FCMB to Raise N300bn to Boost Capital in Q3

FCMB to Raise N300bn to Boost Capital in Q3
FCMB

FCMB to Raise N300bn to Boost Capital in Q3

FCMB Plc will raise N300 billion Tier -1 capital in the third quarter of the financial year 2022 to boost its funding profile, according to a report obtained from CardinalStone Partners.

The multi assets investment banking firm said in an equity report that the bank capital adequacy ratio which printed at 15.1% in the first half of 2022 is closely knit with 15% regulatory demand.

This, according to some analysts who spoke with MarketForces Africa, will limit the ability of the bank to create credit amidst 65% loan to deposit demand requirement for deposit money banks in the country. READ: FCMB: Key Metrics Worsen as Debits, Funding Pressure Prompt Profit Meltdown

Additional tier-1 capital raise to boost capital ratios, CardinalStone stated. the investment banking firm explained that in the first half of 2022, FCMB reported a 20 basis points decline in CAR to 15.1%, just slightly above the BASEL 2 regulatory threshold of 15.0%.

“To address this concern, management hinted that it had received regulatory and board approvals to raise N300 billion in Additional Tier-1 capital, which it hopes to conclude in Q3-2022”, the investment firm wrote.

Elsewhere, analysts stated that the weakness in asset quality was reflected in a 1.3 percentage point increase in stage 3 loan ratio to 4.6% reported by the financial service group.

It said management attributed the higher non-performing loans (NPL) ratio to the weakness in the personal banking portfolio. CardinalStone analysts expect cost-of-risk to be relatively flat at 1.4%, while NPL coverage ratio is likely to remain above 100%. # FCMB to Raise N300bn to Boost Capital in Q3