Wema Bank posted a profit after tax of N3.72 billion in the first half of 2021, indicating a 148.6% increase compared to N1.49 billion recorded in the corresponding period of 2020. This is contained in its recent Q2 2021 financial result as released on the Nigerian Exchange (NGX).
According to the result released, the bank was able to print impressive gains in its bottom line despite a marginal gain of 8.3% in its gross earnings (N41.33 billion), largely attributed to decline in interest expenses and increases in operating income.
A cursory look at historic data on the company’s performance shows that the recent PAT of N3.72 billion (H1 2021) has surpassed the levels printed before the pandemic, H1 2019 (N2.25 billion), and H1 2018 (N1.57 billion).
Gross earnings grew by 8.3% year-on-year from N38.15 billion recorded in H1 2020 to N41.33 billion in the review period.
Interest income in the review period recorded a 12.9% year-on-year growth to stand at N33.69 billion.
However, interest expenses stood at N15.37 billion in H1 2021, which represents a 14.8% decrease compared to N18.06 billion recorded in the corresponding period of 2020.
Wema Bank spent a sum of N8.02 billion as personnel expenses in the half year period, which is 13.7% higher than N7.05 billion spent in the previous year (H1 2020).
In the terms of the statement of financial position, the total assets cross the N1 trillion mark to stand at N1.0. trillion as of June 2021. This is 4.8% higher than N979.52 billion recorded as of the beginning of the year.
Similarly, deposits from customers recorded a 0.5% year-on-year growth to N808.87 billion from N804.87 billion.
Profit after tax for the period was N3.72 billion as against N1.49 billion recorded in H1 2020.
The impressive performance in the period under review shows recovery from the downturn recorded in the previous year, as a result of the covid-19 pandemic which practically crippled most economic activities in the country.
According to the bank’s Chief Financial Officer, Tunde Mabawonku, while commenting on the result during the Analysts & Investors H1 Conference Call, which held virtually, he explained that despite the disruptions caused by the covid-19, Wema Bank was able to stabilize its operating expenses with improved N20.8 billion operating expenses in H1 2021.
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“We are happy the margins are better than last year. We will continue to manage the yield on our assets and improve our business trajectory, there might still be some slight headwinds of cost but, we are sure that we will keep our growth in operating expenses way below inflation rate year-on-year,” he noted.
He also made comments as to the factors that drove the impressive performance. According to him, the reduction in cost of funds to 3.1% in H1, 2021 from 5.0% in H1 2020 was driven by a proactive re-pricing of liabilities and terming out of expensive deposits. Similarly, the comparable uptick in total liabilities was attributed to growth in customer deposits in the review period.
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Commenting on the results, Mr. Ademola Adebise, the Managing Director said, “We are pleased to release our results for the first half of the year. Our performance speaks to the spirit of resilience that runs through the organization as we have strongly bounced back from the covid impacted performance of the same period in 2020.
“As the economy opens back up fully, we expect to see a stronger performance for full year 2021. Over the course of the second half of 2021, the bank will continue its strong focus on the digital business, pushing for further gains in customer acquisition, consumer lending and transaction volumes while on the commercial side of the bank, we will continue to aggressively grow our commercial lending business alongside trade and other revenue lines.”
What this means
The impressive performance in the half year period of 2021, is an indication of recovery from the downturn caused by the covid-19 pandemic, as the economy continues to open-up and activities returning to pandemic levels. As of the time of writing this article, Wema Bank stock at the NGX closed at N0.88, representing a 27.5% year-to-date gain.