Both FCMB Group and Fidelity Bank recorded double digit growth in earnings in 2023.
- FCMB is growing faster and provides an attractive valuation than Fidelity Bank
- Fidelity Bank has a better margin, bigger dividend, and a higher turn on equity.
It is not surprising that banks are the major driver of NGXASI index profit in 2023, as their earnings have been bolstered by a high interest rate environment and foreign exchange revaluation gains as the devaluation of the Naira is a boon.
We have decided to analyse the financial statements of two small and mid-sized lenders-based on key metrics- with a view to ascertaining which one will be investors’ favorite.
Why you might pick FCMB Stock
- FCBM’s lower PEG ratio compared to Fidelity Bank indicates it would be a better value based on its earnings and growth rate.
- Based on a significantly lower forward P/E ratio, P/S ratio and P/B ratio, FCMB looks to be the better value buy, on the whole.
- FCMB posted higher revenue growth
- FCMB has a positive year to date (YTD) return of 8.11 percent compared to Fidelity Bank’s -7.36 percent, which means its shares have gained more so far this year.
Why you might pick Fidelity Bank
- The dividend yield of 6.22 percent is nearly double FCMB’s 3.22 percent.
- A return on equity of 27.04 percent is higher than FCMB’s (25.93 percent), indicating Fidelity management might be more effective in leveraging assets.
- A market capitalisation of N331.33 billion is much higher than peer rival’s N164.36 billion.
While Fidelity Bank is much larger company and utilises the resources of its owners in generating profit, FCBM presents a better value and growth case.
