Wema Bank’s profit rose by 94% in 2021, beating the banking industry on earnings growth as shown by the bank’s unaudited financial report for the 2021 operations.
The report just released shows a top industry record growth of 94 per cent in after-tax profit from N4.6 billion in 2020 to roughly N9 billion for the year.
“This is a confirmation of our earnings outlook for the bank based on the interims that a star performance for the 2021 financial year is to be expected from the bank at full year,” a statement by Wema Bank’s management reads.
The bank’s management added a further improved final quarter to an outstanding growth record at the end of the third quarter to take a distant lead in earnings growth in the banking industry in 2021. The bank raked in N2.7 billion profit in the fourth quarter that topped up the nine-month profit figure of N6.2 billion to N8.9 billion at full year.
“The bank’s managing director/CEO, Mr Ademola Adebise, is driving a new growth impetus for the bank towards positioning as a leading innovative financial institution through digital growth. His bank’s digital bank – ALAT is reputed as Africa’s first fully digital bank,” the statement added.
Wema Bank’s outlook at the end of the third quarter reads: “the bank is looking quite good to register the 2021 financial year as one of outstanding earnings performance. Based on the quarterly profit records, the bank could come close to doubling the closing profit at the end of the year”.
This is a defiant growth for the bank in a year in which many banks struggled with challenges of low-interest margins and a resurgence of cost of funds and credit losses. It marks the strongest growth in profit that the bank has seen in many years, beating even the outstanding growth of 56 per cent in after-tax profit in 2019 – when the bank closed with N5.2 billion profit.
The year-on-year drop in credit losses extended from 56.5 per cent at the end of the third quarter. Wema Bank closed the 2020 financial year with a loan loss expense of N5.6 billion. The drop in credit losses in 2021, therefore, represents a reduction of over N4.3 billion over the review period.
The net positive impact of the cost-saving reflected on net interest income after loan loss charges – which rose by over 45 per cent to close at N36.6 billion at full year. The ability to convert earnings into net income/profit at several stages in the cost/income flow is the summary of the bank’s .
Just as we anticipated, Wema Bank has issued one of the most improved corporate earnings stories from the banking industry for the 2021 financial year. The bank has not attained a profit margin that high in many years.
It earned over 23 kobo per share in the full year, up from about 12 kobo per share in the prior fiscal year. A dividend announcement is to be expected when the audited financial report is released in the coming weeks. The bank has been consistent with a dividend payout at 4 kobo per share over the preceding two years.