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MARCH 12, 2007 VOL. 20. NO 22

Testing the Waters Again

**Ibru, MD, Oceanic Bank.**

After successfully raising over N200 billion from the capital market in 2005,banks plan to raise more than N350 billion in 2007, even as the United Bank for Africa UBA and Oceanic bank International led other in this regard
By Udo Onyeka
Perhaps, banks operating in the country have realised the great potentials the Nigerian stock market is holding after it raised more than N200 billion in 2005 at the wake of recapitalisation from N2 billion to N25 billion for each bank, are now warning up to return to the market. This also coming after a successful public offering in 2006 by Zenith Bank Plc and Intercontinental Bank Plc, in which both bank accessed N110 billion.
It was gathered that apart from the United Bank for Africa (UBA) and Oceanic Bank International Plc that have already opened their public offer, more banks are preparing to source for funds from the market, apparently to have the financial muscle to remain active players in the highly competitive banking sector.
Apart from the UBA and Oceanic that have begun selling their shares to the public, Afribank Nigeria Plc has applied to the Nigerian Stock Exchange (NSE), of its intention to come to the stock market to source for fund.
The Source gathered that Fist Bank of Nigeria (FBN), Platinum Habib Bank Plc (Bank PHB) and First Inland bank Plc, are among other banks intending to put up their shares for sale this year.
Although the amount to be raised by the other banks could not be ascertained, however it was gathered that the FBN might raise the highest amount of N100 billion.
The Oceanic offer which begins Monday, February opens a door of investment opportunity to the public, coming after the bank went to the capital market in 2004 which was fully subscribed.
The Oceanic public offer comes with an offer for subscription of 3.4 billion ordinary shares of 50 kobo at N16.50 bringing the total value to N54.4 billion. The bank is making the offer at a price discount of N3.03; considering that the capital market price of the bank share is at N19.53.
The offer is expected to fetch the bank a total of N55.4 billion, which will bring the bank’s shareholders’ fund to about N100 billion, if the current offer is fully subscribed.
According to the managing director of the bank, Dr. Cecilia Ibru, the offer is being under taken to provide investors opportunity of being part of the bank, increase the capital base of the bank and also increase our branch network locally and even out side the country.”
The Source was told that funds from the offer would enable the bank invest heavily on information technology and also have massive working capital.
Assuring investors of huge return on investment in the bank, Ibru at the completion board meeting of her bank in Lagos, last Monday, projected a profit of N18.9 billion for the bank in 2007, N24.9 billion in 2008 and N28. 6 billion in 2009. The bank also projected a dividend of 56 kobo in 2007, 58 kobo in 2008 and 67 kobo in 2009.
The bank gave a dividend of 42 kobo in the last financial year a well as a bonus issue of one for every four shares held. In addition, investors of the bank also gained through the appreciation of their shares. From a listing price of N5.30 kobo share, the stock value has appreciated to N19.53 kobo at the close of trading week, before the offer was opened.
Chairman of the bank, Apostle Hayford Alile, assured investors that the bank would continue to enhance their wealth through consistent dividend, bonus and capital appreciation.
In last three years, Oceanic bank has effectively shown that it can hold its own, through its resilience as one of the strongest banks in the country. The bank has posted excellent performance in almost all indices. The growth rate of its capital base for the period under review is 254 per cent compared to the industry’s 178, per cent. Aside the above the bank is known for its aggressive deposits mobilisation, another driving force for its performance. Going by the industry average deposit growth rate for the period, which is 101 per cent, oceanic grew thrice more than the industry by posting 399 per cent growth.
In a similar vein, the UBA offers for subscription to the public 1,127,400,000 ordinary shares of 50 kobo each at N35 per share, and right issue of 423,600,000 ordinary shares of 50 kobo each at N35 per share.
Group Managing of the bank, Tony Elumelu, said the UBA would intensify its speed at transforming the bank into a global player. “As the winner of various awards, both locally and internationally in various areas of banking services, and financing projects of small and medium to mega companies, the bank has built a reputation for itself in Nigeria and beyond, as a bank that is committed to service it customers, best.
The UBA offers a good investment opportunity for investors going by the performances of the mega bank. The bank’s balance sheet size as at September 30,2006 soared to N1.051 trillion, representing a 216 per cent growth from the previous year’s figure of N332.60 billion. The gross earning for the 18 month period grow by 247 per cent to hit N90. 44 billion with profit before tax of N12.81 for the same period, an increase of 96 per cent when compared with the previous year. While profit after taxation stood at N11.550 billion apart from getting a discount of about N2.50 on each share of the UBA purchased, considering that the current market price of the bank’s stock is N37.99, the investing public is told to check out the records and "excellent" performances of the banks.