Wema Bank Consolidates Growth
With a 29.7 per cent increase in customer deposits and profit after tax for the half year ended June 30, 2018, Wema Bank Plc has consolidated its growth and raised hopes for improved returns for shareholders, writes Goddy Egene
Wema Bank Plc has shown resilience over the years surviving many challenges that saw the collapse of many of its peers. Through various strategies, including reverting to a regional bank at a point, the financial institution has been able to reposition itself for better performance. Going by its results for the half year ended June 30, 2018, Wema Bank Plc is fast regaining strong customer acceptance and posting improved bottom-line.
The bank recorded gross earnings of N31.93 billion in 2018, indicating a growth of 5.1 per cent above the N30.37 billion recorded in the corresponding period of 2017. Interest income was N25.39 billion, compared with N25.36 billion in 2017.
Non-interest income rose by 30.4 per cent from N5 billion to N6.5 billion. Profit before tax improved by 26.6 per cent, from N1.43 billion to N1.81 billion, while profit after tax grew faster by 29.6 per cent from N1.22 billion to N1.58 billion.
A further analysis of the results showed that more customers are getting attracted to the bank as deposits improved by 39 per cent, while total assets stood at N450.12 billion, up by 16.7 per cent from N385.4 billion.
Also, while many banks are reducing lending, Wema Bank Plc increased loans and advances from N223.4 billion in 2018, from N215.8 billion in 2017. Shareholders’ funds stood at N50.98 billion from N49.72 billion.
Bank Explains Performance
Commenting on the results, the Acting Managing Director /CEO, Wema Bank, Mr. Ademola Adebise said the performance was largely in line with our expectations.
“Deposit grew by 39 per cent to N354.88 billion on the back of continued acceptance of the Wema brand and the sustained success of ALAT – our flagship digital bank. We also improved our earnings capacity. The bank continues to execute on its five-year retail strategy with a clear mandate to improve performance by leveraging innovation. The emphasis for us is not just to digitise our product offerings to customers but also to build a technology driven back-end infrastructure to further improve on turnaround time and efficiency,” he said.
According to him, the bank also continues to improve its customer acquisition through the impressive performance of its USSD platform. The bank also recorded significant growth in agency banking partnerships, with the number of agents increasing by 25 per cent to 845 agents as at H1’2018 across all the 36 states of Nigeria.
“The bank will further leverage on its platforms and in-built capabilities in lowering cost to serve and growing market share.
“During the period, the bank secured credit lines of $15 million and N7.3 billion from the African Development Bank (AFDB) and the Development Bank of Nigeria (DBN) respectively. This is further in-line with the Bank’s intent of obtaining long term funding to drive its SME business. The bank is also expected to open the second tranche of its debt issuance program in a few weeks. With these half-year results, we believe we are on track to deliver on our commitments to shareholders at the beginning of the year,” he said.
Enters New MD
After nine years in office as MD/CEO, Mr. Segun Oloketuyi will retire effective September 30, 2018. He has already proceeded on terminal leave from July 1, hence Adebise will take over in acting capacity subject to regulatory approvals.
Oloketuyi was named GMD/CEO of Wema Bank Plc in June 2009. Upon joining Wema, he was tasked with returning the bank to profitability following the 2008 banking crisis which saw the collapse of many banks.
At that time, Wema Bank had negative retained earnings in excess of N66 billion and was declared a bank in grave financial situation by the regulatory authority. In his decade-long leadership, he completely turned around the fortunes of the bank, recapitalising the bank and returning it to profitability.
The bank is now positioned to deliver dividends to shareholders in the near-future. In his time as MD, the bank also regained its national banking licence from the Central Bank of Nigeria, which has allowed it to expand to the North and East of the country, significantly increasing its market share and customer base in the process,” it said.
The smooth transition that saw Adebise occupy the position of MD/CEO has been hailed as a strategic decision. Adebise has been part of the bank’s executive management team since the transformation programme began in 2009 and has played a pivotal role in the execution of the strategic turnaround programme for the bank.
He has over 28 years’ experience in the banking industry (inclusive of four years in management consulting), and has worked in various capacities in information technology, financial control & strategic planning, treasury, corporate banking, risk management and performance management.
Before joining Wema Bank, Adebise was Head, Finance & Performance Management Practice at Accenture (Lagos Office) where he led various projects for banks in business process re-engineering, information technology and risk management.
He is an alumnus of the Advanced Management Program (AMP) of the Harvard Business School and a holder of a Bachelor’s degree in Computer Science from the University of Lagos. He also holds a Master’s degree in Business Administration (MBA) from the Lagos Business School.
Adebise is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN). He is also an Associate of the Chartered Institute of Taxation and Computer Professionals (Registration Council of Nigeria). He is an honorary member of the Chartered Institute of Bankers of Nigeria (HCIB) and a member of the Institute of Directors.
N20bn Bond Boost
In order to boost its capital, Wema Bank Plc is planning to raise N20 billion via bond offering in August. Adebise said: “We need to enhance our funding. The bank is in the process of raising Tier II and the offer will be opened in August,” Adebise said.
The debt raise is the second tranche of a N50 billion bond programme. The bank said it has appointed parties for the offer and aims to boost its capital ratio to 15 per cent before year-end. The debt issue would help Wema Bank boost its capital ratio above its internal guidance of 15 per cent, from 14.3 per cent compare with the regulatory minimum capital ratio for Wema Bank and its peers, which is 10 per cent.
Wema Bank had earlier said it could issue debt assuming government bond yields dropped below 18 per cent with falling inflation. The bank also hinted of raising equity in 2018 to bolster its capital ratio and cut its operating costs as its new digital strategy gains traction.
ALAT Wins Award
ALAT, which contributed to the growth of deposits of Wema Bank Plc won the ‘Best Mobile Banking App’ and ‘Best Digital Bank for 2017’ in this year’s World Finance Digital Banking Awards.
The World Finance Digital Banking Awards celebrate organisations that lead the way with digitalisation while meeting consumer demands and mitigating against accompanying risks along the way.
The recognition by World Finance, a global print and online media platform which provides comprehensive commentary and analyses of the global economy, is the latest in a series of awards that has greeted the arrival of ALAT into the African banking space.
“We are delighted to earn such a global recognition so early in the existence of ALAT. To us, they are not merely a reward for the hard work but also an incontrovertible evidence of Wema Bank’s new place as a leader in banking innovation in Africa,” the bank said.
The bank noted that it would always remain committed to leveraging technology in delivering superior value to all stakeholders.
“We have developed in-house capacity and capabilities to enable us provide best-in-class digital banking services across all touch points,” it added. According to the bank, beyond ALAT, it continues to champion innovation and leverage technology in breaking barriers plaguing conventional banking.