Wema Bank’s N60bn Earnings In H1, Strongest Growth In 11 Years.

Oseni takes over as Wema Bank substantive MD

Wema Bank Plc raked in gross earnings of N60.3 billion at the close of its half-year operations, top record growth of 46 per cent year-on-year.

Though slower than the first quarter revenue growth of 57 per cent, it still represents a break-out growth for the bank so far this year that towers above 11-year growth records since 2011.

The revenue growth for the period is more than three times the increase of 15 per cent in gross earnings to N93.6 billion in the 2021 full year. The bank’s unaudited financial report for the half-year operations at the end of June 2022 shows that net gain in the value of investment securities is leading to revenue growth for the second year.

The net gain in the value of investment securities soared from just N13 million in the first half of last year to N1.5 billion at the end of half year in June 2022. This marks the biggest income the bank has seen from that revenue line in many years.

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This is followed by a similar break-out growth of almost one-half in interest earnings to N50.5 billion for the first half. Wema Bank has not seen an improvement in interest income anywhere close to this mark since 2013.

The growth record measures more than three times the increase of almost 16 per cent to N74.8 billion in gross income at the end of 2021.

Net fee and commission income also registered strong growth at 38.6 per cent year-on-year to N7.5 billion at the half year, slowing down however from over 59 per cent leap to N13.4 billion for the 2021 full year.

Some disappointments in revenue performance were recorded with the appearance of a net trading loss of N291 million at the end of half-year operations, down from a net trading income of N818 million in the same period last year. The income line is dropping for the third straight year from a height of N14.8 billion at the end of 2019.

Also, other income went down by 15.7 per cent year-on-year to N1.2 billion after dropping by 20.4 per cent to N3.3 billion in 2021.

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The bank’s management faced the challenge of rising costs in the second quarter, which constrained profit margin and dragged down profit growth from 119 per cent in the first quarter to 42 per cent in the half year.

The pressure from cost came from interest expenses, which grew well ahead of interest income at 77 per cent compared to less than 50 per cent. At over N27 billion, interest expenses claimed 54 per cent of interest earnings, rising from 45.7 per cent in the same period last year.

Net interest income rose by 26.8 per cent to a little over N23 billion, which was reinforced by a drop of 27.5 per cent in net impairment loss on financial assets to N625 million. Gains in non-interest income enabled the bank to push operating income a clear 29 per cent to N32.4 billion at half a year.

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The bank’s management achieved a moderated growth in operating costs, which helped to dilute the high growth in interest expenses. Total operating expenses grew by 26.7 per cent year on year to N26.3 billion, which lowered the operating cost margin from 50.3 per cent to 43.6 per cent over the review period.

Wema Bank closed half-year operations with an after-tax profit of N5.3 billion, an improvement from N3.7 billion in the same period last year. Net profit margin however went down from 9 per cent to 8.7 per cent over the period.

The bank earned roughly 14 kobo per share at the end of half-year operations, improving from 10 kobo per share in the same period in 2021.

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