Wema Bank to raise N150bn capital, says merger talks premature

Wema Bank is set to raise N150 billion in new capital through a hybrid of rights issuance, public offer and private placement.

The bank disclosed this at its first half-year 2024 investor and analysts’ conference call. During the call, the Bank’s Executive Director, Tunde Mabawonku, highlighted the bank’s strategy.

He said, “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.

“Our expectation is to initiate this process towards the end of the year, with completion expected in Q1 2025, all within the remaining 18 months of the regulatory timeline.

• NIGERIA DAILY: How Victims Of Flooding Struggle To Get Back On Their Feet
• Biosafety: US pledges support for Nigeria’s food safety

“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.”

In response to a question about potential merger discussions, Mabawonku said, “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.”

Wema Bank’s first half of 2024 results paint a picture of significant growth. The bank reported a strong 100.5 per cent increase in gross earnings, reaching N178.63bn, up from N89.09bn in the first half of 2023. The bank attributed the surge to a 91 per cent increase in interest income and a 155 per cent rise in non-interest income.

The bank’s Profit Before Tax (PBT) also saw an impressive 153.5 per cent jump, climbing to N30.56bn from N12.05bn in the same period last year. This represents over 100 per cent of the 2023 figure. This even surpassed the bank’s pre-tax profit five-year compound annual growth rate of 45 per cent.

These results were underpinned by improvements in key financial ratios. For instance, Wema Bank’s Net Interest Margin (NIM) improved to 7.43 per cent in the first half of 2024, up from 6.12 per cent in the same period of 2023.