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Lender forecasts opportunities in agric, fintech, others

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•Harps on digitization for increased productivity post-COVID-19

A lender in the Nigerian financial sector, Nova Merchant Bank Limited (NMBL), has said there are viable opportunities in the country’s agriculture, financial technology (fintech), healthcare, and telecommunication sectors, even with the ongoing COVID-19 pandemic.

According to the Bank, these sectors are clear winners in the market, and should get the focus and support of banks and other players in Nigeria’s financial space, even while they work with the sectors that are not performing very well, to bring them back on stream.

Specifically, the Chief Executive Officer/Managing Director, NMBL, Anya Duroha, said as a result of the pandemic, there was a need for financial institutions to embrace digitization in offering their products and services, and also create new investment strategies that suit the market.

Speaking during a virtual media parley on Monday, he said it has become visible that the traditional ways of doing business would no longer suffice, noting that financial institutions would have to get very creative about their products and how they offer their services.

He said this strategy helped Nova to maintain profitability even with the challenges posed by COVID-19, as it became apparent that the pandemic may last a little longer, and most banks would have to do contactless banking to succeed in the business environment, not just in Nigeria, but globally.

On the bank’s recent bond offering, which was oversubscribed by 300 per cent, Duroha said the funds would be focused more on the industries where opportunities already abound, noting that the bank would create medium to long term loan facilities to upgrade the country’s export capacity.

His words: “Our primary reason for raising the bond is not necessarily for capital but to have long term funds to finance our long term assets. Although the pandemic has been affecting many companies around the world, we foresaw this and took the necessary steps to make sure that we and our customers continue doing well in business.

“Our plan was to raise N10 billion for seven years tenor, callable after five years and again a subordinated bond, such that it would count as tier-2 capital. So, it was oversubscribed by about 300 per cent. This means we got about N31 billion, whereas we set out to get N10 billion.

 
“We are not just looking at the corporate entities that we deal with, but also looking at the value chain of those entities, their suppliers, distributors, and so on, and while we are funding them, we also make provisions to be able to support Micro, Small and Medium Enterprises (MSMEs) within their value chain.

“This is because even if you finance a corporate and their value chain is not doing well, the corporate will also not do well. This is a strategy that has actually worked very well for us.  Beyond helping MSMEs to grow, it is also good as there is unity and confluence of needs for the bank and for the people.”

In his remarks, the Bank’s Chief Finance Officer, Ifeanyi Chukwuonye, said its capital adequacy ratio (CAR), was 53.57 per cent as at 2019, well above the regulatory ratio, noting that in terms of volume, the bank was well over N20 billion, which was also adequate.

 
 


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