Banking
GCR Affirms Wema Bank BBB-(NG) Rating
By Dipo Olowookere
Global Credit Ratings has affirmed the national scale ratings assigned to Wema Bank Plc of BBB-(NG) and A3(NG) in the long-term and short-term respectively; with the outlook accorded as Stable.
A statement issued by the local rating agency explained that it affirmed the rating because the mid-sized bank has recorded some improvements lately.
It said Wema Bank was presently focusing on deepening its market share particularly within the retail banking segment through increased presence and digitisation.
The lender’s risk-weighted capital adequacy ratio (CAR) improved to 14.3 percent at FY17 (FY16:11.1 percent), supported by a reduction in risk weighted assets (particularly contraction in loans and advances book). Cognisance is taken of the capital reorganisation scheme carried out by the bank during the year, which involved writing off negative retained earnings as well as a portion of impaired assets against the share premium account.
Consequently, the bank expects a more efficient balance sheet. Going forward, the bank plans to raise additional Tier 2 capital before the end of 2Q FY18. This is expected to further strengthen capitalisation and enhance operation.
The bank’s gross non-performing loan (NPL) ratio improved slightly to 4.9 percent at FY17 (FY16: 5.1 percent) and further strengthened to 4 percent at end-1Q FY18, following the declassification of a major component of the reported NPL at FY17. Consequently, specific provision coverage of gross NPLs improved to 21 percent at FY17 (FY16:18.3 percent), albeit remained low.
Wema Bank witnessed liquidity pressure during the year, with the regulatory liquidity ratio falling below the regulatory minimum requirement at some points during FY17 (recording lowest ratio of 17.8 percent in September 2017 and later improved to 26.3 percent at end-FY17).
Management ascribed this to the crowding out effect created by the high yields on government securities during the period.
However, the bank issued commercial paper in 4Q FY17 (raising a total of N17 billion) to cushion its liquidity challenges.
Subsequently, the bank’s liquidity position has since normalised with the liquidity ratio maintained at above 30% throughout 1Q FY18.
Despite an improvement in total operating income during the year, Wema Bank recorded a decline in pre-tax profit to N3 billion in FY17 (FY16: N3.2 billion), impacted by higher funding cost, rise in impairment charges and operating expenses.
Accordingly, return on average equity (ROaE) declined to 4.6 percent (FY16: 5.4 percent), while return on average assets (ROaA) remained flat at 0.6 percent.
Note is taken of management’s operating efficiency strategy aimed at curtailing the relatively high cost-to-income ratio which stood at 83.8 percent, well above the peer average at FY17.
GCR noted that upward rating movement could result from a significant enhancement of market position, and an improved funding mix that could strengthen the bank’s liquidity profile as well as profitability metrics.
However, a rating downgrade could follow from a weakening in competitive positioning, and sustained pressure on earnings, asset quality, and liquidity metrics.
By Adedapo Adesanya
Access Bank Plc, the banking subsidiary of Access Holdings Plc, has entered into a binding agreement with South African-based Bidvest Group Limited for the acquisition of 100 per cent equity stake in Bidvest Bank Limited.
The deal for the 24-year-old South African lender is due to be completed in the second half of 2025, upon regulatory approval.
This shows Access Bank’s further expansion plans in line with goals set by its late founder, Mr Herbert Wigwe.
The agreement to acquire 100 percent stake in Bidvest Bank reflects Access Bank’s commitment to strengthening its footprint in South Africa and consolidating on its position as the continent’s gateway to global markets as it seeks to optimise the benefits of recent acquisitions and accelerate its transition towards a greater focus on efficiencies.
Bidvest Bank, founded in 2000 is a niche and profitable South African financial institution providing a diverse range of services, including corporate and business banking solutions and diverse retail banking products.
As of its year ended June 2024, Bidvest Bank reported total assets equivalent of $665million and audited profit before tax of $20million.
Upon conclusion of this acquisition, Bidvest Bank will be merged with the bank’s existing South African subsidiary to create an enlarged platform to anchor the regional growth strategy for the SADC region.
This is coming just as the bank opened a new branch in Malta as part of efforts to focus on international trade finance after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
The Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
By Modupe Gbadeyanka
To strengthen Europe-Africa trade ties, Access Bank has opened a new branch in Malta. It will focus on international trade finance, employing approximately 30 people in its initial phase, with plans for controlled expansion over time.
It was learned that this Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
Access Bank Malta Limited commenced operations after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
Malta, a renowned international financial centre, and a gateway between the two continents, is strategically positioned to play a pivotal role in advancing commerce and fostering economic partnerships.
This strategic expansion into Malta enables The Access Bank UK Limited to leverage growing trade opportunities between Europe and Africa.
It underscores the organisation’s commitment to driving global trade, financial integration, and supporting businesses across these regions.
“By establishing operations in Malta, we will gain a foothold in a market that bridges European and North African economies, moving us one step closer to our goal of becoming Africa’s Gateway to the World.
“It further enhances our bank’s capacity to support clients with innovative solutions tailored to cross-border trade and investment opportunities,” the chief executive of Access Bank, Mr Roosevelt Ogbonna, stated.
“Europe has emerged as Africa’s leading trading partner, driven by initiatives such as the Economic Partnership Agreements between the EU and African regions and the African Continental Free Trade Area (AfCFTA).
“With Europe-Africa economic relations entering a new phase, The Access Bank Malta Limited is ideally positioned to deepen trade and meet the financing and banking needs of our clients in these expanding markets,” the chief executive of Access Bank UK, Mr Jamie Simmonds, commented.
Also speaking, the chief executive of Access Bank Malta, Renald Theuma, said, “Malta is uniquely positioned as a bridge between Europe and Africa, making it an ideal location for our subsidiary. This move allows The Access Bank Malta Limited to engage more closely with customers in Europe and deliver tailored financial solutions that drive growth and connectivity across both continents.”
By Adedapo Adesanya
The International Finance Corporation (IFC) and Goldman Sachs have announced a new partnership with African banks, including Nigeria’s Zenith Bank and Stanbic IBTC Nigeria to support the Goldman Sachs 10,000 Women initiative, a joint programme launched in 2008 to provide access to capital and training for women entrepreneurs globally.
The two Nigerian banks are part of nine financial institutions from across Africa which have agreed to join the 10,000 Women initiative committing to leverage the business education and skills tools the programme provides to create more opportunities for women entrepreneurs across the continent by providing access to business education.
Others banks include Stanbic Bank Kenya, Ecobank Kenya, Ecobank Cote d’Ivoire, Equity Bank Group, Banco Millenium Atlantico – Angola, Baobab Group, and Orange Bank.
Speaking on this, Ms Charlotte Keenan, Managing Director at Goldman Sachs said – “10,000 Women has had a powerful impact to date, but we know that there are more women to reach and more potential to be realized.
“We are delighted to partner with IFC to supercharge the growth of women-owned businesses across Africa, and mainstream lending to female business leaders. We remain committed to supporting entrepreneurs with the access to education and capital that they need to scale.”
Since 2008, the 10,000 Women initiative has provided access to capital and business training to more than 200,000 women in 150 countries.
“This expanded initiative marks a significant step forward in creating equitable economic opportunities for women in Africa, enabling them to build stronger, more resilient businesses and to realize their entrepreneurial goals,” said Ms Nathalie Kouassi Akon, IFC’s Global Director for Gender and Economic Inclusion.
Goldman Sachs’ 10,000 Women initiative complements the Women Entrepreneurs Opportunity Facility (WEOF), launched in 2014 by Goldman Sachs and IFC as the first-of-its-kind global facility dedicated to expanding access to capital for women entrepreneurs in emerging markets.
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