Wema Bank targets N40bn equity

Wema Bank Plc will target a share placement or a public offer ahead of a forthcoming industry recapitalisation order, after raising N40 billion this month, its executive director, Tunde Mabawonku disclosed.

Mabawonku, who also serves as Wema’s chief finance officer, said its current share sale would close on Dec. 29 and would help catapult shareholder funds to N160 billion including retained earnings, from N90 billion.

Wema is the first Nigerian bank to raise additional funds this year. Its plans coincided with Central Bank of Nigeria Governor Olayemi Cardoso’s order last month that banks would need to raise capital to support an expansion of the economy.

“The plan is to get this in … then depending on the quantum of the central bank order, we can decide to do a special placement or a public offer,” Mabawonku said.

Mabawonku said its capital level would hit 20per cent at the end of the rights issue from 16% in September. Its capital ratio stood at 12per cent in 2021.

Mid-tier lender Wema expects to earn one naira per share this year, up from 0.86 naira in the third quarter. It expects pre-tax profit to more than double to N75 billion next year, up from 30 billion naira, Mabawonku said.

“We would have capital to do more next year,” Mabawonku said. “With more capital, our limit on lending is enhanced so we would be able to (boost loans).”

Wema expects loan growth of 60per cent next year, from 40 per cent this year, taking into account a devaluation which has seen the naira loss more than half its value this year, Mabawonku said.

“In dollar terms, our balance sheet has fairly grown this year. We hope the exchange rate will be a little bit more stable next year.”