Wema Bank: Earnings Plunged Big as Nigerian Economy Struggles to Heal

Wema Bank: Earnings Plunged Big as Nigerian Economy Struggles to Heal

Wema Bank Plc earnings plunged significantly as lender business suffered from the impacts of coronavirus, protests and stiff regulation.

While the economy struggles to heal, lender grew loans and advances 24.4% in 9-month of 2020 as profit after tax plunged 35.45%.

Following the 65% loan to deposit ratio target, lender raised loan book from ₦289.24 billion at the end of 2019 to ₦359.80 billion.

In the period, the bank’s gross earnings slowed down 10.79% to ₦57.83 billion from ₦64.83 billion in 9-month of 2019.

However, lender’s net interest income rose significantly despite lower interest rate environment due to the Central Bank of Nigeria’s dovish stance.

Lender’s unaudited 9-month result showed a 16.86% increase in net interest income, from ₦17.20 billion in 9M-2019 to ₦20.10 billion.

Read Also: Wema Bank Builds Training Academy to Enhance Innovation, Performance

The bank non-interest income however declined 27.61% year on year, slowed down from ₦15.79 billion to ₦11.43 billion.

Meanwhile, the bank was able to reduce operating expenses miniscule from ₦26.63 billion to ₦26.60 billion.

Lender’s weak bottom line dragged earnings per share by about 35% from 14.10 kobo to 9.20 kobo in the period.

In the period, Wema bank recorded 21.58% increase in deposit liabilities, from ₦577.28 billion at the beginning of the year to ₦701.84 billion at the end of 9M-2020.

Commenting on the result, Wema Bank’s Managing Director/Chief Executive Officer Mr. Ademola Adebise said: “We are pleased that our performance has improved significantly on the back of increased economic activities across the country.

“We recorded a better 3rd quarter compared to the 2nd quarter though average numbers still slightly below their 2019 peak volumes.

“For the 9months ended September 30, 2020, the Bank recorded gross earnings of ₦57.83 billion and Profit before Tax (PBT) of ₦3.06 billion.

“Customer Deposit closed at ₦701.84 billion, representing a 21.58% year-to-date growth.

“Despite the tough regulatory regime on cash reserve ratio (CRR), Wema Bank continues to support various sectors of the economy as witnessed in the 24.39% growth in loans to ₦359.8 billion.”

In response to the impact of Covid-19, Adebise stated that the bank played a role in supporting local, state and federal efforts in providing relief to those impacted directly and indirectly.

“We also supported customers through the suspension of loan repayment for SMEs, customized loan extension and moratorium, increased customer engagement through webinars, online channel availability and customer support”, the management said.

“To help in the rebuilding and healing process from the effect of the recent #EndSARS protest, Wema Bank has reached out to all its customers to not only empathize but work with them to create tailored solutions to enable them get their business back on track.

“The pace of Digital adoption and automation has accelerated across the country and indeed the globe in the light of the COVID-19 Pandemic and we are pleased as a Bank to have been ahead of the curve with ALAT, Nigeria’s First Fully Digital Bank.

“In the last quarter, we upgraded to ALAT 4.0 with a whole new personalized experience, thus allowing our customers to do much more with ALAT.

“Our focus for the next three years is to continue to transit ALAT and the larger Bank to becoming the “Dominant digital banking platform” in Nigeria and we are confident that we can achieve this feat”.

“Adebise, further commented that during the last quarter, the Bank further strengthened its governance structures with changes on the Board.

The Bank appointed Mr. Oluwole Ajimisinmi as an Executive Director and also appointed an Independent Non-Executive Director – Mrs Ibiye Ekong”.

“2020 has been one of the most challenging years in recent history but the Bank remains resilient and has committed to keep delivering value added services to its customers and stakeholders as it has done over the last 75 years”, the CEO stated.

The Bank hinted expectation to close the year in line with targets and expectations.

Wema Bank: Earnings Plunged Big as Nigerian Economy Struggles to Heal