The management of Access Bank Plc is planning to address a key shareholder enhancement indicator, Return On Equity (ROE), when it goes to the market in the coming month with a rights issue to its existing shareholders that should bring in Tier One capital of around N68 billion.
“Return on equity is being addressed with this rights issue,” Herbert Wigwe, Group Managing Director and CEO, said in a detailed briefing on the proposed issue to the media yesterday. But boosting ROE is just one of a raft of benefits Wigwe listed that should accrue to the bank and shareholders, once the issue is concluded.
The bank’s management is looking at a ROE in the upper reaches of 20 percent, in terms of performance after capital has been raised.
Wigwe said the capital raising would put the bank in a position to adequately leverage on its positive ratings that have enabled it see a rise in a number of blue chip companies which now consider it worthy to do business with.
“If I raise more capital, I can be able to lend to all the customers, especially the new ones that have come in since we have improved risk ratings,” Wigwe said, adding that the bank’s “ability to resolve infrastructural issues and build the loan book can be a game changer.”
Specifically, the bank’s management also see positive signs ahead of the completion of this capital raising, especially as it is expected to further enhance its risk ratings; help it exploit growth opportunities in the market place; and enable it have a larger single obligor limit.
Other benefits the management sees accruing from a successful capital raising include enabling it to create a more resilient balance sheet for the bank and allowing it better leverage on Tier 1 and Tier 2 capitals.
Wigwe assured that the management has the knack to deliver on promises made in the past, stating that “if we have delivered consistently from 2002 to 2012, there’s no reason why we shouldn’t deliver what we are promising for 2013 to 2017,” in reference to the bank’s current five year growth and strategic plan.
He said money raised from the rights issue would be used to upgrade branches, investing more in technology and as buffer to support its subsidiaries, amongst others. “At the end of the day, it’s to support growth,” Wigwe explained.
