Best Bank Stock to Buy in Nigeria for Long-term Growth

In June 2024, Fidelity Bank issued the shares to the public just in a bit to meet up with CBN

um recapitalization exercise and last year the share price was selling for 9RA.

So let me show you something right here on my charts. Fidelity Bank

June last year. So this was it 9. So

between June July. So I received a lot of questions from Clfolio members and even non-members like whether Fidelity Bank

was a buy at that period whether 9 to 10 NRA was actually a good buy because the share price the market price was a bit higher. I think around 10 NRA when the

higher. I think around 10 NRA when the share was going for like 9. So because

of that I had to post a YouTube video just to share detailed analysis of Fidelity Bank and then interestingly the share was overs subscribed according to

what business they posted here. You can

see Fidelity Bank public offer over subscribed by two NRA 237% sorry. And then if you look at the share

sorry. And then if you look at the share price that period you can see here bank has issued the result of it recent offer

for subscription of 10 billion on shares at 975 co 75 co. So the share price was 975 co I think market price was like 10

or so. So the question is where is

or so. So the question is where is fidelity bank today? Fidelity bank is actually selling for 20 naira that's almost 100% return. So if you key into

Fidelity Bank public offer act 975 today you should be on 100% return from that period between June July last year to date this that's almost like one one

year plus now the question again is um how can I find stocks like this that would give me this kind of return now I didn't know that fidelity will do 100%

but from my analysis I was very sure that the stock was grossly undervalued and one of major line item I looked at when I was analyzing Fidelity bank

statements and you will see that on my YouTube channel was the customer confidence. You know a lot of people

confidence. You know a lot of people just jump into banking stocks thinking that oh they they are banks. Okay let's

look at definition of a bank in a layman's way. A bank accept deposit

layman's way. A bank accept deposit right and then they give out loan. So

meaning that the moment a bank stop accepting deposit that is the beginning of that bank's end. Now how does it accept deposit? They don't come to you

accept deposit? They don't come to you to force you to collect their money.

They come to you to persuade you.

Meaning if you are convinced enough, you will go to the bank to deposit. So

deposit is actually a way to look at what I call customer confidence. So when

I was analyzing Fidelity Bank last year, the first thing I looked at was customer confidence. Are customers confidence in

confidence. Are customers confidence in Fidelity Bank improving or declining?

Now you can see right here, I said customer confidence in a bank says a lot about the bank's ability to sustain low cost fund. A bank that raises more fund

cost fund. A bank that raises more fund via customer deposits will generate more return than a bank that uses depth.

There are two ways bank generates money.

I'll talk about that. either via

customer deposits or depth. So I look at average growth of customer deposits in the last five years. So I like to see a bank generate more funds via customer

deposit than depth because depth is very very expensive. Today

very expensive. Today we are going to be looking at another bank. This bank is surprisingly

bank. This bank is surprisingly undervalued. I usually see this bank as

undervalued. I usually see this bank as being underrated. Like when you talk

being underrated. Like when you talk about top banks in Nigeria, I'm not sure is among the first three or first four people want to mention. Well, as we

already know, the first thing is you hear Zenit, GTB, you hear assets. But

this bank doesn't really come among the first top three or top four. But when I took my time to break down the data, I

was quite surprised. Like, wow, this bank is grossly and surprisingly undervalued. So, that's why I decided to

undervalued. So, that's why I decided to bring it to you guys, my YouTube guys.

Like if you are looking at long-term investment in the banking space and you're looking for a bank that you think is still undervalued bank you can hold on to for the next 3 to 5 years based on

certain trend then this might be the bank to watch out for. So before I continue let me share my usual disclaimer. The ideas shared in this

disclaimer. The ideas shared in this video are based on my personal research and calculations. Kindly do your due

and calculations. Kindly do your due diligence before you invest in this company stock. Please note that the

company stock. Please note that the stock market comes with a lot of risk due to uncertainties. And also make sure you vet my recommendation based on your risk profile. And if you're not

risk profile. And if you're not following Clfolio today, you might be missing out a lot. Why go to different pages of newspaper when you can find all the headline on one page? So go to

glfolo.com/today.

glfolo.com/today.

It will show you all the headline across different newspaper. So gloo.com/today

different newspaper. So gloo.com/today

like right now I can go here you can see it giving me headline most importantly business headline across paper you see from business day to this day to

narometrics to donation so you see a lot of headline that makes a lot of sense headline that moves your money so you have them right here on and it's updated

real time every hour every hour it runs a check across Nigerian newspaper platform and then if you find any good and interesting business headline be it comes here. So I intentionally limited

comes here. So I intentionally limited it to business and market news because that's what I'm interested in in this particular part of the world. So here

let's start. I usually say that banking stocks are great for dividend investors who want stability and cash flow. Yes,

if you're looking for stability, like you want to put your money in a company that you believe is quite stable and would most likely give you cash, pay out

cash dividend over a long period of time. I think banking stocks is actually

time. I think banking stocks is actually banking stocks are where you find one of them. Now, banks are tightly regulated

them. Now, banks are tightly regulated by CBN, which makes investing in them subject to regulatory risk or uncertainties. Now why this might look

uncertainties. Now why this might look like a risk because today we don't know the headline. We don't know the cap that

the headline. We don't know the cap that might come out from CBN. Tomorrow we

don't know. Next week we don't know. But

over time I think that the control the way the banks are being controlled well is actually for your own good as a depositor the bank. But then when you look at it from the other angle when I

run my research I find that majority of top gainers in Nigerian stock market most of them do hardly see market stocks. Most of the top gainers for the

stocks. Most of the top gainers for the year in the market are usually non-banking stocks. You see consumer

non-banking stocks. You see consumer good stocks are always there. Consumer

good stocks, industrial stocks, oil and gas stocks. The banking stocks really

gas stocks. The banking stocks really come to that level, that talk where you see top stocks for the year and then you see banking stocks are number one. It's

very rare. It doesn't happen regularly.

Yes, we also think that appreciation in the banking stocks are usually limited.

it always come during season when there's a major policy like we're seeing right now. So the question is are banks

right now. So the question is are banks going to do another 200 or 300% in the next um two to three years. Well that

depends on policy and all that. But then

I still feel that there are banks that are well positioned. There are banks that are still grossly undervalued today. And if you take advantage of the

today. And if you take advantage of the things I'm going to share with you right now just like I did on Fidelity.

Fidelity was selling for 7 9 when I posted analysis and I told them Fidelity was roughly under value that Fidelity should not be trading for anything below 14 naira and today the bank has stopped

20 NRA because as they release more that was based on the information I had there and the bank has released more information to us that probably make the fair value go higher. So today I'll be

looking at FCMBB as one bank to to to pay attention to. But let's let's continue. So I said banks are tightly

continue. So I said banks are tightly regulated by CBN which makes investing in them um very risky. But then if you are considering investing in the banking

stocks, I highly recommend banks that have historically now look at this part.

I highly recommend banks that have historically enjoyed customer confidence over the years and leveraged on them to deliver long-term value to shareholders.

The single reason I recommended Fidelity Bank and I was confident that Fidelity Bank stock was undervalued and I knew Fidelity Bank would go up was because of

customer confidence. This is the

customer confidence. This is the starting point of every investment in the banking sector. So if you usually start your investment in the banking sector by always looking at the profit

after tax uh capital adequacy blah blah blah you are missing and you are missing the wrong thing. The first and most basic metric to watch out for when you

are investing in the banking sector is customer confidence. I'm sure you've

customer confidence. I'm sure you've heard of bank rush. If today we all decide to walk into one of the banks today to withdraw at the same time that bank will crash. No bank has ever

survived bank rush because that is where they that is where they generate most.

That's what they use to run their operation. That's what they use to give

operation. That's what they use to give loan to customer. That's what they used to invest in any other asset. So when we go to the bank to say we want to withdraw our money now that bank is going down immediately that's what we

call bank rush and I don't think that's what you want to solve SVB that collapse in the US bank rush so if a bank is to survive then we need to look at our our confidence in that bank so if customer's

confidence in that bank is very high which I will show you how to do then your you then you are actually investing in the right bank then you can be safe

to say that yes your money is actually kept in a good place. So let me continue. So customer confidence is very

continue. So customer confidence is very key. So if I'm going to be looking at

key. So if I'm going to be looking at any bank today, that's the first thing.

And then you're going to see interesting data. How I spooled major data from

data. How I spooled major data from their financial statement from 2021 into 2024 and some into halfway 2025 using

trading 12 months. So I use the information that is available to me especially from the Nigerian stock exchange website. So every data that I'm

exchange website. So every data that I'm going to share with you I put them from the bank statement on the bank financial statement from Nigerian stock exchange website. So let's look at certain

website. So let's look at certain things. So in this video I want to show

things. So in this video I want to show you one underrated banks bank that is grossly undervalued.

Why? based on impressive compound annual growth in customer confidence. Meaning

that year on year, year on year, year on year, customer confidence in that bank is growing. So, and if customer

is growing. So, and if customer confidence of of a bank is growing, naturally it leads to what I call low singledigit cost of fund because when confidence in a bank is growing, people

will naturally flock to that bank to deposit funds. It's simple. See if if

deposit funds. It's simple. See if if any news like this breaks out today that bank A is having an issue, go and withdraw your money. Check out you see

what actually when it comes to a reputable and reliable media platform.

Let's see business day. Oh, I think XYZ bank I'm not going to mention him just to avoid um assuming or to to avoid painting that bank's bank as if it's

actually going to happen. No. So XYZ

bank has issue it may not survive till December 2027.

If I tell you what will happen the following day you'll be shocked bank rush. So we want to see impressive

rush. So we want to see impressive compound and grow meaning customer confidence is key. People are people are willing and they are ready to go to the bank to deposit funds every now and

then. Once customer begin to pull their

then. Once customer begin to pull their funds away from the bank it will reflect it's a sign of confidence in that bank.

So do not invest in a bank that you have zero confidence or cost or or the public doesn't have confidence in. So lower

cost of fund is what will follow if people have confidence in the bank and then the lower cost of fund translates to what we call the higher net interest margin because once you go to the bank

to deposit funds because you have confidence in them then the banks will use your money to probably do other business for instance give out loan and advances to other customers and then they will generate more return invest in

other assets and then the return should lead to what I call the higher interest margin so which is driven by interestbearing asset. Interest bearing

interestbearing asset. Interest bearing assets are those assets that are bearing interest. For example, loan and

interest. For example, loan and advances, investment, securities. And

then while the bank is generating for there, the bank is also recording what we call a shocking drop in cost to income. Meaning that the cost of

income. Meaning that the cost of operation of that bank are being managed. The bank is optimizing cost.

managed. The bank is optimizing cost.

Those processes that are being repeated, the bank is automating them. The bank is leveraging technology and eventually drive efficiency. And then you will see

drive efficiency. And then you will see how this number how the cost income ratio has dropped significantly from the last four years from 2021 down and that

means efficiency is very high and now that the bank is operating below threshold and then how that the low price to book value confirms the

historic valuations below bank's fair value. So you see that the where the

value. So you see that the where the bank is selling for right now the price is even low compared to what the book value is. So meaning the bank has passed

value is. So meaning the bank has passed the check one, check two, check three, check four and yet the price right now

is below what the bank stock should be worth based on good value. Good value

here looks at the total assets settling all the bank's liability. That means if the bank is liquidate his assets and then to sell all the liability what is it worth right now is still cheap is

still cheap based on net asset method of valuation which is even considered the minimum form of valuation. You consider

the bank or the company based on what is worth right now. If a company is having issues to sell off his asset and then pay off pay off his liability what is remaining can is it still worth more

than what investors are buying right now? That is another surprise. That's

now? That is another surprise. That's

why I call it a shocking surprising valuation because if the bank passes this one, customer confidence is high, lower cost of funds, higher net interest margin, cost of depos income, cost to

income is dropping, efficiency is high, managing cost, why is the bank still cheap at this level. These are the things we are going to look at now to help us analyze this. I have carried out

a detailed research. So you will see right here I have my Google sheets which I used to spool the bank financial results like I spool data from the bank

financial statement of Nigerian stock exchange website just to save cost to save time sorry now this bank is FCNB now don't rush to say oh FCMBB let me go

and buy SNB relax calm down learn the information the whatever I'm going to share here will open your eyes on how to analyze banking stock banking Stock is

not like any other stock you will just go and check revenue less expenses than profit. Many of you once once a bank

profit. Many of you once once a bank releases it financial statements the next thing you're going to check is the bank gross any interest income. Oh

profit before tax and then no even if a bank is growing its profit after tax. If

you don't go down to understand these key numbers that I'm about to share with you right now, you'll be missing it.

You'll be missing it. Look at the details that we're looking at here. The

customer deposit of the bank, the bank deposits, customer deposit and bank deposit are different. You might have customers and then the banks insurance that are also keeping money maybe finance back. Then that gives us the

finance back. Then that gives us the total deposit. The depth issue the bank

total deposit. The depth issue the bank also raise money from depth. We'll look

at that. Interest on customer deposit, cost of customer deposits, interest on debt issue, cost of debt issue, loan and advance to customer, investment securities, interestbearing assets,

interest on loan, interest on investment securities, net interest income, interest margin, gross earning, total cost. So that's total operating cost,

cost. So that's total operating cost, fees and commission, cost to income, profit before tax and all that. So let's

me break all this down. Now the first thing we want to look at is customer confidence. That's why I'm starting this

confidence. That's why I'm starting this analysis by looking at the customer confidence which is customer deposit. If

customer deposit in the bank you know is not growing take your money away from that bank sell that bank stock. So for

FCMBB customer deposit has grown by an average of 40% from 2021 into 2020 4. That's customer deposit itself. I'm

4. That's customer deposit itself. I'm

not looking at total deposit yet. From

1.5 to 1.9 to 3 trillion, they all in trillion please. 3 trillion to 4.2

trillion please. 3 trillion to 4.2 trillion. And then that give us an

trillion. And then that give us an average annual growth of 40%. Bank

deposits 2 is 160 billion, 124 billion, 280 billion and 80 billion has been growing by 73%. So total deposit with

FCNB has grown by an average of 35% which is very good. 1.7 to two trillion to 3.3 trillion to 5 trillion and so far

in 25 which is trailing 12 months the bank has grown its deposit to 5.7 trillion from 1.7 trillion in 2021 to 5.7 trillion that's an average of 37%

which is quite impressive don't forget customer deposit customer confidence is very very important so SMB has been growing customer deposit by an average

of 40% and total deposit has grown by 35%.

Now why is this very important? I

usually call this deposit my cost my cheap money cheap money. You know why does bank send

cheap money. You know why does bank send marketers to go meet up to target to go raise 100 million 100 billion whatever you will find out why. Now there are two

ways a bank raise money. It's either

they raise deposit or they issue depth.

Now look at FCM depth issue 159 173 269 553 and 723 billion. So you can

see that in 2025 that's 21 12 months so far last four quarter the bank has raised 5.7 trillion as total deposit as

well as raised 725 billion as depth issue. So you can see that the bank is

issue. So you can see that the bank is largely tilted towards deposit. Why? The

answer is very simple. Look at the interest the bank is paying on customer deposit. 38.8 68 126 and 25. The

deposit. 38.8 68 126 and 25. The

interest the bank is paying on customer deposit is sitting at 2.5%.

So we call it cost of fund or cost of customer deposit or cost of custo uh cost of deposit. So it means that FCMB have been paying an average of 2% of its

total deposits. 3% of your total deposit

total deposits. 3% of your total deposit 4% of and 5% although total deposit is growing gradually three 2.5 3.5 4.1 and

5.9 why because of CBN increase in interest rate so you can see how improved uh interest rate sorry increase in interest rate or the hike in interest

rate that we have witnessed in the last 5 years had also pushed cost of deposit higher 2% 3% 4% and 5% sense. Let's now

look at the interest on debt issue.

Meaning if the bank decide to issue debt or rely imagine a bank relying on depth issue to run its operation, it will run

down because the bank's cost of debt issue is 14% 11% 13% and 16%. So tell me

which bank will survive if they had dependent on depth issue. So bank cannot and will never survive it if they depend

on depth issue because one their cost of depth issue is quite high 14% 11% 13% and 16%. When cost of customer deposit

and 16%. When cost of customer deposit is just 2.5 3.5 4.1 and 5.9. If you are the one running this business where do you think most of your money will be coming from? Deposit. So meaning that

coming from? Deposit. So meaning that the bank will do anything and everything to raise money via customer deposit.

Sometime you see them come up with promo to entice you. Oh we 1 million NRA every 3 three days, every two days. Uh

customer savers promo whatever promo.

Why? Because your money is cost of for your money is cheap for them. When they

use your money they will make more money. They will generate higher return

money. They will generate higher return but they cannot issue depth. How many

banks are coming to the market to issue commercial paper regularly? Is rare.

Commercial paper is very expensive for the bank. Only a few bank will go that

the bank. Only a few bank will go that route. But majority of the deposit they

route. But majority of the deposit they come from customer deposit. Why? Because

the cost of customer deposit is very cheap. So imagine 2.5% compared to 14%.

cheap. So imagine 2.5% compared to 14%.

When you go to bank A to borrow money and the bank A is charging you 14%. For

that money and then you can easily come to your uncle to say uncle give me and uncle is saying I will charge you 2% or 1%. Which one will you select? So the

1%. Which one will you select? So the

bank decides to grow with customer deposit because that is where cheap funds are coming in from from this data you're seeing right here. Now how does

the bank use this when they collect this deposit? One, they deploy

deposit? One, they deploy as loan and advances to customers. You

can see right here and then SMB has been growing it advances by an average of 22.1%

from 1.6 6 in 2021 to 1.1. So the 1 trillion in 2021 to 1.1 1.8 2 you can see here 2.3 and then 2.3. So and on

average it's been growing it loan on advances to customers by 22%.

So that means the bank is tilted towards a loan driven bank. You know when you want to understand the business of a bank, don't just say the bank collects

loan, collect deposit and then give out to customer. No, you need to know how

to customer. No, you need to know how does the bank utilize it customer deposit. That will tell you the business

deposit. That will tell you the business of the bank. So majority of the customer deposits are actually deployed to as loan and advances to customer. And then

you also see investment securities have been growing to 372 billion 524 billion and then 77 794 1.1 trillion and 1.5. So

Fidelity Bank has also been growing its investment. But you see that the bank is

investment. But you see that the bank is tilted towards loan and advances more than the investment securities. Although

investment securities at this point is catching up. So the question is is bank

catching up. So the question is is bank going to be a hybrid bank? For me a hybrid bank is a bank that is ted towards both loan and advance to

customer and investment security. So you

can see here 2.3 against 1.5. So I'm

watching this particular number at the end of this year whether it's going to catch up with loan advance to customer or if the bank would decide to push more. I will tell you the implication of

more. I will tell you the implication of this. If a bank is invested more in loan

this. If a bank is invested more in loan and advance to customer it has it advantage and its advantage. If a bank is suited more to investment securities, it also has it advantage and

disadvantage for loan advance to customer. Here the advantage here is

customer. Here the advantage here is that the bank is able to generate higher return especially if it's a bank that has gotten it right in its business of

lending to customers. That's the reason why I love Fidelity Bank. Fidelity Bank

is one bank that has perfected it uh loan to customers. So any bank that can grow its um cheap funds via loan advance

to customer especially banks that can keep its deposit default rate at a lower end. Banks that can maintain low default

end. Banks that can maintain low default ratio then that bank has gotten it right. Now for investment securities

right. Now for investment securities this for me is like a free money because they will invest in treasury bill and bond. The only risk here is that if CBN

bond. The only risk here is that if CBN decide to reduce interest rate like we have seen right now that will definitely pressure banks earning. So a lot of banks that are heavily invested in

treasury bill government bonds would also be affected right here. So that's

why you need to consider the business of the bank. For a bank that is heavily

the bank. For a bank that is heavily invested in loan and advances to customer such banks may not really suffer. You know why? Because when CBN

suffer. You know why? Because when CBN reduces interest rates, yes the bank is going to cut interest rate but it will encourage more people to borrow and when more people are borrowing what happen is

going to support the bank's interest income. This is one of the reason why I

income. This is one of the reason why I like FCNB because if the bank has perfected a lo his loan business and customer deposit is growing then it

means that a lower interest will definitely favor them. So when you say lower interest favoring banks, you need to consider the kind of banks that have gotten it right with loan operation

because that lower interest will be covered will be offset by increased request for loan since interest rate are

have been reduced and that is good for fidelity bank and FCNB. I've not looked at other bank but I'm sharing banks that have looked at their data and I've given you feedback based on what I saw. So

interestbearing assets are the summation of all the asset that generates interest. For instance, Luna advance to

interest. For instance, Luna advance to customer and investment securities. So

that's addition of these two 1.4 1.7 2.6 3.5 and 3.8. So the bank has been growing its interest bearing asset by an average of 27%. Which is good asset that

bear interest. If they continue to

bear interest. If they continue to increase then it means that interest would also go up. But you need to know the type of risk that that bank is exposed to. Interest rate risk is

exposed to. Interest rate risk is actually a major problem in 226. But for

me, I think banks that have gotten it right in their loan business may not face may probably be shielded a little bit. Why? Like I said earlier on that

bit. Why? Like I said earlier on that lower interest would make more customers to request for loan and that will make up for that tip. actually banks that have gotten it right in being able to

screen for customers will definitely but banks that are heavily invested in investment securities will probably face a lot of challenges next day. So don't

assume that all banks are going to be the same in 2026. But I'm not saying Fidelity Bank will go up or do well in 26. But I think this bank has a lot of

26. But I think this bank has a lot of potential once we are done once I'm done with this analysis. You will see why I said so. Now look at the interest on

said so. Now look at the interest on loan to customers here 1374 272 4443 and then interest on in so

these are the interest income earn on loan to customers as well as interest earn on investment securities. total net

interest. The net interest here is total interest less interest expenses because as the banks are actually generating more money from

loan advance to customer they are also paying interest you can see interest on customer deposit so they also paying interest. So when you deduct interest

interest. So when you deduct interest income, sorry interest expenses from interest income and then factor in impayment charges, then that will give you what call the net interest income.

The net interest income is very important because that's what the bank has. That's what the bank has generated

has. That's what the bank has generated so far from its operation after accounting for interest expenses, which is the interest they pay you on your fixed deposit, your savings deposit or

your current account. So net interest income has grown from 90 billion to 121.

You can see here 176 225 to 326. So SMB

has been growing it net interest margin by an a interest income sorry by an average of 37%.

net interest income by an average of 37.4%.

Which is not bad. So you can see the numbers here. You can see that the bank

numbers here. You can see that the bank has been growing by double digits. 40%

growth in customer deposits, 35% growth in total deposits which is good. Don't

advance has been growing by 22% and then interestbearing asset has been growing by 27%. And the net interest income has

by 27%. And the net interest income has been growing by 37% on average. So this

is between 2021 into 2425. So that's

like 1 2 3 4 four years. So that's why I said that this is good for people who are considering long-term investments.

beyond one year, two years or three years. That means you want to buy the

years. That means you want to buy the bank stocks, you want to hold them over a period of time and then irrespective of market volatility so long as customer confidence is key. So one of the major

driver or catalyst behind this growth is customer confidence because if the bank is not growing customer confidence, every other data you see here will be null and avoid. How will a bank generate

more money to give to customers as loan advances? If people are not coming into

advances? If people are not coming into deposit fund and how will the bank make more money if he's not able to give out loan advances to customer? How would you think net interest income? So you can

see that they are all connected which is why I said the starting point of every analysis on your banking stock should be customer confidence. Very important. Now

customer confidence. Very important. Now

we arrived at net margin. What is net margin? Net margin is just like your

margin? Net margin is just like your profit margin in your normal business.

Look at your profit margin which is going to be your net profit over your sales. What percentage of your sorry for

sales. What percentage of your sorry for every one NRA sales generated how much is the company going to keep as its own money. So here for every one NRA

money. So here for every one NRA deployed as loan and investment securities combined how much is the bank earning as its own margin. So net

interest margin here is your interest income over your interestbearing assets.

That's why I added the bank's interest bearing asset 1.6 plus two right here.

So 1 sorry 1 trillion plus 372 billion 1.1 + 5 1.8. So your total interest bearing assets how much are you generating on that

money? So that's what we have here. So

money? So that's what we have here. So

you can see net interest margin is 6.3 7.9 6.7 6.3 and 8. Now you might look at this money and say is this 6 something.

No it's not small because we're looking at trillion. This is 1.4 trillion 1.7

at trillion. This is 1.4 trillion 1.7 trillion. Like I said they are all in

trillion. Like I said they are all in thousand 2 trillion 3.5 trillion and 3.8 trillion. So you can see here that this

trillion. So you can see here that this money is not small. So here's the important information I want to share here. Now this same money because this

here. Now this same money because this interestbearing asset you're looking at here how did the bank get the money?

That's the question. Most of the money came from customer deposits. All right.

Now, on this customer's deposit, how much is the bank going to pay the customer on either savings, current, and fixed deposit? The bank is paying the

fixed deposit? The bank is paying the customer 2.5%.

That's what the bank that's what we call the cost of fund. That's what it cost the bank to keep your money for you.

Now, how is the bank using this money?

The bank is deploying this money to loan and advances and investment securities.

And how much is bank generating on this same money that they collected from you, the bank is generating 6.3%.

So if the bank pays you 2.5 and then the bank is able to make 6.3 and it's giving the bank a spread of 3 something to

four, then that is good. Like in 2022, the bank paid 3.5% as interest on our deposit and then the bank made 7% on that money. Don't forget it's in

that money. Don't forget it's in trillion. Now the bank generated the

trillion. Now the bank generated the bank made 4 point the bank paid sorry please 4% on customer deposit and the

bank generated 6.7 and then you see here 5.2 and 6.2 so this is so that means you need to pay a lot of attention to what

the bank is paying as customer paying on customer deposit as well as what it is generating for itself. Now imagine that it is a bank that is gen look at here

that is dependent on depth.

So tell me how can a bank survive if it's paying 14.3% on total depth issue and is generating just 6.3%.

Meaning if it collect this money as debt and it deploys it is going to make 6.3% that's a loss. You can see 14% paying as

paid as interest and then here 11% paid as interest on debt and then is now generating 7%. 13% paid as depth 6%. 16%

generating 7%. 13% paid as depth 6%. 16%

16% paid as debt and now the bank is generating six. Do you think the bank

generating six. Do you think the bank will survive? The bank would have closed

will survive? The bank would have closed shop. So no bank can survive if they are

shop. So no bank can survive if they are fully or largely funded by debt issues.

So this is the reason your bank is pursuing your money. This is the reason your bank wants your deposit because that's the only way they can survive because on your deposit they pay you

5.9% and on that money they're going to earn 6%. Now the difference is also what

earn 6%. Now the difference is also what we call the spread and they look at FCB so far in 2025 net interest margin is 8.37. Once they release that full year

8.37. Once they release that full year for 2025, this is trailing 12 months.

I'm adding the last four quarters. Once

they release that full result for the year, we'll be able to check all this number and then uh tell you what I think about the bank.

But so far so good. This is not bad.

Now, total gross income of that bank meaning both the net interest income and the non-interest income. The interest

income and the non-interest income. here

every other income sources including fees and commission fees and commission here is coming from ATM charges uh bank transfers and all that the bank has been

growing it fees and commissions by 53% in the last four years now look at what is very important for me here this is the gross earning of that bank the

operating cost you can see the operating cost of the bank 111 billion 138 billion 216 billion 217 17 and 399 the bank

operating cost has been growing by an average of 29%.

Because of inflation inflationary inflationary um threat is actually making the bank to spend more. But you

don't look at that and say oh the money is too much. Let's compare what portion of the bank net interest income is he

using to pay or finance this cost that is rising. So that's what we call the

is rising. So that's what we call the cost income ratio. You're looking at the percentage of that particular revenue or gross earning that it is using to

finance and to tell you whether it is good or not. So that's what we call the cost to income ratio. So out of 212 52%

of that income went to operating cost which is above standard because a bank's cost to income should

be below 40%. 40% is very okay. Now in

2022 you can see it dropped to 49%. Out

of 22 49% in 2023 it dropped to 41%.

And then in 2024 it dropped to 34% and so far in 2025 cost to income is 32%. Now can you see how the bank has been lowering its cost

to income? This is what we call

to income? This is what we call efficiency. The bank is driving

efficiency. The bank is driving efficiency from 52 to 49 to 31 to 34 to

32. That's how the bank. So this is a

32. That's how the bank. So this is a sign that the bank is optimizing cost.

The bank is optim the bank is deliberate. For example, there are some

deliberate. For example, there are some repeated processes that can easily be automated that automatically save cost.

Save cost means you don't need anybody in that department again because AI is doing the job. Technology is doing the job. The advent of ATM alone a lot of

job. The advent of ATM alone a lot of banking staff lost lost their job. So

there are things ATM can do for example then if you want to withdraw you can go to the banking hall to withdraw you will see Q but now ATM is taking care of that. So that's what we call cost

that. So that's what we call cost optimization being able to automate some processes then achieve result higher results. So this for me is a major line

results. So this for me is a major line item. It's a major and look at how the

item. It's a major and look at how the bank is growing it gross earning. has

been growing gross earning by an average of 46% in the last four years while growing the total prof cost by 29%. So

that means gross earning is even growing faster than operating cost. So no wonder you see finance uh cost to income ratio dropped significantly. This is very good

dropped significantly. This is very good for Fidelity Bank. And then profit before tax has been growing by 53% after tax has been growing by 42% on average.

Now you will notice we had a dip from 93 down to 73 right here. That's in 2024 because of the win uh four tax that we saw. So that's why you see a dip and

saw. So that's why you see a dip and then you see trading 12 month already is above the previous full year 87.2 billion and then 73 billion meaning the

bank is on track to beaten its previous full year uh financial. So profit after tax has been growing by 42%. Look at EPS the same thing. EPS the same thing too.

We saw a drop in EPS because of the win for tax but hopefully we should see a recovery. But then the public offer that

recovery. But then the public offer that we're looking at now can also dilute earnings further. So that's why I said

earnings further. So that's why I said this banking stock is good for long-term investment. Meaning by time they raise

investment. Meaning by time they raise their capital the media uh deadline uh figure then you should see the bank come back and this one bank that will rise so

fast. That's why I am very very um

fast. That's why I am very very um concerned. I'm sorry. I'm not concerned

concerned. I'm sorry. I'm not concerned in terms of the negative side. I'm

concerned because I was wondering why the investors have probably um underrated this bank. Why they have allow this bank to stay at this 9 to10

level for a long time when it has this hidden potential. Now look at the return

hidden potential. Now look at the return on equity of the bank. The return on equity has grown to from 8% to 11%. 8%

to 11%. And then you see the shareholders equity. Now look at the

shareholders equity. Now look at the most important part of this analysis.

Now the shareholders equity of the bank divided by the ordinary share gave me a book value. Book value

book value. Book value FCNB book value was 12 naira 24 co in 2021 and the bank was selling for 2

naira meaning in 2021 the bank was 309% undervalued and then in 2022 book value was 13.83. 83 13.83

and the bank was selling for 385 co the bank was 258% undervalued

in 202 uh2 2023 sorry SMB had 23.38 book n per share book value and the bank share was selling for 7.4 4 and then in

2024 book value was 23.1 and then class share price is 9.7 and then so far in 2025 book value is sitting at 19.68

and then SMB is selling for 10. You can

see the increase from 2021 2.9 3.8 7.4 9.4 to 10.7 look at the increase yearon-year

increase in share price. Now you also notice that the the valuation here has

been dropping 309 to 259 to 215 down to 144 down to 1983

meaning that SCNB stock price is closing out is catching up with it value very soon. That's what it means.

soon. That's what it means.

So this already shows that the banking stock is on its way to catch up with it book value. That's why you see that the

book value. That's why you see that the rate at which the banking stocks is undervalued compared to it book value

has been dropping from 3009 in 2021 down to 83. You can see year on year 259 215

to 83. You can see year on year 259 215 145 down to 83. So meaning FCNB is actually or will we catch up with the

fair value very soon book value very soon and if it has to catch up with book value then it means that the share price should top at least 19 naira so that's

like 90% from today's price of 10 naira now this may not happen next year two months or 3 months it means if you are holding this stock over a four to five

year period then fidelity bank my sorry FCNB might actually catch up with it bank book value of 19 naira because it's

closing out and don't forget my first analysis was customer confidence. So if

FCMB customer confidence continue to grow at this pace from 5.7 trillion then in 2026 it grows into 6.5 trillion 7 trillion 8 trillion then it

automatically means that the bank is going to raise more money to push it interest bearing asset because the more this deposit grows then the more the

interestbearing asset grows and the more interestbearing asset grows the more net interest margin grows And the more net interest margin grows then while also

optimizing cost then it means that the bank is a will be able to catch up with it fair value very very soon. This is

how to analyze banking stock. This is

not a job. This is not something you do overnight 2 minute 3 minutes and you say oh I want to invest in banking stock.

Some of you want to invest huge money in banking stocks and you don't want to you don't want to pay someone to carry out detail analysis like this. You just want a quick, you want a quick job. Some

people will come to YouTube and say your video is long. You are not serious.

You're not serious. I'm sorry to say. Go

and keep your money elsewhere. Go and

put your money in savings deposit. If

you are serious about investing in Nigerian stock market, investing in the banking stock. This is what you should

banking stock. This is what you should do so that when you put your money there, you'll be able to sleep well at night. This is the due diligence that

night. This is the due diligence that I'm talking about.

There are people in my community that are deep pocket investors because of the volume of the amount of money they want to put in that bank stock. They can't

afford not to watch my video because in my video I carry out due and detailed analysis. That was exactly what I did on

analysis. That was exactly what I did on Fidelity Bank.

So when you want to invest your money in a bank especially a bank you're looking to hold over a four to five year period then this is the kind of analysis you carry out to improve. So when you go back to your drawing board or when anything happens in the market and you

go back to your drawing board, the first thing you want to check is customer deposit still growing. The moment

customer deposit stop growing, it's time to pull your money out of that banking stock. It's as simple as that. Because

stock. It's as simple as that. Because

the bulk of the money they generate to run the operation is deposit. And why?

Cheap money. Look at cheap money. The

bank cannot survive on debt. They will

run down. cost of debt is already higher than net interest margin. So how do you expect a bank to be raising money?

That's why you see banks hardly come to the market to sell commercial paper to us or corporate bonds because it's expensive.

The best place, the best sort of fund for any bank is deposit. That's why they are willing to pay marketers. That's why

they are willing to sell marketers to anywhere just to make sure that they get the money and they reward them handsomely too. You see one of the top

handsomely too. You see one of the top marketers of a bank, they are even telling the to be a most bank manager, they are top marketers because they generate a lot of money for the banks.

So what are our big takeaway from this analysis that I just shared right here?

This is my takeaway. So pay attention to this particular takeaway from So the big takeaway here is that banks that enjoy growing customer confidence

will remain solid and good for long-term investments. So if you are considering

investments. So if you are considering investing in a bank for long term, this is the first thing you should look at customer confidence because nothing

ruins a bank faster than bank rush. when

customers are rushing to withdraw their money from a bank at the same time because of bad news. So any bank that is going to be a hold for you for long term

customer confidence as explained here total deposit must be growing very key like you can see from fidelity total

deposit 35% customer itself deposit itself 40%.

Second take, banks that are able to deploy cheap funds and generate higher return from related to customers remain a solid buy. Banks that are able to

deploy cheap fund. What is cheap fund?

Total deposit. Look at why it is cheap.

Interest is cheap. 2.5 3.5 4% and five.

And then when they deploy it to generate higher return, where's the higher return? 6% 7% 6 6.7 6 6.35

return? 6% 7% 6 6.7 6 6.35 and 8.3 expensive funds are depth this is

expensive no bank can survive on this don't even go close to this any bank that has most of most of his funds coming from depth don't even go to that

bank pressure there's pressure so cheap funds very key banks that are able to automate repeated processes to save time, optimize cost and leverage latest

technology for service delivery are a must own. When a bank is automating it

must own. When a bank is automating it processes when a bank is optimizing cost, it will be very very visible right

here. Cost to income ratio to be very

here. Cost to income ratio to be very visible. Look at how FCMBB had optimized

visible. Look at how FCMBB had optimized cost. Look at how they have dropped

cost. Look at how they have dropped their cost income ratio from 52% down to 32% over a 4year period. This is

massive. This is very impressive meaning that the more they grow their income, the more they grow their income, don't forget cost are being optimized. And

then look at the rate at which operating cost is growing versus income. Operating

cost has grown by 29% on average from 2021 down to 2024 2025 2012 month and gross earning is growing by 46%. On

average so cost to income ratio look at the drop look at it here. Look at here.

This is a bank that is deliberately optimizing costs just to reward shareholders to deliver value. So that

means FCNB is highly efficient right here. If a bank banking stock or if a

here. If a bank banking stock or if a bank is able to meet these three major criteria, there is no reason why you shouldn't hold that bank for long-term investing. It's as simple as that.

investing. It's as simple as that.

There's no reason why you shouldn't hold that bank for long-term investing. And

if I come here to look at the chart of FCNB, the long-term chart of FCNB.

Now FCNB is selling for um 10 NRA at this point. Now you notice something

this point. Now you notice something here. Look at how the bank has tested 12

here. Look at how the bank has tested 12 NRA right from 2024. First test, second test and third test. So this is a major

wall right here. If the bank is able to break out of this, this may not happen like I said it may not happen tomorrow, it may not happen next year. But if this

happens based on the growth I have seen on their financials using this metric, if it happens then FCMD might break out

into 1920 Naira because this is this is 12 NRA key level. So if you break out nothing is stopping MT FCMBB sorry from

touching 19 to 20 NRA and that align with my estimated book value of 19 NRA right here.

So meaning that the bank if you break out of 11 to 12 NRA could touch 19 to 20 NRA which is the average book value of that bank based on the current

financials. This is what I do when I

financials. This is what I do when I analyze banking stocks. I don't I don't do this regularly. This is the kind of analysis I carry out whenever I want to invest in a banking stock for a long

time. If you're considering investing in

time. If you're considering investing in a banking stock for a long time, if you're looking for a bank to buy, you have a bank in mind and you're not sure if this bank pass your checklist and all that, we can have oneonone. I'm open to

oneonone section, but it's a paid section. It's a paid one-on-one section

section. It's a paid one-on-one section that I have with selected investors who wants to invest in the bank and are considering a detailed analysis like this. You can come to me, come to my DM,

this. You can come to me, come to my DM, come to my support. Let's talk. I I

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