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NOVA Merchant Bank CEO Says Strategy is Long Term Funds for Core Infrastructure Investments

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NOVA Merchant Bank intends to continue to go into core infrastructure investments in Nigeria, using long term funds raised from a recent bond issuance to match long term investments.

Nath Ude, Chief Executive Officer/Managing Director of NOVA Merchant Bank Limited, told CNBC’s Wole Fameruwa on Monday that the next series in its N50 billion bond issuance, will be used to bridge the infrastructure gaps in the country.

“Merchant banks are supposed to bridge a huge gap especially on the infrastructure side. What we do is to identify the gaps that exist in the economy and see how we can bridge them,” Ude said.

“If you know the size of the imports that happened in Nigeria, you will understand that we import literally everything.”

Nigeria’s total imports stood at N5.92 trillion in fourth quarter (Q4) of 2020, an increase of 10.1 percent when compared to the third quarter (Q3) of 2020 and an increase of 10.8 percent when compared to Q4 2020, with imports accounting for 65 percent of total trade of N9.12 trillion in 2020, according to latest data from the National Bureau of Statistics (NBS).

Nigeria has the capacity and the Covid-19 crisis has also created a huge opportunity for the country to see what it should be manufacturing locally, Ude said.

The N10 billion series 1 of the N50 billion bond which was 300 percent oversubscribed has helped NOVA in terms of matching long term funds with long term investments, Ude said.

“We want to go away from the retail 90, 60-day fund cycle. It is a matching fund and that is our strategy,” Ude said.

GCR Ratings earlier in May upgraded the national scale long term rating assigned to Nova Merchant Bank Limited to BBB(NG) from BBB-(NG) and affirmed the national scale short term rating at A3(NG), with a Stable Outlook.

The Covid-19 is real, the impact has been huge for the banking industry and merchant banks are not isolated from this, according to Ude.

“Because of the respective restrictions that is going on, businesses are adversely affected. The more you have businesses affected in the form of shutdowns, what then happens is that the volume of business opportunities shrink. And as they shrink it has its impact on the bankable funds and by default it affects the size of businesses,” Ude said.

“It also reduces the opportunities you have to support businesses for financial institutions like us. Sectors that have not been growing well will as a result not receive funds as a result of the impact of the Covid.”

The good news is in the vaccine uptake and the way people are beginning to go from denial to understanding that its real, according to Ude.

NOVA Merchant Bank Limited audited results for the financial year ended December 31st 2020, showed impressive growth across its major financial lines.

The Bank declared a profit after tax of N3.49bn in 2020 compared to N1.65bn in 2019 which represents a 112 percent increase.

NOVA Merchant Bank offers an integrated suite of financial solutions covering Wholesale Banking, Investment Banking, Asset Management, Wealth Management, Trade Services, Transaction Banking, Cash Management and Digital Banking.

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