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Afribank invests additional N3b in IT
By
Esan Sunday
Senior Finance Correspondent,
Lagos
As
deployment of information technology (IT) becomes the cutting edge in the
banking industry, the management of Afribank, has spent about N3 billion on its
IT department.
By
this huge investment, the bank’s IT department is touted to be the best
in the industry.
Making
the disclosure last week, the bank’s Head, Information and Technology,
Mr. Afolabi Bayo, said the outfit runs a modern National Data centre at its
corporate head office in Lagos, where it occupies two floors to house its
hardware equipment and other network communication accessories.
The
bank, according to the bank chief, keeps a range of servers for its various
business functions at the head office, while maintaining a serviceable level of
hardware configurations in the branches for its front-end activities.
He
said: “The bank’s communication deployment strategy provides for
VSAT links between NDC and branches in major cities, while other locations link
up to the NDC via nearest VSAT branch location using wireless radio
technology.”
Though
a total of 111 of the bank’s 140 braches are already connected on line,
he promised that the remaining 29 would be connected before the end of the
year.
The
bank is currently in the capital market to raise N17 billion to boost its
shareholders’ funds and remain relevant in the post consolidation period.
Afribank
is currently seeking N17 billion from the public by offering 2.5 billion shares
of 50 kobo each at a price of N6.80 kobo per share. The offer, being packaged
by Union Merchant Bank and Afribank International Limited (Merchant Bankers),
is expected to boost the working capital of the bank and make it scale through
the re-capitalisation directive of the apex bank.
The
bank promised to pay the new investors a dividend of 45 kobo in 2006 and 55
kobo in 2007, respectively. These exclude share bonuses that may also be given
out to the investors for the years. The bank also forecast that while the
earnings per 50 kobo share would increase to 78 kobo in 2005, it would increase
to 77 kobo and 95 kobo, respectively in 2006 and 2007.
Commenting
on the offer, the Chief Executive of Union Merchant Bank, Alhaji Salihu
Ehimeakhe, said Afribank is quite cheap at N6.80 and now that the BIOA shares
controversy has been resolved, investors of the bank are in for very good
returns, better than what was promised in the prospectus.
“I
will enjoin all and sundry to buy Afribank’s shares because it is a good
buy. It is a good product and I am sure investors will respond positively and
buy into it more importantly because of its price, returns on investment and
the management that has proved to be reliable,” Ehimeakhe said. He
further said the post offer growth envisaged by the bank would be so rapid that
the share price would double and in the long run, those, who buy now would be
better off. He also argued that at the offer price, the stock should be well received,
noting that it is a tried and tested stock, which commands a bargain price with
a lot of room for capital appreciation.
The
Union Merchant Bank chief also asserted that by the time the management of the
bank, which he considers able and experienced, finances its branch network
expansion, upgrades the existing information technology and provides additional
working capital for its operations with the proceeds of the offer, the bank
will be in a good stead to compete favourably and make returns that might
surpass the projected levels. He also added that the board and management of
the bank have carried out a restructuring exercise that will reposition the
bank for increased market share and increased shareholders value.
In the same vein, Chief Akintude Asalu, the president of the
NSSA, said buying Afribank’s shares is one of the best decision any good
investor could make, especially at the offering price of N6.80. According to
him: “N6.80 kobo is not a bad price at all for Afribank. The timing is
also right. You know these days once you prepare peoples’ mind for an
issue that is coming, you anticipate that they would have taken steps to
prepare themselves for the issue. So, in this regard, the timing is okay and
the pricing is also excellent. So, I urge Nigerians to massively participate
and but into the bank, which is currently one of the biggest banks in the
country.”
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