Investors in Fidelity Bank Plc have earned more than 507 per cent in capital gains over the past five years, ranking above all other major return benchmarks in the Nigerian stock market and the entire banking sector.
Trading reports at the Nigerian stock market for the five years between May 31, 2019 and May 31, 2024, showed that Fidelity Bank outperformed all key indices in the stock market.
Fidelity Bank’s share price rose by 507.14 per cent over the period, representing an average annual capital gain of 101.43 per cent.
These returns underscore Fidelity Bank’s immense value as a stock for all times, helping investors to hedge against inflation while preserving significant long-term value.
With a 507 per cent capital gain in five years and an average annual gain of more than 100 per cent, the return analysis implies that investment in Fidelity Bank is more attractive than other classes of assets, including fixed-income securities such as government and corporate bonds; real estate investment and mutual funds among others.
The highly divisible nature of shares investment and high free float of Fidelity Bank, which makes the bank’s shares easily available, underline the bank as a most attractive investment option for all cadres of investors- small, medium and high net worth; retail and institutional investors.
Comparative analysis showed that Fidelity Bank outperformed all other major market indices with the bank’s average annual return for the period twice the average return by the overall market and almost four times the average return in the banking sector.
The All Share Index (ASI) – the common, value-based index that tracks all share prices at the Nigerian Exchange (NGX), which is widely regarded as Nigeria’s benchmark for the equities market, recorded a five-year return of 219.61 per cent, an average annual return of 43.9 per cent.
Contrary to the significantly above-average performance of Fidelity Bank, NGX Banking Index-which tracks the banking sector, doubled by 120.53 per cent over the five years, representing an average annual return of 24.11 per cent, more than 77 percentage points below Fidelity Bank’s average return.
Two other major price indices- the NGX 30 Index and NGX Main Board Index, recorded five-year cumulative returns of 185.73 per cent and 265.6 per cent respectively, representing an average annual gain of 37.15 per cent and 53.1 per cent respectively.
The NGX 30 Index tracks the share prices of the 30 largest companies in the stock market while the NGX Main Board Index represents the largest and most diversified group of listed companies on the stock exchange. Fidelity Bank is quoted on the main board, like most other major banks and companies on the stock market.
The average annual return of 101.43 per cent underlines that Fidelity Bank provides a substantial return for investors, even where such investors had borrowed money at the ruling interest rate and the invested fund was adjusted for the impact of the inflation rate.
Nigeria’s inflation rate peaked at a high of 33.69 per cent in April 2024 while the Central Bank of Nigeria (CBN)s Monetary Policy Committee (MPC) recently increased the Monetary Policy Rate (MPR), otherwise known as benchmark interest rate, to 26.25 per cent.
Fidelity Bank’s share price, which closed May 31, 2019, at N1.68 per share, rose successively to N10.20 per share by the end of May 2024. The ASI had, during the period, risen from its opening index of 31,069.37 points to close the weekend at 99,300.38 points. The NGX Banking Index rose from 361.57 points to 797.37 points. The NGX 30 Index, which opened the period at 1,286.68 points, closed the period at 3,676.44 points. The NGX Main Board Index appreciated from 1,267.54 points to close the weekend at 4,634.31 points.
Market analysts are unanimous that share prices are illustrative of the fundamental values of quoted companies.
Managing Director, HighCap Securities Limited, Mr. David Adonri, said the price of any stock in the market is a correct reflection of the market value for the stock.
