.
  • Adjusted P/E-Ratio for the three-month dropped to 1.68x from 2.25x, translating into less waiting period by investors.
  • The said earnings per share yielded 14.84% of the price of each units of Fidelity Bank’s shares on the exchange on the day the result was released to investors through the exchange.
  • Estimated value of each unit of Fidelity Bank is N8.37, same as previous quarter’s estimate.
  • Confirming the academic under-priced position of Fidelity Bank’s shares on the exchange is the Price to Book Value estimate that stood far below unity.
Sources: Company, Nigerian Exchange Ltd, Investdata Research


Exploring our blend of valuation tools, we conservatively valued each unit of Fidelity Bank shares at N4.18, thus, we rated it a Hold.

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