Wema Bank pays off CBN debt, eyes fresh capital

Wema Bank PLC said it has paid off the N50 billion loans it took from the CBN. The bank’s Chief Finance Officer Tunde Mabawonku said the bank had repaid a N50 billion 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 per cent a year earlier.
He said higher loan charge in 2016 also affected its capital ratios which were still above the 10 per cent regulatory threshold.
“We intend to do a N20 billion issue by end of second quarter or early third quarter,” Mabawonku said. The debt raise will boost capital ratios to 14 per cent, he said, adding the bank needed about N8 billion to reach that level. Mabawonku said it would also raise equity afterwards, likely next year. The bank managed N6.5 billion in debt last year due to high interest rates. Mabawonku said Wema had registered a N50 billion bond programme and has appointed advisers for the debt sale this year.
The bank aims to grow loans between one and two percent this year, after it achieved 22.3 per cent growth last year, to conserve its capital.
Wema on posted a pretax profit of N3.28 billion for 2016 up from N2.99 billion a year ago. Shares in Wema have underperformed the broader market both this year and in 2016. They have fallen 7.4 per cent since the start of January while the main index is down 4.2 per cent.
Wema shares slumped 46 per cent last year as the banking sector in general, and smaller banks in particular, came under pressure from the economic slowdown.