Wema Bank to seek regulatory approval for upgrade to a national bank
Wema Bank, a Commercial Bank with Regional authorization, presently operating as a full-fledged Commercial Bank in two contiguous geo-political Zones and the Federal Capital Territory, has stated that it intends to seek regulatory approval for an upgrade to National authorization.
The bank, which made this known at its 2013 investor briefing, said it would seek regulatory approval for an upgrade to National authorization to become a national bank by December 2013.
The bank was granted a regional banking license after being identified as one of the distressed banks at the banking reform era. Over the months, the bank has tried to recapitalise and clean up its books.
The bank said it would also embark on a brand and image refresh program to be carried out in the coming months, according to a document which highlighted the bank’s Strategic Plan for the years 2013-2015. The bank’s vision is to be the most efficient Retail & Commercial Bank by 2015.
The bank said it is anticipating regulatory approvals for N40 billion capital expected within next few days and that the process for Tier-2 Capital raise on-going; to be concluded before end of the year.
“We are still on track with our transformation program of positioning Wema Bank as a leading player in the Banking industry, with a focused shift towards disciplined execution,” the bank said.
Other on-going plans include to consolidate on areas of strength, raise additional long term capital, expand retail banking, and push for growth in commercial hubs, continuous streamlining of operations, achieve competitive Returns on Equity (RoE) and ensure returns to shareholders.
The bank also hopes to improve on efficiency and market share, achieve measured growth in market share driven by efficiency, achieve leadership position in Retail & Electronic Banking services, achieve best efficiency ratios in industry – ROE, ROE, C/I ratio, NPL, WACF, increase overall industry market share to 5 per cent, and ensure significant Capital base to protect against economic shocks.
“Core focus remains on Retail Banking, as the Bank intends to build savings volumes in the future. The Bank will deepen technology usage to reduce the cost to serve and then pursue and develop relationships with various Cooperatives, schools, churches, religious organizations and companies with large workforces to partner on various salary related products,” the bank said.
It added that salary-tied lending to employees of Blue-chip companies will also attract the required patronage and lock in stable deposits from salary accounts.
On commercial banking, the bank seeks to deepen its commercial business in the Lagos, South-West & South-South markets.
“Branches will continue to serve as outlets to mop up retail deposits while the Key distributors of Large Corporates will also be a target focus. The Commercial Banking group will remain entrenched within the Fast Moving Consumer Goods sector and partner with key distributors of the Large Corporates. The Bank will also continue to identify companies that have spin-offs in the Retail and Commercial business space,” it said.
The bank said the growth in its balance sheet is largely expected to be driven by deposit growth.
2012 highlights
The Bank closed the 2012 financial year with Net loans and advances of ₦73.75 billion. There was a 9.6 per cent growth in loan volumes in the 2012 financial year. Non-performing loan ratio was down from 15 per cent to 14 per cent.
“The growth in loan was restricted in 2012. This was due to regulatory constraints on lending as a result of the low capital adequacy ratios,” the bank said.
Gross Earnings increased by 19 per cent to ₦30.4 billion in 2012 largely driven by income from Money market investments (Treasury Bills and Placements). The Bank’s Net interest margin averaged 8 per cent in the 2012 financial year; this was down from the peak of 8.9 per cent in 2011. The reduction was due to a portfolio shift to money market investments, according to the bank. Margins are expected to improve in the 2013 financial year, the bank said.
Operating expense increased by 23.6 per cent in 5 years; from ₦14.4 billion to ₦17.8 billion. Operating expense however declined year on year between 2010 and 2012. Expenses increased by 1 per cent in 2012 financial year.
The bank recorded an 18 per cent growth in deposit from ₦147 billion in 2011 to ₦173 billion in 2012. Gross earnings were up 19 per cent from ₦25.6 billion in 2011 to ₦30.4 billion in 2012, net interest income of ₦11.7 billion, up 17.57 per cent year-on-year (Dec 2011: ₦10.1 billion), Operating expense up 1 per cent year on year to ₦17.7 billion, (Dec 2011: ₦17.5 Billion) while there was a loss before tax of ₦4.9 billion, (Dec 2011: ₦3.7 billion).
The bank’s directors, according to the document, are of the opinion that subject to unforeseen circumstances and based on the assumptions, the Profit Before Taxation for the years ending 31 December 2013, 2014, 2015, 2016 and 2017 is expected to be in the order of ₦1.757 billion, ₦2.734 billion, ₦4.515 billion, ₦11.768 billion and ₦24.17 billion respectively.
The bank’s Annual General Management Meeting is scheduled for August 16.
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