Wema Bank records 20% profit gain in 9 months
Shareholders approve the bank’s capital reduction scheme
Temitope Joseph | Monday, 23 October 2017 3:36pm | business
Wema Bank Plc., one of the major financial institutions in Nigeria grew its gross earnings to N45.38 billion from N37.8 billion in 2016, a 19.7% rise, with PBT and PAT of N1.80 billion and N1.53 billion respectively, representing a growth of 20.8% and 20.4% since 2016.
Contained in a report titled "Wema Bank Unaudited IFRS Results for the Period ended 30th September, 2017”, the bank attributed the positive earnings and growth to increased customer patronage, and its growing brand presence.
Obtained on Monday by thebusinesspost.ng, the report shows the bank's interest income rose by 16.7 per cent, while its non-interest income improved by 35.7 per cent.
Shedding more light on the bank’s unaudited third quarter 2017 financial results, the Managing Director/CEO, Wema Bank Plc. Segun Oloketuyi said the growth in gross earnings was supported by increased contribution from non-interest income which rose by 35.74 per cent from N5.96 billion in third quarter of 2016 to N8.09 billion.
“The high interest rate environment continued to impact earnings, as interest expense increased year on year. Despite this, the Bank recorded a growth in Profit before Tax (PBT) by 20.81 per cent to N1.80 billion. We expect that as interest rates trend downwards, our funding cost will decline, leading to improvements in our margins,” Oloketuyi said.
On efforts to position the bank for continued growth, the CEO revealed that the Bank has issued its 182–day and 270-day Commercial Paper (Program 1) to take advantage of certain opportunities within the fast-growing commercial sectors.
“Still on growth, the Bank will embark on a capital
reorganization exercise. The essence of the reorganization is majorly to resolve the long-standing negative retained earnings, ensure successive years’ profits can be effectively ploughed back into the business – supporting the Bank’s growth strategy while positioning our shareholders for dividend consideration” Oloketuyi added.
Speaking on the Bank’s recently ranked 8th position in the annual KPMG industry customer service annual survey, Oloketuyi said “This is a further attestation of our processes, product & service offerings, which have afforded us increasing market penetration. We expect a top-5 finish by 2018, and we have begun working, to achieve this feat”.
Meanwhile, the plan by Wema Bank to carry out a Scheme of Capital Reduction whereby the Share Premium Account of the lender is reduced from N48.870 billion to N8.698 billion has been approved by shareholders.
The approval came at the bank’s Extraordinary General Meeting held over the weekend in Lagos, and the move is expected to make the bank eligible to pay dividends from profits made in the future, provided there are subsisting covenants or contracts entered into by the bank to the contrary.
The Wema Bank’s Chairman, Babatunde Kasali, who spoke at the meeting explained that the exercise is in line with the procedures set out in Sections 105, 106, 107, 108, 109, 110, 111 and 120 of Companies and Allied Matters Act (CAMA) and Rules 4(d), 4(g) and 5(4) of the Company Proceedings Rules 1992.
According to him, they consented that the N40 billion be transferred to the Capital Reduction Account. This will clear out the negative balance of N39 billion in the bank’s revenue reserve account and accommodate the balance due from the exercise.
He further told the Board of Directors that the macro environment in 2016 was challenging on a number of fronts for the bank, adding that the economic realities, especially the unstable and poor forex supply, liquidity challenges, economic contraction among others were dominant factors within the economy.