Wema Bank Plc FY 2018 Conference Call and Earnings Presentation - The Key Takeaways


Tuesday, April 9,  2019  08:40 PM / Proshare MARKETS                           


Wema Bank Plc held its FY 2018 Investors and Analyst Conference Call Earnings Presentation. Proshare NG participated along with leading market analysts and professionals. 

The management of the bank during the overview of its operating environment within the period under review stated that the global and domestic environment faced significant strain as trade tensions, chaotic Brexit and slow growth in China as the effects of US trade tariffs set in affected the global environment while the domestic economy was slow in the 1st & 2nd quarter but picked up in H2 2018. 

Despite the underlying constraints reflected in policy decisions, as stated, the Bank remained on course with the implementation of its growth strategy. 

Wema Bank Plc recorded a gross earnings of N71.53bn in FY 2018 as against N65.27bn in FY 2017, up by +9.60% YoY while the bank’s Profit After Tax increased by +47.34%  YoY from N2.26bn in FY 2017 to N3.33bn in FY 2018.


Table – 2018FY Audited Results

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The bank’s balance sheet/statements of financial position reflected that it recorded growths in Loans and advances and customer deposits respectively. Its CASA grew by 32%:-Savings Deposit grew by 26%  (y/y) to N62.9billion (N49.8billion in FY 2017) Current account balances also grew by 36.07% (y/y) to  N102billion (N74billion in 2017)

At the close of trading today, the share price of Wema Bank Plc closed flat at N0.69k.

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Graph– One Year Share Price Movement

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In a nutshell, below are the key takeaways from the FY 2018 earnings presentation made by the bank’s management team;

  1. Wema Bank’s loan growth is skewed to short tenor transactions while its Oil and Gas exposure comprises downstream trading entities and an upstream syndicated loan.
  2. The Bank recommend to its shareholders a dividend payment of 3kobo for the first time in 14 years in line with the Board  approved dividend policy which is a reflection of value creation for its shareholders. Whether the bank will remain a store of value for its shareholders will be determined by the consistent payment of dividend going forward.
  3. As part of its growth focus in the short term, the bank wants to enhance capital by raising additional funding and capital to support projected business growth. It is pertinent to state that the bank raised additional N17.675billion in Tier II capital during the year 2018.
  4. The bank planned to keep its cost to income ratio between 75-80% in FY2019 which is still considered relatively high.
  5. The bank sets an NPL ratio of 5% for FY 2019 after achieving an NPL ratio of 4.98% in FY 2018 which reflects that it might give more credits/loans in the current running financial calendar.

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