Business
Fidelity Bank moves to surpass recapitalisation target
Fidelity Bank Plc is riding on a track record of impressive performance in core banking operations, and as a quoted company, to enjoy superlative patronage in its N127.1 billion combined rights and public offers.
Coupled with other strategic growth plans of the lender, the offers are expected to accelerate Fidelity Bank’s drive not only to meet the new N500 billion recapitalization target, but to also surpass it in its ambition to become one of the biggest banks in Nigeria.
Reports have shown high subscription levels for the offers in the early weeks propelled by acceptances by existing shareholders and demand by the general investing public.
Fidelity Bank had last month commenced its public offer of 10 billion ordinary shares of 50 kobo each at N9.75 per share and rights issue of 3.2 billion ordinary shares of 50 kobo each at N9.25 per share. The shareholders had given their support earlier at the annual general meeting of the bank, where they said that they would buy into any share offering by Fidelity Bank.
The acceptance and application lists for the rights issue and public offer, which opened on Thursday, June 20, 2024, are scheduled to close on Monday, July 29, 2024. The rights issue has been pre-allotted on the basis of one new ordinary share for every 10 existing ordinary shares held as at the close of business on Friday, January 05, 2024.
Blazing the trail
At the public offer and rights issue facts behind the combined offer presentation at the Nigerian Exchange Limited (NGX), the Managing Director/Chief Executive Officer of Fidelity Bank, Mrs. Nneka Onyeali-Ikpe, said the financial institution’s N127.10bn capital raising was to be considered as a pacesetter in the life of the banking industry recapitalisation drive.
She noted, “Given that Fidelity Bank has already started the process of raising additional capital ahead of CBN’s directive, requiring the banks to raise a minimum capital base of N200bn for national banks and N500bn for banks with international operations like ours, amongst other capital requirements.
“This didn’t come as a surprise to us. As for us at Fidelity Bank, the CBN recapitalization directive presents a significant opportunity for a stronger and more resilient banking industry.
“We have embraced the challenge as a catalyst to propel us towards a long-term vision of becoming a market leader across every product that we offer and segment that we serve, not just in Nigeria, but as an international bank.”
According to Onyeali-Ikpe, proceeds from the capital raising exercise would be instrumental in achieving its strategic growth plan.
She said,“The proceeds from this N127.1bn capital raise via the rights issue and public offer will be instrumental in achieving our strategic growth plan. These funds will be deployed to drive the following growth aspiration, business and regional expansion within and outside Nigeria, technological transformation, diversify and grow our earning base and lastly, it will help us to increase our capacity to support our customers.”
Chairman of the bank, Mustapha Chike-Obi, represented by an independent director, Isa Mohammed, boasted that the bank would surpass the N500bn capital requirement for its international licence.
“This is the first of a multi-stage approach that we intend to take, not only to attain the N500bn target but we aspire to surpass it. Today, we are here to listen to a bank that has grown exponentially in four years”, Mohammed said.
“Perhaps, the kind of growth that we have had has not been seen in the financial sector and it is based on strong fundamentals, strict corporate governance and on numbers that are sustainable over the short to long terms, and this has been demonstrated, not only in our balance sheet footing, in terms of our profitability but also concerning the market. We have outperformed the All-Share Index twice in the last three years and also outperformed the banking index four times over the last three years with share price growth of over 250 per cent.”
Also, the Executive Director of Fidelity Bank, Mr. Stanley Amuchie, declared that the commercial bank had a strong market positioning in the Nigerian banking industry, stressing that, notwithstanding the significant changes in the competitive landscape of the Nigerian banking sector, it had continued to perform well.
“Due to the advances in technology and rapid evolution of banking business, Fidelity Bank must be properly positioned to remain a competitive and forward-looking institution,” he stated.
In his remarks, the acting CEO of the NGX, Jude Chiemeka, said, “We are delighted that Fidelity Bank has chosen this platform to communicate its financial performance, operational development and strategic plans to undertake capital raise. Your presence here underscores your willingness to provide information to the market.
“We know that it would drive transparency in the market. I know that this is a very good day for the market. It is important to point out that we have had listings for a while and it has been by introduction. So, this is a bold step for the exchange and we are delighted that Fidelity Bank is blazing the trail.”
Eyeing oversubscription
In the light of unprecedented interest from both the shareholders and the investing public, the bank has started preparations to allow the absorption of very likely oversubscription.
With promising feedback from receiving agents and as shareholders, investors, experts, and other stakeholders continue to rate the combined offers high, the board has called an extraordinary general meeting (EGM) on July 26, 2024, to enable the bank to absorb expected surplus funds.
Accordingly, shareholders are scheduled to meet later this month to authorise the company “to accept surplus monies arising from potential oversubscription of the combined offer in such proportion as may be determined by the board of directors, subject to the company’s issued share capital and obtaining relevant regulatory approvals”.
Shareholders are also expected to increase the issued share capital of the company from N22.6 billion divided into 45.2 billion ordinary shares of 50 Kobo each to N26.70 billion through the creation of up to 8.2 billion shares in order to “accommodate potential oversubscription of the combined offer in the proportion of 5.0 billion additional ordinary shares under the public offer and 3.2 billion additional ordinary shares under the rights issue”.
According to leaders of shareholders’ associations, the pricing of the highly discounted rights issue and public offer, the operational growth of the bank over the years, dividend records, and capital gains were attractions to buy more stakes in the bank. Fidelity Bank is one of the few companies that pay dividends twice a year on the stock market.
They are confident that a post-recapitalization Fidelity Bank would deliver higher returns and continue to be a leading preserver of values for shareholders’ wealth.
Shareholders, under the auspices of Independent Shareholders Association of Nigeria (ISAN), Ibadan Zone Shareholders Association (IBZA), Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Pragmatic Shareholders Association of Nigeria and Progressive Shareholders Association of Nigeria among others, said they were picking up their rights and mobilising supports for the bank. The general shareholders’ endorsements represent a major boost for Fidelity Bank, which has the most diversified retail shareholders’ base among Nigerian banks.
Speaking in numbers
The audited report and accounts of Fidelity Bank for the year ended December 31, 2023 had shown that gross earnings rose by 65 per cent to N555.83 billion.
The top-line performance was driven by significant growths across income lines including 55 per cent growth in interest income, 562 per cent increase in other operating income and 44 per cent growth in fee and commission income.
The bottom-line fared better with net profit after tax rising by 99 per cent to N99.46 billion in 2023. Earnings per share (EPS), thus jumped by 93 per cent to N3.11, providing a strong buffer for the bank to increase dividend payout without undermining its sustainability.
Impressively, the interim report and account of the bank for the first quarter ended March 31, 2024 also showed that it started the current business year on stronger footing with three-digit growths across key performance indicators. The three-month report, released at the NGX showed that gross earnings increased by 89.9 per cent to N192.1 billion in first quarter 2024.
The top-line performance of the lender continued to be driven by broad-based growths across income lines with interest income rising by 90.7 per cent and non-interest income growing by 84 per cent in first quarter 2024.
A deeper look into the scorecard revealed that growth in interest income was primarily spurred by a higher yield environment and strong earning assets base, while the increase in non-interest income was led by double-digit growth in account maintenance charges, foreign exchange (forex)-related income, trade, banking services, and remittances, supported by increased customer transactions.
Profit before tax doubled by 120 per cent to N39.5 billion in first quarter 2024 as against N17.9 billion in first quarter 2023. The bank’s performance was driven by expanding market share with total deposit rising by 17 per cent within the three months to N4.7 trillion, compared to N4 trillion recorded at the end of 2023.
The bank also increased its supports for national economic growth with net loans and advances rising by 21 per cent from N3.1 trillion at the end of 2023 to N3.7 trillion by March 2024.
Mustafa Chike-Obi, a world-class financial expert, assumed his role on the Board of Fidelity Bank Plc in August 2020, heralding a period of notable resilience and stability for the institution. His tenure has been marked by a concerted effort to address the lack of capital, a fundamental challenge faced by entrepreneurs.
On the other hand, Nneka Onyeali-Ikpe, a consummate professional with over 30 years’ experience across various banks, assumed office as Managing Director/CEO, Fidelity Bank on January 1, 2021.
