Interest and Non-Interest Income Strengthen Margins: Wema Bank Plc achieved 9.59% growth in gross earnings to NGN71.53bn, driven by an uptick in both interest (+8.60%) and non-interest income (+13.93%). Interest expense, however, declined by 8.00% as the bank replaced short term lending from other bilateral funding sources.
Consequently, the bank’s Net Interest Margin (NIM) improved to 7.08%. Impairment charges increased by 61.05% while the uptick in operating expenses pressured profitability. Nevertheless, Profit After Tax (PAT) grew by 47.48% to NGN3.33bn.
Interest expenses are, however, expected to rise in 2019, driven by coupon payments on its recently issued bond, pressuring margins. However, we acknowledge the bank’s drive towards retail deposits, hence we project growths in Interest income (2.35%), non-interest income (8.00%), and PAT (12.84%).
Decline in CASA Mix Undermines Deposit Growth: Customers’ deposits, which make up 75.53% of total assets, grew by 45.09%, strengthening the bank’s asset base. Although the bank grew its term, current and savings deposits, term deposits weighed more, placing
downward pressure on its CASA mix to 48.96%.
Nonetheless, we are confident in the ability of the bank to leverage on its digital banking platform, ALAT, to grow its low-cost deposits and improve its CASA mix to c.55%.
Cost to Income Ratio Remains A Burden: Although operating income grew by 25.50%, the banks CIR just moderated to 87.16% as spending on technology and personnel expenses drove operating expenses by 21.68%.
Going forward, we expect a decline in technology cost as a chunk of its spending in 2018 was one-off. We believe that this decline, coupled with the bank’s proposed electronic onboarding system for customers will lead to a decline in operating expenses and hence, a decline in its Cost-to-income ratio.
Capital Restructuring Strengthens Financial Position: Having raised NGN17 billion in Tier II capital, Wema Bank Plc had the required funds to expand its loan book and investment holdings.
Thus, loans and advances to customers grew by 16.84% while investment securities increased by 61.06%. The bank also restructured its loan portfolio and adopted internal guidance of a maximum of 20% single sector concentration, to avoid concentration risk and a spike in its Non-Performing Loan ratio (4.98%) which is already bordering the regulatory limit.
Other prudential ratios also remained within regulatory bounds: Capital Adequacy ratio (18.01%) and Loan to Deposit (68.31%). Given its capital position, we project a 6% growth in the loan book which is below its guidance of 10% for FY2019.
Also, we expect the NPL which is currently at 4.98% to break the prudential guidance of 5% given the expected growth in risk assets.
Fifteen Years Later, Shareholders Get Rewarded: Following its capital reconstruction, a major constraint to Wema Bank’s dividend payment ability was lifted. Consequently, Wema Bank proposed a dividend NGN0.03, reflecting a payout ratio of 34.79%. If our expectation of an uptick in the NPL ratio holds, its dividend paying ability will be capped at 75%. However, there is no cause for alarm yet, as a payout ratio of 75% is a tall order.
Recommendation: We reviewed our EPS upwards to NGN0.10 from NGN0.08, given our
expectation of stronger profit by FY2019. With an expected PE of 8.30x, we arrived at our Dec. 2019 target price at NGN0.83, posing an upside potential of 15.28%.
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Investment Banking/Meristem Capital Limited
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Here is the exciting 2021 list of the richest football clubs in the world
Here’s Forbes 2021 list of the most valuable clubs in the world.
Billionaires are fond of investing in sports franchises. This is because there is a lot of money in it and the income stream is pretty consistent. Authoritative wealth watch magazine, Forbes yesterday released its official list of the most valuable clubs in the world.
It also gave a summary of the business side of the football world which we found quite interesting.
Nairametrics did a thorough review of the list and highlighted the parts which we believe will resonate well with our readers. Let’s get to it!
Top 10 richest clubs in 2021 by value
Tottenham hotspur comes in at the 10th position with a valuation of $2.3bn. The English club is owned by Joseph Lewis and Daniel Levy. They generated $494m last year.
Paris St Germaine comes in at 9th position with a valuation of $2.5bn. The French league 1 giants generated more money than arsenal last year. They generated $599m. PSG is owned by an investment group, Qatar Sports Investments.
Arsenal football club, another London side club comes in at 8th position with a valuation of $2.8bn. The club is solely owned by Stan Kroenke, an American Businessman who invests in sports and media. Arsenal generated $430m in 2020 making it the 8th most valuable club.
Chelsea football club comes in 7th on the list with a valuation of $3.2bn. The London side club has retained its longstanding owner Roman Abramovich, a Russian Oligarch. Chelsea generated $520m last year.
Manchester City (4bn)
Manchester City, an English club with a long history of billionaire owners comes in at 6th position. The very successful English club generated total revenue of $609m last year. The club is valued at $4bn and is owned by Sheikh Mansour bin Zayed Al Nahyan.
Liverpool comes in 5th at a $4.1bn valuation. The English club is the second wealthiest in England with a generated revenue of $619m. The club is owned by a joint partnership between Billionaire, John Henry and Tom Werner.
Manchester United (4.2bn)
Manchester United is the wealthiest English club on the list. The club is valued at $4.2bn, taking up the 4th position on the list. The club has been owned by a Jewish business family, the Glaziers for years. They are the largest shareholders and practically own the club. They generated $643m last year.
Bayern Munchen (4.215bn)
Bayern Munchen comes in at the third position with a value of $4.215bn. The German giants have bossed the German league for years. They generated $703m last year, coming in at the 3rd position.
Real Madrid (4.75bn)
Real Madrid Fc comes in at the second position. The football club which had previously dominated this list was edged out by bitter rivals, Barcelona. Real Madrid is valued at $4.75bn and the club is also owned by the club members. Real Madrid generated $729m, the same amount of revenue as Barcelona last year.
FC Barcelona (4.76bn)
Fc Barcelona is the most valuable football club in 2021 with a market value of $4.7bn. The club sits gallantly in the first position.
The Spanish giants generated a massive $792m in revenue last year and succeeded in holding on to their key player Lionel Messi. They also edged out Real Madrid and Man Utd who have dominated this list for 16 years. FC Barcelona is owned by the club supporters. It has no major shareholder or billionaire financier. The club has over 160,000 members forming its governing body.
What you should know
- 6 of the 10 richest clubs in the world are owned by billionaires; the rest are owned by club members and an investment group.
- In the last 16 years, the world’s richest football clubs list has been topped by only two clubs – Real Madrid and Manchester United.
- Football clubs generate revenues through advertisements, sponsorship deals, jersey deals and ticket sales. These are the 4 major revenue streams of a football club.
- The top 3 teams on the list – Fc Barcelona, Real Madrid and Bayern Munchen generated a combined revenue of $2.3bn in 2020.
UBA Business Series to equip SMEs with Performance Management Strategies for Organisational Growth
UBA has been assisting with essential tips to help businesses ensure that they stay afloat and remain thriving.
As part of its commitment to support the growth and sustainability of Micro, Small and Medium-scale Enterprises (MSME) in the continent, Pan African financial Institution, United Bank for Africa (UBA) Plc, is set to organise the next edition of its UBA Business Series.
The UBA Business Series which is a monthly event, is an MSME Workshop as well as a capacity-building initiative of the bank where business leaders and professionals share well-researched insights on best practices for running successful businesses, especially in the face of the difficult operating environment that dominates the African business landscape.
Through this initiative, UBA has been assisting with essential tips to help businesses re-examine their models and strategies and ensure that they stay afloat and remain thriving.
The topic for the next edition of the series is ‘ Managing Performance for Business Growth,’ and it will be held on Wednesday, April 14, 2021, via Microsoft Teams. At this session, the Managing Director, Secure ID Limited, Mrs Kofo Akinkugbe, will be sharing useful tips and insights on the key strategies of performance management to boost business growth.
Akinkugbe is the founder of SecureID Nigeria, a MasterCard, VISA and Verve certified Smartcard Personalization Bureau and Digital Technology company. She currently serves as the Managing Director/CEO, Secure Card Manufacturing, – a Smartcard manufacturing plant producing high-security identity cards and documents for the Banking, Telecoms and Public sectors across Africa and beyond.
The capacity-building event is a virtual session which is open to all – including business owners and leaders – and will be held on Wednesday, April 14th, 2021, at 2pm WAT. Interested participants can register via http://bit.ly/UBASMEWorkshopMarch2021
UBA’s Head, SME Banking, Sampson Aneke said of Akinkugbe, ‘with her vast experience garnered over the years from various sectors, she will help business owners understand how performance management strategies can be effectively implemented to ensure business growth’.
He emphasised UBA’s commitment and deep passion for small businesses, which according to him, remains the engine of any developing economy adding, “We know small businesses are the backbone of the economy in every country. In many climes, businesses with fewer than 100 employees account for 98.2% of all businesses. This no doubt captures the importance of SMEs to a thriving economy which is why UBA is committed to seeing them flourish.”
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- Friesland Campina Wamco Nigeria Plc announces AGM, proposes dividend of N6.74 per share.
- ETI appoints Akin Dada as Group Executive, Corporate & Investment banking.
- Union Homes REIT proposes final dividend worth N465.03 million for shareholders.
- GT Bank Plc holds FY 2020 investors presentation.
- Cornerstone Insurance Plc notifies stakeholders of late submission of financial statements.