Wema Bank Plc has reported a profit before tax of N102.105 billion for the year ended December 31, 2024, marking a 134% year-over-year (YoY) growth from the previous year.
The unaudited Group financial statements, reviewed by Nairametrics, reveal that the bank’s gross earnings surged by 89.61% YoY to N430.259 billion.
Key highlights (2024 vs 2023):
- Gross earnings: N430.259 billion +89.61% YoY
- Interest Income: N351.832 billion +89.52% YoY
- Interest Expense; N181.640 billion +93.39% YoY
- Net interest income; N170.192 billion +85.55% YoY
- Net impairment loss on financial assets: N14.732 billion +39.46% YoY
- Net interest income after impairment charge for credit losses: N155.460 billion +91.55% YoY
- Net fees and commission income: N55.621 billion +122.82% YoY.
- Operating Income: N233.887 billion +91.04% YoY
- Profit after tax: N88.834 billion +146.84% YoY.
- Earnings per share N4.145 +48.09% YoY
- Loans and advances to customers N1.203 trillion +50.19% YoY.
- Cash and Cash equivalents N284.458 billion +29.16% YoY
- Total Assets N3.619 trillion +60.98%.
- Customers’ deposits N2.530 trillion +35.96%.
- Share capital and Share Premium: N67.146 billion +343.87% YoY.
- Shareholders’ funds: N260.864 billion +87.27% YoY
Commentary
A deeper analysis of Wema Bank’s 2024 financial performance highlights interest income as the primary driver of growth.
- Interest income accounted for 82% of gross earnings, reinforcing the bank’s reliance on traditional lending and investment activities.
- The growth in interest income was fueled by higher loans and advances to customers and banks, which contributed 66% of total interest income; a marginal 0.25% decline from 2023.
- Loans and advances to customers surged by 50% to N1.203 trillion, signaling strong credit expansion. However, this came at a cost, as impairment provisions on loans and advances rose significantly by 120.33% to N16.594 billion, indicating higher expected credit losses.
- Meanwhile, interest income from investments in securities jumped by 97% to N113.224 billion, increasing its share of total interest income by 3.90% to 32.18%.
Funding and interest expenses
On the liability side, Wema Bank recorded robust deposit growth, reflecting increased customer confidence and deposit mobilization efforts:
- Customer deposits grew by 35%, adding N669 billion to reach N2.530 trillion.
- As a result of higher funding costs, interest expenses surged by 93.39% YoY to N181.640 billion, with customer deposits accounting for N103.415 billion (57% of total interest expenses); a 28% increase from 2023.
- Despite the rising cost of funds, net interest income remained strong at N170.192 billion, up 85.5% YoY, showcasing a healthy interest spread.
Non-interest income and profitability
Beyond interest income, non-interest income played a crucial role in boosting profitability, contributing N78.427 billion in revenue.
- Net fees and commission income more than doubled (+122.82% YoY) to N55.621 billion, largely driven by foreign exchange (FX) transactions and electronic banking fees.
- FX revaluation gains also had a positive impact, growing 6.79% YoY to N14.527 billion.
- These non-interest income streams, coupled with robust interest income growth, pushed profit before tax to N102.105 billion (+134% YoY), while profit after tax surged by 146.84% to N88.834 billion.
Capital raise and market performance
Looking ahead, Wema Bank is set to further strengthen its financial position through a planned capital raise.
- The bank recently announced its intention to secure N200 billion through a Rights Issue and a Special Placement, scheduled to launch on April 1, 2025.
- This marks the second tranche of its capital-raising efforts, following the N40 billion secured in the first tranche.
- The successful completion of this capital raise will strengthen its balance sheet, improve liquidity, and long-term growth potential; factors for boosting investor confidence.
- Already, Wema Bank’s share capital and share premium stood at N67.146 billion as of December 31, 2024, reflecting a 344% year-on-year increase.
Investor sentiment toward Wema Bank remains strong, as reflected in its share price performance:
- Following the release of its 2024 results on January 30, 2025, Wema Bank’s share price gained 1.8%, closing at N11.2, up from N11.0.
- The stock has posted a 23.1% year-to-date (YTD) gain, ranking 23rd on the NGX in terms of performance.
- In 2024, Wema Bank emerged as the best-performing banking stock, delivering a 62.50% YTD gain.
