August 04, (THEWILL) – Wema Bank Plc posted impressive results for its 2024 half year operations ended June 30. This will trigger a quantum leap towards an enhanced milestone in the current recapitalisation exercise to the delight of the stakeholders who are enthusiastic about the capital raise.
Amid an increasingly challenging environment, the bank’s topline and bottom line profits were positively impacted by the efficiency in asset allocation during the period. They were also impacted by the bank’s innovation in customer service through friendly and intuitive technology for which the bank is known.
That explained why, despite the unfavourable economic climate, the bank hauled N146.06 billion in interest income, which is 129.7 percent more than the N76.64 billion achieved in the preceding year. This stemmed from efficient management of expanding loan book in a challenging environment, suggesting the focus on core banking activities and an emphasis on supporting the growth of the economy, especially the real sector. Loans and advances to banks and customers increased by 76 percent to N94.24 billion against N53.52 billion achieved in the corresponding period of the previous year.
This played a major role in boosting the assets as the balance sheet rose to N2.76 trillion in H1 2024 from N2.24 trillion in FY 2023, representing a 23.2 percent growth. This suggests that the bank is coasting to a surge in asset base at the end of 2024, having surpassed the 2023 figure of N2.24 trillion by 23.2 percent.
Riding on the upward trajectory of revenues, the bank’s profit before tax rose to N30.56 billion during the review period compared with N12.05 billion in H1 2023, translating to 153.6 percent. Similarly, profit after tax rose by 154.6 percent to N26.59 billion compared with N10.49 billion in H1 2023.
Investment in securities yielded a 120 percent increase in returns from N21.20 billion in H1 2023 to N47,29 billion in the review period on the back of a favourable interest environment as government intensified borrowings through public-offered instruments during the period.
Components of the H1 profit include non-interest income from FX transactions which surged 1,028 percent to N6.4 billion from N571 million in H1 2023. The bank harvested significantly from its electronic products for which it has a tremendous reputation as an industry leader. Revenue from e-banking platforms rose to N6.1 billion from N3.1 billion in H1 2023 – a 95 percent increase.
A game changer in digital banking solutions is ALAT. Launched in 2016, ALAT, Wema Bank’s exceptional digital banking platform, doubles as Africa’s first fully digital bank. It allows Nigerians from any part of the world to transact both in naira and dollars from wherever they are, on their phones.
To enhance its role in financial inclusion, Wema Bank also launched ALATHUB. This is its agency banking platform designed to help Nigerians of all ages in the most rural parts of Nigeria to access banking services via registered Wema Bank Agents. Customers using this platform can do anything from opening accounts, withdrawals, deposits and money transfers to accessing loans, getting cards and sorting other financial needs, without having to go to the bank.
The positive revenue trajectory in H1 2024 points to the fact that the bank will record a huge revenue haul through its electronic banking products in FY 2024. Analysts predict an upper double-digit growth by the bank in 2024 with prospects of significant increase in interest income, e-banking revenue and FX transactions.
“Wema Bank enjoys historic customer loyalty – the best among the financial services institutions in Nigeria. The recapitalisation exercise will offer a huge opportunity for it to record a significant growth and boost its market share.. It may not join the Tier-1 group; it, however, will get stronger by the time the recapitalisation is over,” said Johnson Ikhehide, a financial analyst.
Wema Bank recently flagged off its capital raise to meet the target with the N40 billion rights issue which has been approved by the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC).
In a statement, Wema Bank’s Managing Director/CEO, Moruf Oseni, reiterated the bank’s resolve in retaining its Commercial Banking license with National Authorisation, adding that the N40 billion Rights Issue is a step in that direction.
He stated: “We are delighted to announce the conclusion of the 1st tranche of our Capital Raise Programme, after obtaining the relevant approvals of all regulatory authorities.
“Our move to commence our Capital Raise Programme very early demonstrates our push for excellence and with a strong emphasis on our digital play, we are set to amass more successes in the coming months.
“We were impressed by the vote of confidence given by our shareholders during the 1st Rights Issue exercise as our shares were fully subscribed. In addition, we obtained the approval of shareholders at our 2023 Annual General Meeting (AGM) to raise an additional N150 billion to meet the capitalisation threshold set by the CBN. The process is expected to be completed within 12-18 months.
“We are committed to providing optimum returns for every stakeholder and the successful conclusion of this N40 billion Rights Issue is a bold step in the right direction.”
THEWILL recalls that the CBN) in March 2024, launched a recapitalisation programme requiring banks to raise fresh capital in alignment with the minimum requirement for their respective banking licenses, within a 24-month timeline spanning April 1, 2024, to March 31, 2026. The goal of the recapitalisation programme is to simultaneously boost the Nigerian economy and strengthen the Nigerian financial services institutions to play a bigger role in the economy.
On the equities market, Wema Bank closed its last trading day (Friday, August 2, 2024) at 6.30 NGN per share on the Nigerian Stock Exchange (NGX), recording a 1.6 percent gain over its previous closing price of 6.20 NGN. Wema began the year with a share price of 5.60 NGN and has since gained 12.5 percent on that price valuation, ranking it 57th on the NGX in terms of year-to-date performance.
Data from the NGX showed that Wema Bank stock is the 26th most traded stock on the Nigerian Stock Exchange over the past three months (May 3 – Aug 2, 2024). It has traded a total volume of 216 million shares—in 8,156 deals—valued at NGN 1.44 billion over the period, with an average of 3.42 million traded shares per session. A volume high of 14.9 million was achieved on July 11th, and a low of 457,422 on May 10th, for the same period.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
