Fidelity Bank raises N30bn via bond issue to boost lending

Fidelity Bank has raised N30 billion through an unsecured bond at 16.48 percent, to fund increased lending to small businesses and retail clients, financial advisers to the issue disclosed yesterday.

According to the bond prospectus seen by Reuters, the fixed-rate bond due 2022 was fully underwritten and will be quoted on the Nigerian Stock Exchange. Fidelity Bank can redeem the bond after five years, it said.

Shares in the bank, which fell 39 percent last year, were up 3 percent at 1.70 naira.

Rival lender Skye Bank has said it will raise 50 billion naira via a rights issue by the third quarter to expand its loan book, after it sold 100 billion naira worth of commercial notes in March.

Stanbic IBTC Holdings, the unit of South Africa’s Standard Bank, has filed an application to the Nigerian bourse to raise 20.4 billion naira via a rights issue.

Nigeria’s banking sector index, which accounts for around 40 percent of total stock market capitalisation has gained 2.9 percent so far this year, having lost 22 percent last year owing to a heavy burden from tight regulation which cramped profits.

Fidelity Bank expects loan growth to hover between 15-20 percent from 2013-2015, driven by existing and new facilities made to power, agriculture, oil and gas sectors, it said.

The lenders have been shoring up their balance sheets after adopting stricter international capital requirements, which has meant capital ratios for most lenders dropping by between 100 and 400 basis points to near the regulatory minimum of 16 percent.