HOW WEMA BANK KEPT WARN IN 2018

In the financial year 2018, Nigeria's Wema Bank ended with solid 59.5% growth in profit before tax to N4.798bn despite double digit growths in expenses and impairment provision. The secret?

Well, according to the audited figures for the year released not too long ago, the secret was in the solid foundation which its net interest income provided.

From the figures, interest income rose by 8.60% to N57.635bn from N53.073bn while interest expense DECREASED by 8% to N30.643bn from N33.306bn. And the result? Solid 36.5% growth in net interest income to N26.992bn.

For the record no other income stream grew this fast. Net fee and commission rose by 19.1% to N6.507bn ; net trading revenue at N5.532bn was 15.3% up; Other income topped up 16.1% to N1.822bn and even securities investment income declined by 82.2% to N0.033bn.

Hence, in the end, Gross Earnings ( that is as far as Henates could estimate) grew by only 9.74% to N69.707bn from N63.519bn.

Thus, as impairment provision jumped by 61.1% to N3.511bn;  personnel cost rose by 23.2% to N12.337bn and Other operating expenses increased by 22% to N1.822bn, it took only the solid growth in dominant income stream to keep afloat

In the end, despite the onslaught from cost pressure, Wema Bank ended the year with 6.88% profit margin compared to 4.74% in 2017.

Perhaps, in 2019 financial year overheads may get the same focussed that drove interest expense down while interest income was on the rise. That's what may guarantee that the current year ends warmer than in 2018.

WEMA BANK PLC Full year Nbn
                            2018.           2017
Gross earnings 69.707.       63.519
Interest income 57.635       53.073
Interest expense30.643.     33.306
Net interest.       26.992.      19.767
Impairment.         3.511.         2.180
Net commission 6.507.         5.462
Net trading inc.   5.532.         4.799
Investment inc    0.033.         0.185
Other income      1.822.         1.569
Personnel cost  12.337.      10.010
Other op exp.     17.620.      14.446
Profit b4 tax.        4.798.        3.009
Profit margin %.   6.88.          4.74%



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