Home Business High Interest Rate: Wema Bank Mulls Over N20bn Bond Exercise In Q3

High Interest Rate: Wema Bank Mulls Over N20bn Bond Exercise In Q3

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Wema Bank Plc has said it might postpone its second tranche N20 billion bond issuance, while monitoring the interest rate regime in the country.

According to its chief finance officer (CFO), Mr. Tunde Mabawonku, the lender bank was targeting August to raise fresh capital in its expansion course, following the Central Bank of Nigeria’s (CBN) authorization of a national banking license in 2015.

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

He said, “We have a N50billion bond programme approved by SEC last year. We have raised N6.25 billion. So, we still have availability for N43 billion 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 our capital adequacy ratio (12.7 per cent). The economy is improving, foreign exchange is available, and 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 reduce, 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 further said the foreign market regime has improved in the economy, with people 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 stated.

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

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