FCMB to Raise N300bn to Boost Capital in Q3

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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 Cardinal Stone 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, Cardinal Stone 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

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. Cardinal Stone 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