Wema Bank announces 25% growth, 10% post-tax profit in H1

. Digital mobile banking was key, set spread
Wema Bank Plc has reported a 25.17 per cent growth in gross earnings, driven by a 25.84 per cent and 21.92 per cent increase in interest and non-interest income respectively.

The Nigerian Lender also reported a Year-on-Year post tax growth of 10.4 per cent in its unaudited H1’2017 financial results released via the Nigerian Stock Exchange on Tuesday.

The bank’s results showed stable growth as Gross Earnings moved from N24.26 billion in H1’2016 to N30.37 billion in H1’2017, an increase of 25.17percent, While Profit after tax moved from N1.1b in 2016 to N1.2 b in 2017.

Interest income also appreciated from N20.2b as at June 2016 to N25.4 b in June 2017, depicting an effective use of depositor’s funds.

The Bank’s statement of comprehensive income showed income from Net Fee and Commission, as well as other Income, contributed to the Bank’s improved profitability.

Despite a 24 percent reduction in Net Trading income that fell to N527.1m from N695.6m recorded in June 2016, the bank’s operating income that stood at N13.4b in June 2017, as against N12.7b in the same period of the prior year was thus boosted by the bank’s net fee and commission income, which rose to N3.9 b from N3.1b and other income, which appreciated 85 per cent to N589.3 m from N319.2m, also in the period under review.

Total operating expenses however increased by 5 percent to N11.965b in June 2017 compared with N11.392b the previous year as the bank continues to contend with diesel expenses, general administrative and other business expenses, which increased from the previous year.

The lender’s statement of financial position as at 30th June 2017, also indicated that total assets dropped 2.2 per cent from N391.8b in 2016 to N383.2 b in 2017.

Other highlights from the statement of financial position was a 67.2 per cent increase in deposits from banks that stood at N40.2b against N24.0b in H1 2016, Deposits from customers declined slightly to N251.7b fromN253.8 billion while shareholders’ funds increased by five per cent to N49.7 billion from N47.2b in the corresponding period of the past year.

Providing further insights into the performance of the Bank during the period, the MD/CEO, Segun Oloketuyi in a statement made available to The Daily Times said, “In the first half of the year, the bank operated in an uncertain and challenging domestic economic environment. While we recorded notable improvements in the second quarter of the year, especially around foreign currency management, the execution of fiscal policies and the continued tight monetary policy impacted on consumers’ disposable income and invariably on banking sector’s performance.”
He said, “Despite the relatively tough climate, Wema Bank recorded success on a number of financial and non-financial priorities.”

He said that the 25.2 per cent growth in Gross Earnings from N24.26b to N30.37b resulted from a 25.84% increase in interest income to N25.37 b and a 21.92% rise in non-interest income, which increased on the bank’s income from mobile and digital banking offerings.

The lender’s MD, stated that the impact of the growth in gross earnings was however muted by the higher cost of funds within the sector. “Despite this, we still maintained a decent interest margin while recording a 10% growth in Profit before Tax (PBT).”

The Bank further optimized its loan book in the first half of the year by focusing on recoveries and supporting transaction with good and steady cash flows. This resulted in a 9.38% decline in the volume of Loans and Advances, while yield on assets improved.

The Bank’s Capital Adequacy Ratio (CAR) increased to 12.71% (H1’2017) from 11.06%, as at FY2016, whilst NPL remained below the 5% mark at 4.90% as at H1’2017.

Wema Bank’s growth strategy – Project LEAP – revolves around the Bank’s Retail business and this was further strengthened by the May 2017 launch of ALAT, Nigeria’s first fully digital Bank. ALAT is the first of its kind with its end-to-end digital offering and customer interaction.

“The Bank’s target is to onboard an average of 1,000 new customers per day and we are on track to achieve that.” said the MD

According to Oloketuyi, The Bank also continues to improve its customer acquisition through the launch of its Agency Banking initiative and the impressive performance of its USSD platform (*945#).

“Indeed with this 3-pronged strategy, Wema Bank is poised to be Nigeria’s leading Retail Bank. We have commenced the second half of the year with cautious optimism, especially around the implementation of the needed economic reforms and execution of the 2017 budget to ensure stimulation of economic growth.

The expectation is that the country will exit recession in the 2018 financial year, but this will be dependent on a diligent execution of the reform programme.”

Short-term growth strategies revealed by Ademola Adebise, the Deputy Managing Director, lays emphasis on building and consolidating on the gains within the Digital Banking space, where the bank currently leads and to improve on customer acquisition and invariably cost of funds.

In sharing the Bank’s expansion plan, the Deputy Managing Director revealed that the bank has opened three (3) branches in the North. “The bank will expand further with two (2) other branches within the North Central Region and at least one in the East before the end of the year. “We continue to improve the brand perception of the bank, both across physical channels and through social media engagement.”

On the bank’s growth plan and capital raise, Tunde Mabawonku, the Chief Finance Officer stated that “We are also closely watching interest rates in the money market and relevant government policies to determine the timing of the second tranche of our Debt Capital issue, to further boost our ability to grow our franchise.We have continued to engage both local and international fund providers and have improved on our capacity to do business especially within the Trade Finance space. The Bank is rated by two rating agencies (Fitch & GCR) and our credit rating remains investment grade and a stable outlook.”