Post Views:
464
Rating: Buy
Current Market Price: N1.78
Loan to Deposit Ratio: 100.55%
Year High: N2.40
Year Low: N1.78
Fair Value: N4.12
Equity Analyst: Tunde Segun Jeariogbe
Introduction
- This report observed the financial performance statistics of Fidelity Bank Plc for the half-year ended 30th June, 2020, compared same with similar quarter in 2019 and established growth trajectory.
- We also observed few valuation metrics, and arrived at conservative projections using the full-year performance indices of the past few years.
- Generally, the result can be rated average when put side-by-side with figures released in the similar quarter of 2019.
- Although the Top Line only improved by marginal points, Bottom Line however grew at a more appreciable rate, the growth is more relevant given the economic realities of the period under review as previously reported.
- See below for other financial indices and comparisons.
FIDELITY | |
Bourse | Nigerian Stock Exchange |
Code Name | FIDELITY |
Sector | FINANCIAL SERVICES |
Market Classification | Main Board |
Nature of Business | Commercial Banking |
Date of Incorporation | November 19th 1987 |
Date Listed | May 17th 2005 |
End of Accounting Year | 31st December |
Website | www.fidelitybank.ng |
Registrar | First Registrars Nigeria Limited |
Auditor | Ernst & Young / PKF Professional Services |
Share Price@Relsd (N) | 1.81 |
Earnings per Share | 0.39 |
Intrinsic Value(N) | 4.12 |
Share Outstanding | 28,974,797,023 |
Market Capitalisation | 52,444,382,612 |
Company figures
- Gross Earnings during the period stood at N105.75 billion, up from the N103.65 billion at the end of 2019 half-year.
- Of this amount, Interest Income stood at N87.72 billion, as against the N85.83 billion in 2019 second quarter.
- Interest Expenses was estimated at N39.30 billion, same as 19.68% below the reported N48.93 billion at the end of 2019 second quarter.
- Net Interest Income stood at N48.42 billion, as against the N36.89 billion achieved the preceding half-year.
- Operating Expenses grew by 22.40% above the comparable period; to N43.81 billion as against the prior half-year’s N35.79 billion.
- Profit before Tax stood at N11.96 billion, same as 21.92% above the N9.81 billion posted last year.
- Having considered the Tax Expense for the period, a total of N11.30 billion was reported as Profit for the period. This is 33.01% above the N8.49 billion earned at the end of the first six months in 2019.
- Total Comprehensive Income for the period stood at N22.45 billion, as against N19.15 billion in the comparable period of 2019.
FIDELITY | |||
Statement of Comprehensive Income | |||
2020(Mill) | 2019(Mill) | %CHG | |
GROSS EARNINGS | 105,755 | 103,655 | 2.03 |
INTEREST INCOME | 87,727 | 85,830 | 2.21 |
INTEREST EXPENSES | 39,302 | 48,931 | 19.68 |
NET INTEREST INCOME | 48,425 | 36,899 | 31.24 |
OPEX | 43,811 | 35,792 | 22.40 |
DEPRECIATION | 3,030 | 2,377 | 27.47 |
PBT | 11,963 | 9,812 | 21.92 |
TAX | 660 | 1,314 | 49.77 |
PAT | 11,303 | 8,498 | 33.01 |
TOTAL COMP INCOME | 22,452 | 19,150 | 17.24 |
Statement of Financial Position | |||
Total Assets | 2,403,234 | 1,940,163 | 23.87 |
Total Liabilities | 2,152,545 | 1,724,597 | 24.81 |
Net Assets | 250,689 | 215,566 | 16.29 |
Property Plan & Equipment | 38,275 | 38,011 | 0.69 |
Retained Earnings | 49,865 | 43,624 | 14.31 |
Total Deposits | 1,405,945 | 1,097,011 | 28.16 |
Total Loans and Advances | 1,413,638 | 1,157,201 | 22.16 |
- Total Assets is currently valued at N2.40 trillion, same as 23.87% above the corresponding period valuation of N1.94 trillion
- Similarly, due to improved deposits base, Total Liabilities posted for the period was N2.15 trillion as against N1.72 trillion in 2019 second quarter.
- Net Assets is therefore estimated at N250.68 billion, which is 16.29% above the N215.56 billion estimated at the end of last year.
- Retained Earnings remained positive at N49.86 billion up from last year’s N43.62 billion.
- Total Deposit achieved at the end of the period is same as N1.40 trillion, better than the N1.09 trillion deposit reported in the corresponding quarter of 2019.
- Total Loans and Advances stood at N1.41 trillion, as against N1.15 trillion in 2019..
Financial Strength/Solvency Ratios
- Debt Ratio is estimated at 89.57%, as against 88.89% in the corresponding period of 2019. In other words, the Total Liability Value Reported is currently 89.57% of Total Assets Valuation.
- Total Debt to Equity for the quarter stood at 858.65% which means that Debt can Replicate Equity 8.58 times, as against 8.00 times in the comparable period.
- Equity Ratio which compares Equity to Total Assets stood at 10.43%, lower than the 11.11% in the corresponding period.
- Estimated Beta value for Fidelity Bank as at the time this report was compiled stood at 1.25, better than the 1.15 industry average.
Financial Strength/Solvency Ratio | |||
TICKERS | 2020 | 2019 | %CHG |
Debt Ratio | 89.57% | 88.89% | 0.76 |
Total Debt to Equity Ratio (MRQ) | 858.65% | 800.03% | 7.33 |
Equity Ratio | 10.43% | 11.11% | 6.11 |
TICKERS | FIDELITY | Industrial Average | %CHG |
Beta Value | 1.25 | 1.15 | 8.70 |
Profitability Ratios
- Pre-Tax Margin improved by 19.50% to 11.31% from the 9.47% estimated at the end of 2019 six-month year.
- Interest Expenses to Gross Earnings dropped by 21.27% to 37.16%, as against the previously estimated 47.21%.
- Return on Average Equity through the first six months of 2020 is 37.16%, compared to 47.21% estimated from the 2019 numbers.
- See below table for detailed profitability ratios and comparison.
PROFITABILITY RATIOS | |||
TICKERS | 2020 | 2019 | %CHG |
PRE-TAX MARGIN | 11.31% | 9.47% | 19.50 |
EFFECTIVE TAX RATE | 5.52% | 13.39% | 58.80 |
IE TO GE | 37.16% | 47.21% | 21.27 |
ROAE | 4.51% | 3.94% | 14.37 |
ROAA | 0.47% | 0.44% | 7.38 |
Efficiency Ratios
- Operating Expenses at the end of the period is estimated at 41.43% of the estimated Gross Earning, below the 34.53% achieved in the 2019six-month financials.
- Gross Earnings estimated is same as 4.40% of the Total Assets value posted for the period under analysis.
- Total Loan and Advances posted for the quarter is 100.55% of Total Deposit, this is 4.68% downward adjustment over the 105.49% estimate in 2019. Note that this is far above the regulatory standard for Nigerian banks
EFFICIENCY RATIOS | |||
2020 | 2019 | ||
OPEX TO GE | 41.43% | 34.53% | 19.97 |
GE TO TA | 4.40% | 5.34% | 17.63 |
LDR | 100.55% | 105.49% | 4.68 |
Investment/Valuation Ratios
- The profit earned per unit of Fidelity Bank is estimated at N0.39, 33.01% better than the N0.29 earned in similar quarter of 2019.
- Total Comprehensive Income is estimated at N0.77, this is 17.24% above the N0.66 TCI/share achieved in 2019.
- Adjusted P/E-Ratio for six months dropped to 1.16x from 1.41x, This can also be seen as reduced investment period.
- The said earnings per share yielded 21.55% of the price of each unit of Fidelity Bank’s shares on the floor of the exchange on the day the result was unveiled to the investing public through the exchange.
- Estimated value of each units of Fidelity Bank shares in its book is N8.65, this is 16.29% improvement over the previous estimate of N7.44.
- Confirming the academic under-priced stand of Fidelity Bank’s shares on the exchange is the Price to Book Value estimate that stood far below unity.
FIDELITY | |||
Investment/Valuation Ratios | |||
Tickers | 2020 | 2019 | %Chg |
EPS | 0.39 | 0.29 | 33.01 |
TCIP/SHARE | 0.77 | 0.66 | 17.24 |
P/E-Ratio | 1.16 | 1.41 | 18.02 |
Earnings Yield | 21.55% | 17.67% | 21.99 |
BV/Share | 8.65 | 7.44 | 16.29 |
PBV | 0.21 | 0.22 | 6.24 |
Valuation
Exploring our blend of valuation tools, we conservatively valued each unit of Fidelity Bank shares at N4.12, thus, we rated it a BUY.