Adegoke Adegbami, a financial management consultant is currently the Managing Director/Chief Executive, Mainstreet Bank Microfinance Bank Limited in 2009, a subsidiary of Skye Bank Plc. In this interview he speaks on the challenges and prospects of the bank in the wake of the COVID-19 pandemic. Excerpts:
Your bank recently raised about $20million via one of your debt products. Can you shield more light on details of the product?
Thank you for the opportunity to have this conversation. First we must remember the fact that the core of our business is financial intermediation. We get money from those that have surplus and channel it to those that need it for productive purposes. And two things are important here. The more of it we can get and our ability to manage and deploy it profitably. The product in question was actually launched in 2018. We had just paid down a foreign debt of about N700million at that time. Our first option was to look for a similar foreign facility as a replacement. But the fact that Nigeria entered a recession in 2016 and the sharp devaluation of the Naira made it impossible for us to get a foreign replacement. Besides, we were not ready to carry the foreign exchange risk; we believed that was not our area of strength. It was this dilemma that made us looked inwards and launched that product we called Main Treasure Note. It is typical of a commercial paper, except for the fact that we handled everything by ourselves, including the marketing of it. The tenors range between 180days to 12months with very attractive interest premium. The target was that with aggressive marketing, some people will be able to pull out their deposits from commercial banks and give parts or all of it to us. We marketed it to the middle class, high networth individuals and corporate entities. That gave us about N800million in 2018. We marketed mostly within family and friends network in 2018. We had subscription ranging from N5million and above.
All we did late 2019 and 2020 was to leverage on the confidence we got from the 2018 success story and rework our marketing strategy. Today we have agents that market this product for us on commission basis. We got all our staff involved, including back office and other support staff. We also continued to place advert in the newspapers and online platforms. The people who have patronised us since 2018 are very happy with the attractive interest and our prompt, quality services. Our investment grade credit rating by Agusto & Co also served to boost their confidence in our bank. With the very low interest regime in 2020, many of them now found us as their investment destination. Even though this particular product is revolving in nature, we have a portfolio of over N8billion on that product as we speak. If you use N400/$, that translates to $20million.
What’s your company’s performance in 2020, considering the impact of COVID-19 pandemic and what do you think the future holds?
On the quantitative side, we have grown our total assets by 81% year on year. Our portfolio has grown by 80%. Our gross revenue and profit before tax have grown 71% and 74% respectively. To be able to fund the growth in portfolio, we have grown our deposit moderately and debt funding significantly. Despite the challenges of the last 12 months, our bank has won a number of awards and recognitions. At the Fintech Innovator Merit Award 2020, we won Africa’s Most Innovative Micro Lending Service Brand of the Year 2020. We were recognised as the Microfinance Bank of the Year 2020 by the Classic Magazine.
What is your view on the issue of recapitalisation of MFBs by the CBN? How are the operators faring in this regard?
Like many of us, I believe capital is very important for the success of any business, but particularly a banking business. I also believe that the regulators mean well for the sector. However, there is a need for the regulators to consider the issue of timing very well. Even if the timing was right as at when the Central Bank of Nigeria (CBN) initiated the current capital increase, COVID-19 has made the timing wrong. They gave extension of 12 months, but that was with the expectation that the world would be able to deal with COVID-19 in maximum of 12 months. The reality today is different. Almost two years down the line, the world is still grappling with COVID-19. COVID-19 has now become COVID-21, particularly with the current experiences of India, Turkey and Brazil. Don’t forget we live in a global community. And we also have our own peculiar problems in Nigeria. My advice is that the regulators should give us more time. They can apply their new requirements to new entrants but they should give more time to existing institutions. I don’t think anybody will benefit from these businesses being closed down, at least not the regulators, employees, shareholders, government and the Nigerian economy at large.
What is your stance on CBN’s restriction on crypto currency?
My first reaction was that the CBN appears to want to control what is clearly not within its control. But CBN has also clarified that they did not ban crypto currency transaction in Nigeria, neither do they criminalise it. What they are saying is that you cannot pass it through banks that are regulated by the CBN. This is because they believe it is prone to fraud and it is difficult for the CBN to regulate. They cannot take responsibility for or guaranty the safety of your money in those transactions. I think that is fair enough. We also have information that all regulators and government agencies are now working together to find a way around it.
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