Wema Bank Plc has delivered its strongest financial performance in at least five years, reporting a remarkable surge in both gross earnings and profitability.
The bank’s audited financial statements for the year that ended on December 31, 2024, reveal that gross earnings jumped to N433.43 billion, driven by robust interest income and strategic asset expansion.
Profit before tax soared by 141% to N102.5 billion, marking a record-breaking milestone as the bank capitalized on rising interest rates and strengthened its loan and investment portfolio.
As part of the report, the Board of Directors proposed a dividend payment of N1.00 per share for the 2024 financial year
Loans and investments fuel interest income surge
Wema Bank made most of its money in 2024 by giving out loans and investing in government securities.
- The bank earned N233.85 billion from loans, which was 91% more than last year, and loans made up about 66% of its total interest income.
- The bank also earned N113.68 billion from government investments (like bonds and treasury bills), a 98% increase from the previous year, contributing about 32% of interest income.
Apart from taking advantage of high interest rates (due to CBN’s policies to fight inflation), the bank also gave out more loans and increased its investments in safer government securities.
- The total loans Wema Bank gave out (gross loans) stood at N1.237 trillion, with N1.125 trillion coming from long-term loans.
- On the investment side, Wema Bank held N712 billion in Federal Government Bonds and N111.11 billion in Treasury Bills, which are much safer investments compared to loans.
While Wema Bank made strong gains from loans and investments, its loan portfolio still carries some risks.
- Since some loans might not be fully repaid, the bank set aside N36 billion as a safety measure for possible losses (Expected Credit Loss or ECL).
- A major part of the bad loan provision (N27.33 billion) is for loans that are already in serious trouble (Stage 3 loans).
- After removing this amount, the actual loans left on the bank’s books (net loans) stood at N1.201 trillion.
Rising costs and the impact of interest expenses
Despite strong earnings, Wema Bank like other Nigerian banks faced higher funding costs due to the prevailing high-interest rate environment:
- Interest expenses on bank deposits jumped 732.9%, reflecting the increased cost of funds.
- Borrowing costs surged 139.9%, putting pressure on net interest margins.
- Total interest paid on customer deposits reached N103.4 billion, highlighting the impact of monetary tightening.
While these cost pressures were significant, the bank’s ability to sustain strong net interest income helped mitigate the impact.
Non-interest income:
Beyond interest income, Wema Bank’s non-interest revenue grew significantly, thanks to its digital banking innovations and diversified services. Net fees and commission income rose to N55.576 billion, driven by:
- FX transactions (N15.039 billion)
- Electronic products (N14.073 billion)
- Management fees (N8.023 billion)
- Account maintenance fees (N7.364 billion)
Wema Bank’s digital innovations, ALAT Xplore (Nigeria’s first mobile banking app for teenagers) and Coop Hub (a platform for cooperative societies), might have played a key role in this growth.
- ALAT Xplore attracted younger users, boosting account openings, card transactions, and e-banking fees.
- Coop Hub helped cooperative societies manage finances digitally, increasing fund transfers and transaction-based revenue.
Balance sheet analysis
Wema Bank’s total assets grew to N3.593 trillion, with customer deposits making up a significant portion. Shareholders’ funds increased to N256.421 billion, driven by:
- Retained earnings of N103.251 billion
- Share capital of N10.715 billion
- Share premium of N56.431 billion
To further strengthen its capital base and meet regulatory requirements, Wema Bank embarked on a N40 billion rights issue, boosting its share capital and premium.
Additionally, the bank’s Chairman, in the 2024 Annual Report, reaffirmed its commitment to raising N200 billion in fresh capital, stating:
“To meet the new CBN capital requirements, the bank will be raising N200 billion in new capital as approved by the shareholders at the last Annual General Meeting. This will be broken down into N150 billion Rights Issue and N50 billion in Special Placement.”
Wema Bank share price closed at N10.7 and is up 18.8% in 2025.
