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NOVA Merchant bond issuance to increase earnings capacity, CFO says

Nova Merchant Bank Limited said the derby bond issuance will increase earnings capacity and help build a more efficient balance sheet as the lender surmounted the COVID-19 crisis that ravaged economies across the globe.

Its 10 billion naira seven-year subordinated unsecured bond issuance was oversubscribed by 300 per cent.

Investment in the bond which is part of the bank’s 50 billion naira debt issuance programme was restricted to qualified institutions and high net worth individuals.

NOVA Merchant Bank’s Chief Financial Officer (CFO) Ifeanyi Chkwuonye said in a CNBC interview that the bond issuance is in line with the bank’s corporate strategy to raise long term funding.

He added that the lender was not moved by the coronavirus pandemic that paralyzed government activities and forced government to impose a lockdown so as to curb the spread of the virus.

“You will agree with me that amid turbulence there are opportunities. And in line with our corporate strategy we amy tap the debt market in the future,” said Chkwuonye.

For the year ended December 2019, the bank’s net income spiked by 44 percent to N1.65 billion from N1.15 billion the previous year.

The result showed that the Bank achieved strong growth across all parameters as it recorded a remarkable 113 percent growth in gross earnings from N2.76 billion in 2018 to N5.87 billion in the year under consideration, while profit before tax closed at N1.5bn, representing a 56 percent rise from N0.96 billion the year before, even as total assets grew by 155% from N25bn to N63.8bn in the year under consideration.

Analysts and investors have said that there is a lot of liquidity in the bond market because equity market is not doing well as investors have dumped shares on the back of lack of transformation policy on the part of government and poor corporate performance.

Eurobonds of equal maturity with Naira bonds have higher yields due to the current currency risk.

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