WEMA Bank has held its first half year 2024 investor and analyst conference call, where the bank disclosed plans to raise N150 billion in new capital through a hybrid of rights issuance, public offer and private placement.
Executive Director, Tunde Mabawonku, highlighted the bank’s strategy, stating that “we have obtained shareholder approval to raise N150 billion 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.
While shareholders’ funds are currently around N200 billion, our qualifying capital stands at N67 billion.
To maintain our status as a commercial bank with national authorization, 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 clarified that such talks are premature at this stage. He stated, “M&A conversations might seem a bit premature at this level. Our focus is on capitalizing in line with regulatory requirements and continuing to do business.”
With this context, the focus now shifts to whether Wema Bank’s current performance, reflected in various financial ratios, will be sufficient to persuade investors to participate in this capital-raising effort.
Current Performance: The Case for Optimism
Wema Bank’s first half of 2024 results paint a picture of significant growth. The bank reported a strong 100.5% increase in gross earnings, reaching N178.63 billion, up from N89.09 billion in the first half of 2023. The bank attributes this surge to a 91% increase in interest income and a 155% rise in non-interest income.
