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Skye Bank Eyes N100bn Fresh Capital


By Goddy Egene, 05.04.2010

Directors of Skye Bank Plc are seeking the approval of  shareholders to  raise N100 billion fresh capital - apparently to strengthen its operations and compete favourably in the  banking industry.

THISDAY gathered that the funds are to be raised through the issuances of ordinary shares or via the issuance of bonds or medium-term notes, other instruments or loans.In this regard, the directors are said to have included the request as a special business at the bank's Annual General Meeting scheduled to hold in Abuja on May 20, 2010.

The directors are also requesting the shareholders to authorise the issuance and allotment of up to three billion ordinary shares of 50 kobo each in the authorised share capital of the bank, each share to be issued at a price, which is not less than N7 and does not exceed N10 per share.Before now, many banks had planned to raise additional capital through bonds issuance. But only   GTBank Plc has accessed the market  for the first tranche.Unity Bank Plc has already applied to the Nigerian Stock Exchange (NSE) to raise about N24 billion via Rights Issue.

Analysts said that plan by Skye Bank to raise N100 billion has raised the jostle for fresh funds in the capital market. The shares of the bank have witnessed significant recovery since the beginning of 2010, rising by over 36 per cent.Skye Bank Plc recently posted gross earnings of N126.67billion for the year ended December 31, 2009 as against N74.62 billion achieved in 2008, showing a  growth of 69.76 per cent.  

The bank declared a profit before tax of N2.15billion and profit after tax of N1.13billion, respectively. During the financial year also, its loan portfolio recorded a 28.97 per cent increase, from N246.39billion to N317.76billion. The bank explained in a statement that this increase evidently reflects a high level of organisational focus, sound management, and consumer confidence in the Skye brand, considering the pervasive hiccups in the industry in the area of risk asset creation.

The bank proposed a dividend of five kobo per share amounting to N579million. According to the bank, in declaring the dividend, it was mindful of the unceasing support that it had received over the years from shareholders.Analysts had said that Skye Bank would present stronger results in the coming months, considering its strong and significant showing in 'traditional' businesses such as structured financing in power, oil and gas, construction, hospitality, education, and transport sectors. 

They also believe that its Non-Performing Loan (NPL) ratio would significantly reduce, considering the fact that adequate provisions had been made for transactions in those lines of businesses in the 2009 financial statements, as advised by the regulator.


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