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Wema Bank records N20.87b gross income in six months

By Chijioke Nelson
22 July 2015   |   12:38 am
The unaudited result of Wema Bank Plc for the first half of 2015, showed a gross earnings of N20.87 billion, up from N20.82 billion recorded in the corresponding period of 2014.
Photo; logbaby

Photo; logbaby

The unaudited result of Wema Bank Plc for the first half of 2015, showed a gross earnings of N20.87 billion, up from N20.82 billion recorded in the corresponding period of 2014.

However, the bank’s net interest income fell by N650 million from N9.71 billion it achieved in the same period in 2014, to N9.06 billion in 2015. Profit before tax at N1.17 billion, was also down from N1.70 billion in the first half of 2014, representing N530 million decline, while the other operating expenses, put at N4.98 billion, showed a N24 million cost reduction, compared to N5.04 billion in the same period in 2014.

The result also showed that the profile of loans and advances was trimmed to N134.57 billion, from N149.29 billion as at December 2014.

Also, the deposit base slid from N258.96 billion as at December 2014, to N234.10 billion, representing N24.86 billion decline, while Non-Performing Loan (NPL) ratio of 2.9 per cent indicated 0.4 per cent increase from 2.5 per cent recorded in the corresponding period of 2014.

The Managing Director and Chief Executive Officer, Wema Bank, Segun Oloketuyi, said the bank has been able to sustain its financial performance, albeit, on a lower level compared to the same period in 2014, due to the tough operating environment in the period under review, attributable to economic headwinds, regulatory restrictions and political uncertainty.

“The first quarter of the year was characterized by election-related activities and political maneuverings with limited emphasis on economic matters, while the second quarter was largely characterized by the continued pressure on the currency, the tight monetary policy conditions and the low level supply of petroleum products.

“All these issues affected consumer discretionary spending and indeed the growth in our Retail volumes. “Due to the lack of economic policy clarity so far in 2015, investment decisions have been tentative.

In addition, the Cash Reserve Requirement (CRR) harmonization has reduced liquidity with significant impact on margins from money market investments.

“We are confident that as the new administration settles into office, its policy thrust will become clearer, hence, enabling us to continue to make well informed lending decisions mitigate risk exposures and further expand our customer base,” he said.

The bank chief however, noted that despite the economic challenges, the lender made appreciable progress in its transformation project.

He recalled that the bank unveiled a new corporate identity to reflect its new direction and strategic focus, as it now has a fresh, vibrant and contemporary look, which is also replicated in our approach to business.

“We have also commenced the process of raising additional capital in the second half of the year to grow business. We will continue to work on other elements of our Project LEAP growth strategy as communicated to stakeholders,” he added.

But the Chief Finance Officer, Tunde Mabawonku, said: “Operationally, the bank has continued to efficiently deploy its assets. Our loans to deposits ratio has moderated to 57.1 per cent, compared to 57.6 per cent as at December 2014, through a cautious approach to our lending, pending policy clarity from the new administration.

“The liquidity squeeze and tight monetary policy conditions affected our yields from money market investments. Technically, banks can only lend 39 per cent of available resources, as CRR is 31 per cent and liquidity remains 30 per cent.

“We therefore used the first few months of the financial year to streamline our mix of deposits and funding sources. This has resulted in slightly smaller deposit liabilities volumes but a better cost of funds.”

“Although, there was a five per cent decline in Net Interest Income to N8.89 billion in first half of 2015, when compared with first half of 2014, this was mitigated by a 6.5 per cent growth in our Non-Interest Income to N3.38 billion in first half of 2015 compared to the same period last year.

Our sustained Net Interest Margin above 7.5 per cent was also an improvement and our NPL ratio also remained below the three per cent mark.

“We foresee an improvement in economic activity and systemic liquidity once the “bail-out” talks are concluded and there is more clarity on the economic policy of the new administration.

Our expectation is that economic activities will pick up from August/September this year and the momentum will be sustained throughout the remaining months of the year.

“While general economic conditions and the regulatory environment remain tight, we believe that our lending strategies, embedded risk management culture and continuous cost savings will enable us stand firm throughout this period. We remain on track to deliver the 2015 financial projections.”

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