WEMA Bank Plc Unaudited Financial Results for the 6 months ended June 30th, 2017 (1)

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LAGOS, NIGERIA – 19th July 2017 – Wema Bank PLC (Bloomberg: Wema NL) (“Wema” or “the Bank”), announces its unaudited H1’2017 financial results.

  • Launched 1st Digital Bank in Nigeria on 2nd May 2017.
  • Reports a 25.19% growth in gross earnings, driven by a 25.84% and 21.92% in interest and non-interest income.
  • Year-on-Year PBT growth of 10%

 

Managing Director/Chief Executive Officer’s Review

 

 

Commenting on the results, the MD/CEO, Segun Oloketuyi provided further insights into the performance of the Bank during the period.

 

The Bank operated, during the first half of the year, with an uncertain and challenging domestic economic backdrop. 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 performance.

 

Despite the relatively tough climate, Wema Bank recorded success on a number of financial and non-financial priorities. Specifically, Gross Earnings recorded stable growth, increasing by 25.17% from N24.26 billion (H1’2016) to N30.37 billion (H1’2017). This growth results from a 25.84% increase in interest income to N25.37 billion alongside a 21.92% rise in non-interest income -- where we continue to see impressive growth, led by fees and commission income from our mobile and digital banking applications. 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 strong interest margins.

 

The Bank also further optimized its loan book in the first half of the year by focusing on recoveries and supporting shorter tenured transactions. 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. 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 diligence in execution of plans.

 

Further discussions with Ademola Adebise – the Deputy Managing Director revealed that for Wema Bank, the emphasis in the next six months is to build and consolidate on the gains within the Digital Banking space, where the Bank presently leads, and to improve on customer acquisition and invariably cost of funds. In sharing the Bank’s growth 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 on the brand perception of the Bank, both across physical channels and through social media engagement,” Adebise said. The Bank has renovated more than 70% of its branch network to a more contemporary look and this will continue as the economic climate improves.

 

It is a strategy of “Click and Mortar”. ALAT has revolutionalised the digital space; we also want to ensure the consistency of the “ALAT experience” in our traditional branches. This is evidenced by the Bank’s improvement in the KPMG Customer survey. We have moved from a low of 19th position to 8th position in the recently published report.

 

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. Wema Bank’s strategy is to remain nimble and efficient and we hope to further achieve this in the coming months”.

 

The Bank is rated by two rating agencies (Fitch & GCR) and our credit rating remains investment grade and a stable outlook.

 

 

 

 

 

                                                            -ENDS-

 

 

 

 

 

 

 

 

 

Financial Performance Review

 

 

Income statement (N’bn)

H1’2017

H1’2016

(∆%)

Gross Earnings

30.37

24.26

25.19

Interest Income

25.36

20.16

25.79

Non-interest income

5.00

4.11

21.65

Operating expense

11.97

11.39

5.09

Profit before Tax

1.43

1.30

10.00

Profit after Tax

1.22

1.10

10.91

Earnings Per Share

6.30 kobo

 6.00 kobo

5.00

 

 

Balance Sheet (N’bn)

H1’2017

2016FY

(∆%)

Total Assets

383.17

421.22

-9.03

Loans and Advances(net)

205.71

227.01

-9.38

Deposits

291.93

320.76

-8.99

Shareholders’ Funds

49.72

48.50

2.52

 

Highlights

 

  • Gross earnings increased by 25.19% (Y-o-Y) to N30.37 billion in H1’2017 from N24.26 billion in H1’2016.
  • Profit before Tax (PBT) increased by 10% to N1.43 billion in H1’2017 from N1.30 billion in H1’2016.
  • Profit after Tax (PAT) rose by 10.91% to N1.22 billion in H1’2017 from N1.10 billion in H1’2016.
  • Net loans declined 9.38% from N227.01 billion (2016FY) to N205.71 billion (H1’2017), as customers paid down on loans.
  • Non-Performing Loans (NPLs) ratio declined by 3.16% to 4.90% (H1’2015) from 5.06% (2016FY).
  • Capital Adequacy Ratio (CAR) increased by 14.83% to 12.7% (H1’2017) from 11.06% (2016FY) due to lower charge on operational risk.

 

 

Operational Achievements

 

  • Fitch & GCR re-affirm Wema’s National Long term rating at (BBB-).
  • Re-opened Kaduna branch. Kano, Bauchi, Warri, Uyo, Mararaba, Enugu opening soon.

 

- ENDS -

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