Why Wema Bank may extend N20bn bond issuance

The Chief Finance Officer (CFO), Wema Bank Plc, Mr. Tunde Mabawonku has said the lender might postponed second tranche N20 billion bond issuance, stressing that the bank is monitoring the interest rate regime in the country.

The bank was targeting August to raise fresh capital in its expansion course following the Central Bank of Nigeria (CBN) authorization of a national banking license in 2015.

Mabawonku while speaking at a media parley with financial journalists during the weekend, explained the bank’s half year of 2017 financial report, strategies of the bank, innovation technology drive and the outlook.

He said bank was granted approval by Securities and Exchange Commission (SEC) to raise a N50 billion bond in 2016, but has raised N6.25b.

According to him, “We have a N50billion bond programme approved by SEC last year. We have raised N6.25 billion. So, we still have availability for N43b to raise in the market.

“The plan was to have started the bond exercise in August but interest rate still high and outlook for inflation rate might still be very high.

“What we did was to check with is our capital adequacy ratio (12.7 per cent). Do we foresee any major decline, No. The economy is improving, foreign exchange is available, customers’ are paying down on their loans and better liquidity in the market.

“So, we do not see any deteriorating in the Non-Performing Loan (NPL). The outlook for capital adequacy ratio this year will remain around 12 per cent, the minimum threshold is 10 per cent by CBN. If rate do not reduced, we might probably not raise the bond this year. We will wait until April next year. If we do not raise the bond, our capital adequacy ratio will remain above 12 per cent mark.

He elaborated further that, “the foreign market regime has improved in the economy, more people are paying down on their loans, hence, reducing NPL. We do not see any increase in NPL now that is better liquidity from the foreign exchange market. Our expectation for NPL will remain below 4-5 per cent threshold this year.”

He explained that through the launch of Alat, the first fully integrated end-to-end digital bank in Nigeria, Wema Bank has been aggressive in its target of opening 1,000 accounts per day.

Currently according to him, the bank has opened close to 57,000 accounts, pushing financial inclusion in the country.

“The Bank also continues to improve its customer acquisition through the launch of its Agency Banking initiative and the impressive performance of its USSD platform (*945#). Indeed with this 3-pronged strategy, Wema Bank is poised to be Nigeria’s leading Retail Bank,” he said.

On the half 2017 financials he highlighted the fact that Wema Bank recorded 4.9per cent Non-performing loan NPL status and a 12.7 per cent Capital Adequacy Ratio, which are both within the regulatory requirement for the banks in Nigeria.

In the area of earnings, the bank achieved 25.1per cent gross earnings growth from N24.26 billion in 2016 to N30.37billion in half year of 2017, 25.54 per cent growth in interest income which translated to N25.37billion and a 21.92 per cent rise in net interest income.