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UPDATE 1-Nigeria's Wema Bank plans to issue next tranche of debt issue in May

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LAGOS, April 18 (Reuters) - Nigeria's Wema Bank will issue the second tranche of a 50 billion naira ($159 million) debt programme from next month and aims to pay a dividend this year for the first time in a decade, its deputy chief executive said on Wednesday.

It also targets 10 percent loan growth in 2018 by focusing on small firms, Ademola Adebise said.

The debt issue would help the mid-tier lender boost its capital ratio above its internal guidance of 15 percent, from 14.3 percent, he said. The regulatory minimum capital ratio for Wema and its peers is 10 percent.

"We would be embarking on a capital raise and I hope that would take us above our internal guidance on capital adequacy," Adebise told an analysts' call.

In July, Wema Bank said it could issue debt assuming bond yields dropped below 18 percent with falling inflation. Yields are now at around 14 percent.

It also talked about raising equity in 2018 to bolster its capital ratio and cut its operating costs as its new digital strategy gains traction.

The bank was quiet about the equity raising on the analysts' call but said it aimed to resume dividend payments this year.

Nigerian firms are tapping debt markets this year after the government redeemed some treasury bills, instead of rolling them over, in order to bring down yields. Analysts expect the central bank to cut interest rates this year as inflation slows.

Nigeria's biggest and oldest leasing firm C&I Leasing plans to raise 7 billion naira in a bond issue next month.

Wema aims to revive loan growth after credit dropped by 4.9 percent last year - despite the bank's target of 1.5 percent growth.

It said it recently obtained a $15 million loan from the Africa Development Bank and another $20 million from the Islamic Development Bank to boost lending.

The bank's 2017 pretax profit fell to 3.0 billion naira from 3.25 billion naira a year earlier.

Its shares have soared 69 percent this year, part of a broader rally in banking stocks as oil prices rose and Nigeria exited recession. They closed down 2.3 percent on Wednesday at 0.92 naira.

($1 = 314.50 naira) (Reporting by Chijioke Ohuocha; Editing by Adrian Croft and Susan Fenton)