Access Bank to raise N68 billion


Access BankBy Chijioke Ohuocha

LAGOS (Reuters) – Access Bank has filed for regulatory approval to raise up to 68 billion naira ($415 million) through a rights issue after shareholders backed the plan, its chief executive said on Tuesday.

CEO Herbert Wigwe told an analysts’ call that he expected the share sale to begin by the second week of November, after the bank gains approval from the Nigerian Securities and Exchange Commission, and the capital raising should be completed by year-end.

At a shareholder meeting on Monday, Access Bank, Nigeria’s fourth-biggest lender by market capitalisation, said it would issue 7.64 billion shares at 8.90 naira each to existing shareholders, to bolster core capital and support its lending business.

“We would concentrate on concluding our rights issue while making sure that we maintain our growth momentum. We would continue to build a high quality loan book … and a low cost retail banking strategy,” Wigwe told the call, presenting the bank’s nine-month results.

He said loans grew 33 percent in the nine months to September and that the bank achieved a pretax profit of 42.15 billion naira ($256.5 mln), up 20 percent from a year ago.

Shares in the top-tier lender shed 1.03 percent to 8.62 naira, lower than the rights price, to value the bank at 197.25 billion naira ($1.20 billion).

Chief financial officer Seyi Kumapayi told the call that the central bank had started to impose stiffer international capital rules, explaining recent capital-raising across the industry.

In recent months, rivals such as Diamond Bank and Unity Bank have raised fresh equity capital, while United Bank for Africa (UBA) and Sterling Bank are expected to announce plans to raise fresh equity capital this month.

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Analysts also say First Bank and Skye Bank, which was last week named as the preferred bidder for nationalised Mainstreet Bank, may follow suit.

Kumapayi said Access Bank’s capital adequacy ratio declined by 10 basis point to 19.9 percent during the nine-month period to September due to significant loan growth and an interim dividend payment.

“Our rights issue will ensure that we build a very strong buffer against the regulatory environment,” Kumapayi said.

Analysts say capital adequacy ratios for most Nigerian lenders have dropped by 100-400 basis points this year to near the regulatory minimum of 16 percent under stricter international requirements, expecting some would have to lower dividends and loan growth this year to preserve cash.

(1 US dollar = 164.10 naira)

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