Nigeria’s Wema Bank targets 2% loan growth to boost capital as lending slows

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By Chijioke Ohuocha

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LAGOS, April 7  – Wema Bank aims to grow loans between one and two percent this year, after it achieved 22.3 percent growth last year, to conserve its capital as Nigeria enters a second year of recession, a senior executive said on Friday.

Chief Finance Officer Tunde Mabawonku said the bank had repaid a 50 billion naira ($164 million) seven-year loan it got from the central bank last year which knocked its capital ratio to 11.1 percent at the end of December from 15.1 percent a year earlier.

He said higher loan charge in 2016 also affected capital ratios which were still above a 10 percent regulatory limit.

“We intend to do a 20 billion naira issue by end of second quarter or early third quarter,” Mabawonku told Reuters.

The debt raise will boost capital ratios to 14 percent, he said, adding the mid-tier lender needed about 8 billion naira to reach that level. Mabawonku said it would also raise equity afterwards, likely next year.

The bank managed 6.5 billion naira in debt last year due to high interest rates. Mabawonku said Wema had registered a 50 billion naira bond programme and has appointed advisers for the debt sale this year.

Wema on Monday posted a pretax profit of 3.28 billion naira for 2016 up from 2.99 billion naira a year ago.

Shares in Wema have underperformed the broader market both this year and in 2016. They have fallen 7.4 percent since the start of January while the main index is down 4.2 percent.

Wema shares slumped 46 percent last year as the banking sector in general, and smaller lenders in particular, came under pressure from the currency crisis and economic slowdown.

Africa’s biggest economy entered its first recession in 25 years in 2016, brought on by low oil prices, which has hammered its foreign reserves and created chronic dollar shortages, frustrating businesses and individuals. ($1 = 305.20 naira

 

Naija247news
Naija247newshttps://www.naija247news.com/
Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

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