Business as Wema Bank reports 193% PBT growth, proposes N0.50 dividend
Wema Bank has reported a profit before tax of N43.64 billion for the year ended 31 December 2023.
According to the financial statements reviewed by Nairametrics, Wema Bank reported gross earnings of N226.915 billion, a 71.51% increase from the N132.301 billion reported the year prior.
A significant portion of this revenue was from interest income, which constitutes about 82% of the gross earnings.
Key highlights (2023 FY vs 2022 FY):
•Gross earnings N226.915 billion +71.51% YoY
•Interest Income N185.643 billion +71.83% YoY
•Interest Expense; N93.922 billion +74.55% YoY
•Net interest income; N91.721 billion +69.13% YoY
•Impairment charge for credit losses: N10.563 billion +119.68% YoY
•Net interest income after credit losses: N81.158 billion +64.22% YoY
•Net fees and commission income: N24.962 billion +50.50% YoY.
•FX revaluation gain: N13.603 billion +754.48%
•Operating income: N122.429 billion +64.37% YoY
•Profit for the period N35.989 billion +217.03% YoY.
•Earnings per share: N2.79 +216.99% YoY
•Loans and advances to customers N801.103 billion +53.64% YoY.
•Cash and Cash equivalents: N220.234 billion +128.71% YoY
•Total Assets N2.248 trillion +55.93% YoY.
•Customers’ deposits N1.861 trillion +59.59% YoY.
Wema bank’s significant profit growth in 2023, beats its 5-year CAGR rate of 35%.
The share price surged by 52% in Q1 2024, ranking the bank as the best-performing bank in terms of share price appreciation for the period.
Dividend payment:
For the fiscal year 2023, the group is proposing a final dividend of N0.50 per share to be distributed to its shareholders. This marks a notable increase of approximately 67% compared to the dividend payout in 2022.
What you should know
It is worthy to note that the significant growth in profitability for 2023 is not primarily fueled by foreign exchange gains. Despite a significant 754% YoY increase in foreign exchange gains, amounting to N13.603 billion, its contribution to the bank’s gross earnings stands at a modest 5.99%.
The substantial growth in pre-tax profit can be attributed primarily to substantial growth in interest income due to increased interest rates. Interest income constitutes about 82% of the gross earnings.
The balance sheet also showed improvement. Total assets grew by 55.93% to N2.248 billion, driven by growth in loans and advances to customers and significant growth; about 129% increase in cash and cash equivalents.
Considering the new CBN capital base requirement, Wema Bank faces a significant challenge in meeting the new mandated capital base of N200 billion.
Presently, its share capital and share premium account combine to N15.127 billion, highlighting the substantial gap that needs to be bridged to comply with the new regulations.
