Wema Bank’s unaudited financial report for 2021 operations just released shows record industry growth of 94% in after-tax profit from N4.6 billion in 2020 to around N9 billion for the year. This is a confirmation of our earnings outlook for the bank based on the intermediaries that a star performance for the full year 2021 is to be expected from the bank.
The bank’s management added a further improved final quarter to an exceptional growth record at the end of the third quarter to take a distant lead in profit growth in the banking sector in 2021. The bank made a profit of 2, 7 billion naira in the fourth quarter which increased the nine-month profit figure from 6.2 billion naira to 8.9 billion naira on a full-year basis.
The Managing Director/CEO of the bank, Mr. Ademola Adebise, is giving further growth impetus to the bank to position itself as a leading innovative financial institution through digital growth. Its bank’s digital bank – ALAT is renowned as the first fully digital bank in Africa.
Our outlook for the bank at the end of the third quarter indicated “the bank looks pretty good at recording the 2021 financial year as one of the outstanding results. Based on quarterly earnings records, the bank could be close to doubling closing earnings by the end of the year.
This is defiant growth for the bank in a year in which many banks have struggled with issues of low interest margins and a resurgence in the cost of funds and loan losses. . This is the strongest profit growth the bank has seen in many years, even surpassing the exceptional 56% growth in profit after tax in 2019 – when the bank closed with a profit of 5.2 billion. naira.
The year-over-year decline in credit losses extended 56.5% at the end of the third quarter. Wema Bank closed the 2020 financial year with a loan loss charge of N5.6 billion. The decline in credit losses in 2021 therefore represents a reduction of more than 4.3 billion naira over the period considered.
The net positive impact of cost cutting was reflected in net interest income after loan loss charges – which increased by more than 45% to close at N36.6 billion full-year. The ability to convert earnings into net income/profit at several stages of the cost/income stream is the summary of that of the bank.
As we expected, Wema Bank posted one of the best corporate results in the banking sector for the financial year 2021. The bank has not achieved such a high profit margin for many years.
It earned more than 23 kobo per share in the full year, compared to around 12 kobo per share in the prior fiscal year. A dividend announcement is expected with the publication of the audited financial report in the coming weeks. The bank has complied with a dividend payout of 4 kobo per share in the previous two years.