Wednesday, April 27, 2016 5:37PM/ NSE
Wema Bank PLC (“Wema’ or “the Bank”), announces its Unaudited Q1 2016 financial results
Managing Director/Chief Executive Officer’s review
“Considering the challenging operating environment led by weaker oil prices, a tight monetary policy and rising inflation, WEMA Bank has been able to deliver top line growth with Gross earnings increasing by 6.1% to ₦11.3 billion compared to ₦10.6 billion in the same period last year.
We have continued to grow our retail volumes in 2016; while the number of new accounts and card activations have increased by over 50% and the deployment of alternative platforms have also grown by 15%. We remain focused on keeping our cost profile under check while gradually growing the asset portfolio where we see optimal opportunities.
While concerns remain, as we progress in the financial year around: rising inflation due to the impact of higher energy, transportation prices and a slower GDP growth due to a lack of stimulus, we remain focused on executing our strategies to drive economic production. Despite these headwinds, we believe that we will improve our 8.2% growth in interest income over Q1 2015 which will translate into improved net interest margins and consequently, improving profitability over the course of the year.”
Chief Financial Officer’s review
“In spite of the challenging market conditions, the Bank grew its interest income by 8.2% to ₦9.7bn from ₦8.9 billion in Q1 2015. While trading income has not been immune from the larger macro headwinds, our diversification strategies are yielding results as fee and commission income grew by 17.1% to ₦1.35 billion from ₦1.15 billion in the same period last year.
Our sustained commitment to optimizing costs was underpinned by a 2.2% decline in operating expenses to ₦5.14 billion from ₦5.25 billion in Q1 2015 despite inflationary pressures. We experienced a year on year 4% decline in Net Interest Income to ₦4 billion, this was mitigated by a 17% growth in our Non-Interest income to ₦1.3 billion over the same period.
The loan to deposit ratio has held steady at 65% from 65.1% as at December 2015, in line with our selective approach to creating new risk assets. The NPL ratio increased slightly to 2.89% from 2.67% in December 2015. We believe that with on-going recovery efforts coupled with improvements in market conditions, the NPL ratio should improve in the coming quarters. Most importantly we will continue to focus on maximizing operational efficiency, and enhanced lending strategies to deliver stronger results as the year evolves.”
With Q1’16 largely subdued, the Bank expects the remainder of 2016 to record improvements, stemming from the implementation of the budget and continued fiscal reforms. This would translate into an up-tick in risk asset growth, targeted towards identified critical and viable sectors such as manufacturing and agriculture. Furthermore, the Bank expects stronger growth in retail deposit mobilization as it continues with the expansion of its branch network and e-banking channels.
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