Wema Bank open to M&A, targets retail growth

Nigeria’s Wema Bank is still open to mergers and acquisitions to build scale after it dropped a bid to buy a rival last year, but is focused on growing its own retail business, its chief executive told Reuters on Friday.
Segun Oloketuyi put in a bid for Keystone Bank, one of the country’s nationalised lenders, but dropped out after failing to find enough merger benefits. A group of local investors acquired Keystone in March.
Oloketuyi said Wema, a mid-sized bank, was focusing on growing its existing business through a low-cost digital strategy it developed to attract and serve consumers cheaply.
“We are always open. If there’s opportunity for acquisition, merger, and the target fits into what we want to do, I am sure the bank will look at it,” he said in an interview in his office in Lagos. “We need to get scale,” he added.
Wema shares slumped 46 per cent last year as the banking sector in general, and smaller lenders in particular, were hit by an economic slowdown and a currency crisis. Shares in mid-tier rivals such as Skye Bank and Diamond Bank lost more than 60 percent.
Low oil prices have put pressure on banks’ once-lucrative oil and gas loan books, leading some to close branches, lay off workers and look for other ways to cut costs.
Oloketuyi said the 72-year old Wema Bank was turning to digital services to reduce the cost of serving customers in remote areas in Africa’s most populous nation.
He said this was proving a cheap way to tap into an emerging credit culture. Nigeria is reforming its credit system with the introduction of credit bureaus and biometric identification to enable mortgage lending, store and credit cards, which were almost non-existent before.
“Today we have proper credit bureaus to make lending a lot more attractive. Now you can track customers and if they default you can report them … that way they don’t become a problem to the sector,” Oloketuyi said.
Industry data showed instant transfers hit 38 trillion naira ($121 billion) last year. Nigerian banks had a total of 65 million accounts last year, up from 23 million eight years ago.
Oloketuyi said Wema was targeting three million customers by 2020 from one million now. Its digital banking platform has attracted 5,000 customers since its launch this month, and is opening around 500 new bank accounts a day, he said.
Oloketuyi expects retail banking will account for about 50 percent of Wema’s business by 2020 from about 30 percent now.
The bank also serves corporate and public sector customers.
Source: Reuters.