Wema Bank is gearing up to bolster its capital base by N150 billion as it eyes sustained growth and regulatory compliance in Nigeria’s competitive banking sector.
This capital raise, which is a hybrid of rights issuance, public offer, and private placement, was revealed during the bank’s first half-year 2024 investor and analysts’ conference call.
Speaking at the conference, the Executive Director of Wema Bank, Tunde Mabawonku, outlined the bank’s strategic approach to the capital raise.
“We have obtained shareholder approval to raise N150bn in qualifying capital. We will be doing this through a combination of a rights issuance and a special private placement,” Mabawonku said.
The bank aims to initiate this capital raise towards the end of 2024, with an expected completion in the first quarter of 2025.
Mabawonku emphasized the importance of this capital raise in maintaining Wema Bank’s status as a commercial bank with national authorization, stating, “While shareholders’ funds are currently around N200bn, our qualifying capital stands at N67bn.
To maintain our status as a commercial bank with national authorisation, we need to raise this capital in the coming months, ensuring we meet our licensing requirements.”
Amid growing industry speculation, Mabawonku addressed questions about potential merger and acquisition (M&A) activities, dismissing such talks as premature.
“M&A conversations might seem a bit premature at this level.
Our focus is on capitalising in line with regulatory requirements and continuing to do business,” he asserted.
The announcement comes on the back of a stellar financial performance by Wema Bank in the first half of 2024.
The bank reported a 100.5 per cent surge in gross earnings, which rose to N178.63 billion, compared to N89.09 billion in the corresponding period of 2023.
This impressive growth was driven by a 91 per cent increase in interest income and a 155 per cent rise in non-interest income.
Further highlighting the bank’s robust financial health, Wema Bank recorded a 153.5 per cent increase in Profit Before Tax (PBT), which soared to N30.56 billion from N12.05 billion in the same period last year. Remarkably, this PBT figure surpasses the bank’s pre-tax profit five-year compound annual growth rate of 45 per cent.
Additionally, the bank’s key financial ratios reflected substantial improvement.
The Net Interest Margin (NIM), a critical indicator of profitability, improved to 7.43 per cent in the first half of 2024, up from 6.12 per cent in the same period of 2023.
The move to raise new capital is seen as a strategic step to strengthen the bank’s financial position and support its growth trajectory amidst an evolving banking landscape.
With these developments, Wema Bank is positioning itself not only to meet regulatory requirements but also to capitalize on emerging opportunities in the Nigerian financial sector.
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