By Amaka Ifeakandu
Lagos
Wema Bank Plc has recorded profit before tax of N1.17 billion for the financial year ended June 31, 2015. The result showed a drop of N530.0 million or 31 per cent compared with N1.70 billion achieved in the corresponding period of 2014.
The bank’s net income also went down from N9.71 billion reported in the preceding year to N9.06 billion within the period under review while other operating expenses declined to N4.98 billion compared to N5.04 billion in the preceding year.
The result released by the bank further showed that Loans and Advances decreased to N134.57 billion, down from N149.29 billion as at December 2014 while deposits from customers stood at N234.10 billion, against N258.96 billion as at December 2014.
The bank reported gross earnings of N20.87 billion, up from N20.82 billion in the first six months of 2014.
Commenting on the results, Managing Director/Chief Executive Officer of Wema Bank PLC, Mr. Segun Oloketuyi, said, “Given the tough operating environment in the first half of 2015 attributable to economic headwinds, regulatory restrictions and political uncertainty, the Bank has been able to sustain its financial performance, albeit, on a lower level compared to the same period in 2014.
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, investment decisions have been tentative. In addition, the CRR harmonization has 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 stakeholders.
The Chief Finance Officer,
Tunde Mabawonku said: “Operationally, the Bank has continued to efficiently deploy its assets. Our loans to deposits ratio has moderated to 57.1 per cent, compared to 57.6 per cent as at December 2014, through a cautious approach to our lending, pending policy clarity from the new administration.
The liquidity squeeze and tight monetary policy conditions affected our yields from money market investments. Technically, banks can only lend 39 per cent of available resources, as CRR is 31 per cent and liquidity remains 30 per cent. 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 five per cent decline in Net Interest Income to N8.89 billion in first half of 2015, when compared with H1 2014, this was mitigated by a 6.5 per cent 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 per cent was also an improvement and our NPL ratio also remained below the 3 per cent mark.
