Q3 2024: Wema Bank posts N30bn profit
Wema Bank released its third-quarter results, showing that pre-tax profits rose to N30.050 billion, compared to N10.059 billion recorded in the corresponding quarter of 2023.
This helped boost the bank’s nine-month pre-tax profits to N60.616 billion.
A deeper look into the results shows interest income played a key role in the growth.
This income line contributed N83.348 billion, which is 76 percent of the gross earnings.
The growth in interest income can be attributed to the income generated from loans and advances provided to both customers and banks.
This segment of interest income made up 66 percent of the bank’s total interest income.
Also, the pre-tax profit was supported by the growth in non-interest income, which contributed N26.106 billion.
Net fees and commission income more than doubled to N14.833 billion, driven by FX transactions and fees on electronic products.
In addition to the interest income, foreign exchange (FX) revaluation gains play a significant role.
In Q3, the bank reported a foreign exchange revaluation gain of N8 billion, representing 140 percent YoY growth.
These results are likely to be viewed favourably by investors, potentially leading to increased interest in the bank’s shares and a positive impact on the stock price.
This year, the share price is the best-performing banking stock, with a year-to-date gain of 43 percent. Last year, it delivered a remarkable 47 percent year-to-date return.
Despite the strong results, the bank is without challenges. The bank faces challenges due to a heightened risk environment and new capital requirements, which may impact overall profitability.
In Q3, impairment charges on loans and advances to customers surged by 230 percent to N6.745 billion, raising the nine-month provision to N11.933 billion compared to N2.946 billion in the same period of 2023.
While the bank’s profitability has surged, the rising impairment charges highlight underlying risks that could erode future earnings if not contained.
