WEMA bank records N20.82b gross earnings despite economic uncertainty
Despite the tough operating environment in the first half of 2015, WEMA Bank Plc has earned over N20 billion, according to the unaudited financial results for the period ended June 30, 2015.
The report, which was made available to Marketing Edge put the gross earnings of the bank at N20.87 billion with slight increase from N20.82 billion in H1 2014.
The Net Interest Income is N9.06 billion, down from N9.71 billion in H1 2014 while the Profit Before Tax is N1.17 billion, down from N1.70 billion in H1 2014.
According to the results, the bank records N4.98 billion as Operating Expenses compared to N5.04 billion in H1 2014 while Loans and Advances were put at N134.57 billion, down from N149.29 billion as at December 2014.
Deposits from customers is N234.10 billion, down from N258.96 billion as at December 2014 while Non-Performing Loan ratio of 2.9% (2.5% recorded in H1 2014).
Commenting on the results, Mr. Segun Oloketuyi, Managing Director/CEO of the bank attributed the performance to economic headwinds, regulatory restrictions and political uncertainty.
However, he stated that despite the economic uncertainty, the Bank has been able to sustain its financial performance, albeit, on a lower level compared to the same period in 2014.
According to him, 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, the Managing Director noted that investment decisions had been tentative while the CRR harmonization had 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.”
“Despite the economic challenges, we have made appreciable progress in our transformation project. On May 2nd, 2015, Wema Bank unveiled a new corporate identity to reflect our new direction and strategic focus. The Bank 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 stakeholder,” he stated.
Reacting, Tunde Mabawonku, the Chief Finance Officer said that operationally, the Bank had continued to efficiently deploy its assets, adding, “Our loans to deposits ratio has moderated to 57.1%, compared to 57.6% as at December 2014, through a cautious approach to our lending, pending policy clarity from the new administration.”
He explained that the liquidity squeeze and tight monetary policy conditions affected the bank yields from money market investments. “Technically, banks can only lend 39% of available resources, as CRR is 31% and liquidity remains 30%. 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 5% decline in Net Interest Income to N8.89 billion in H1 2015, when compared with H1 2014, this was mitigated by a 6.5% growth in our Non-Interest Income to N3.38 billion in H1 2015 compared to the same period last year. Our sustained Net Interest Margin above 7.5% was also an improvement and our NPL ratio also remained below the 3% 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,” he said.
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