NPF Micro Finance Bank Seeking N3b Capital Boost To Support SMEs

The Nigeria Police Microfinance Bank is set to impact more Nigerian micro entrepreneurs that need funding for survival and sustainability, as the Bank seeks to raise fresh N3 billion from the capital market. Modestus Anaesoronye looks at the Company, its vision and readiness for the future.
Sounding of the closing gong at the Nigeria Stock Exchange (NSE) last week is symbolic for the Nigeria Police Force (NPF) Microfinance Bank (NPF MFB).
The exercise brought the management close at requiring the NSE to prepare the market for its planned rights issue through which it planned to raise substantial amount of money to pursue its spread out initiative.The bank seems to have impressed the NSE with its performance in terms of structure, financial management and sustainability plan.
Just recently, Augusto & Co reviewed the operations of the bank and rated it A.
The rating agency at the end of that exercise declared that the Bank is a company with good financial condition and strong capacity to repay obligations on a timely basis and stable outlook.
Government believes that robust economic growth cannot be accomplished without situating well focused programmes that enhances entrée of deprived and low income earners to factors of production, especially capital.
Against the backdrop of concerns expressed by stakeholders and the need to enhance financial services delivery, the 2005 Microfinance Policy, Regulatory and Supervisory Framework for Nigeria was Revised in April, 2011 by CBN.
Incorporated in May 1993 as a private limited liability company, the NPF Microfinance Bank plc was granted a provisional license as a community bank by the CBN in July 1993. The Bank commenced operations in August 1993. The NPF MFB was registered as a public limited company in July 2006 and was given approval-in-principle as a microfinance bank in May 2007.
It obtained its final license in December 2007 and shares of the Bank became listed on the Nigerian Stock Exchange in December 2010. The bank specialises in the provision of banking and other permissible financial services to poor and low income households; and micro-enterprises with emphasis on members of the Nigeria Police community.
These services include retail banking, granting of loans, advances and allied services and with a large number of shareholders comprising over 6,000 institutional and individual investors, with ownership concentrated amongst the two largest shareholders, the Nigeria Police Co-operative Society Limited which holds the largest equity stake of 64.75 percent and the NPF Welfare Insurance Scheme with a 10.25 percent ownership.
The bank today is now seeking to broaden its services stretching beyond its current coverage of 17 branches. The bank is eyeing to be present at the 36 states of the federation.
Managing Director of the bank Akin Lawal said at the NSE shortly after sounding the gong, said’ we are consulting and we are coming to the market at the appropriate time, all the shareholders will have the opportunity to take up their rights and the public offers. We are quite confident that whenever we choose to come to the market will be the right time.’
Lawal commended government for the foresight in establishing the Microfinance banks which he said is meeting the craving of the people, which he also said is the engine room of the economy. ‘It is the micro-subsector of the economy and micro finance are there to provide the necessary financial assistance to small companies and basically that is where they can get support ‘.
The banks chairman Azubuko Udah, said that the bank plans to establish 12 more additional branches after raising the fund. ‘We want to cover the whole federation, though we have 2 branches in Abuja but we want to satisfy the public and in particular our teeming customers. As you observe we are doing pretty well and I am happy with the price of our shares in the market giving the prevailing economic situation but we wish it goes up. We will also sustain the dividend we pay and soon shareholders will begin to get bonus shares depending on the way we are going and the expansion drive we are pursuing’ Udah said.
Continuing, he said the bank is sustaining loan offer to artisans and other people including the police and the general public that are in the agro-allied business, poultry and animal husbandry.
Udah also said the bank benefitted from the N2 billion which government earmarked for microfinance banks.‘We got about N500 million and we have been doing well with it, we have been supporting micro businesses in the country’.
The Bank’s business strategy focuses on growing income through the provision of banking services to the police, their communities, microfinance clients and other members of the general public. In line with its strategic plan, driven by the threat of increased competition from microfinance institutions and deposit money banks, NPF MFB offers high-quality services, leveraging on its history with police customers.
The Bank intends to increase its industry outreach by expanding to all 36 States through branches, cash centres and meeting points. In addition, the Bank plans on diversifying its customer base, traditionally dominated by men, to include women through its barracks strategy aimed at empowering them further.
In the last three years, NPF MFB’s business volumes have grown moderately, with total assets soaring at a CAGR of 19 percent, with total loans and advances also growing at a CAGR of 17 percent over the same three years period. NPF MFB’s net earnings grew by 15 percent from the prior year to ₦2 billion as at 31 December 2014.#
Pre-tax ROE and pre-tax ROA have averaged 15.6 percent and 7.1 percent respectively over the three-year period. In addition, the Bank’s cost-to-income ratio averaged 68.7 percent over the three year period (2014: 69.3 percent). During the year ended 31 December 2014, pre-tax profit increased by 21 percent to ₦617 million. ROA remained unchanged at 6.3 percent while ROE improved to 15.4 percent.

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