Wema Bank profits enhanced by growth in non-interest income
Wema Bank Plc’s in its unaudited result and accounts for the half year (H1) period ended June 30, 2016 showed an impressive performance, as it was able to grow profitability and other key financial parameters.
This year has characterized by deceleration on a number of economic indicators coupled with increasing energy costs, intensified mop-up of liquidity by Federal Government of Nigeria with the introduction of Treasury Single Account (TSA).
Gross earnings of Wema Bank for the half year ended June 30, 2016 grew remarkably by 16.3 per cent to N24.3 billion from N20.9 billion in the corresponding half year of 2015; driven primarily by rise of 5.2 per cent net trading income from N661 million to N696 million in H1 2016.
The rise in net trading income can be attributed to the enhancement in fixed income securities and derivates trading portfolio.
Interest income grew by 15.2 per cent from N17.5 billion in H1 2015 to N20.2 billion in the current period, while Interest expenses rose by 38 per cent from N8.4 billion to N11.6 billion due to growth in cost of customer deposits.
Similarly, non-interest income rose by 21 per cent to N4.1 billion in H1 2016 as against N3.4 billion in prior half year of 2015, driven by the bank ongoing initiative to enlarge footprint in retail space while upholding customers saving across its branches.
Other key contributing factors include 42.3 per cent increase in fee and commission income from N2.2 billion in H1 2015 to N3.1 billion in H1 2016; resulting mainly from increase in retail banking customer fees & commissions and commission on foreign currency denominated transactions on the back of increased transaction.
Wema bank recorded a total operating income of N12.69 billion in H1 2016 as against N12.3 billion in H1 2015.
On the other hand, total operating expenses increase by 27 per cent from N11.1 billion to N11.4 billion reported in H1 2016.
The breakdown of the bank’s total expenses for period shows that four per cent growth was recorded in personal expenses from N4.99 billion to N5.2 billion, driven by 1.4 per cent increase in wages and salaries.
Also, other operating expenses that include Asset Management Corporation of Nigeria (AMCON) levy that gained 56 per cent to N903 million from N579 million recorded in prior half year of 2015.
Profit before tax gained 8.33 per cent from N1.2 billion in H1 2015 to N1.3 billion in H1 2016 as profit after tax was further impacted by modest rise in tax expenses.
Tax expenses rose by nearly 11 per cent to N194.7 million from N175 million in H1 2015; hence profit after tax increased by 11.11per cent to N1.1 billion in the H1 2016 from N997 million reported in H1 2015 despite the current macro-economy challenges.
Following improved profit, its earnings Per Share gained 20 per cent from N0.5 kobo in H1 2015 to N0.6 kobo in H1 2016.
Wema Bank’s total assets dropped by 1.2 per cent to N391.8 billion as June 30, 2016 as against N396.7 billion it closed December 31, 2015. The decline was driven by 7.3 per cent drop in loans and advances to customers.
Loans & advances to customers moved to N172 billion as against N186 billion recorded as at December 31, 2015 while customers deposit however dropped by 2.49 per cent from N277.9 billion as at June 30, 2016 to N284.98 billion in December 31, 2015.
Shareholders’ funds rose by 2.4 per cent to N47.2 billion from N46.1 billion as at December 31, 2015. Liquidity Ratio of Wema Bank remains above Central Bank of Nigeria (CBN) requirement of 30 per cent while Non-performing Loan (NPL) is also below CBN’s five per cent threshold.
The bank’s liquidity ratio closed half year of 2016 at 31.4 per cent as against 33.6 as at December 31, 2015. NPL ratio moved to 2.83 per cent from 2.67 per cent as at December 2015.
Furthermore, loan to deposit ratio moved from 65.1 per cent as at December 31, 2015 to 67.5 per cent as at June 30, 2016.
Wema Bank profits enhanced by growth in non-interest income https://t.co/K0cMghlKSZ
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