Wema Bank Plc. at its Extraordinary General Meeting (EGM) held on Friday October 20, 2017 in Lagos, received the approval of its Shareholders’ towards the attainment of its Scheme of Capital Reorganisation exercise. With this approval, Wema Bank would give effect to the creation of a Capital Reduction Account (CRA), the transfer the negative balances in the retained revenue account to the Capital Reduction Account (CRA), reflect the carrying amounts on the specified assets based on their current economic values while effectively setting-off these balances against the share premium account.
As part of the next steps, Wema Bank will approach the Federal High Court for approval on the resolutions passed by the Shareholders. The approval is expected to be received within the next few weeks, leading to the passage of all accounting entries before the 2017 financial year end.
The exercise is expected to make shareholders alongside the investment community witness a more efficient balance sheet, improvements in our performance ratios — as the plough back of successive years’ profits lead to the continued growth of the Wema Brand. In addition, the Bank would also be well positioned to commence payment of dividend payments.
Commenting on the unaudited Q3’2017 financial results of the bank, the MD/CEO, Segun Oloketuyi provided further insights into the performance of the Bank during the period.
Despite the economic conditions, Wema Bank continues to show signs of resilience, evidenced by its growing brand acceptance and increased customer patronage. Gross earnings grew by 16.79% from N37.89 billion in Q3’2016 to N45.38 billion as at Q3’2017. This was supported by increased contribution from non-interest income which rose by 35.74% from N5.96 billion in Q3’2017 to N8.09 billion, as at Q3’2017. The high interest rate environment continued to impact earnings, as interest expense increased year on year. Despite this, the Bank recorded a growth in Profit before Tax (PBT) by 20.81% to N1.80 billion. We expect that as interest rates trend downwards, our funding cost will decline, leading to improvements in our margins.
On the service delivery front, Wema Bank was recently ranked 8th position in the annual KPMG industry customer service annual survey from 13th position in 2016. This is a further attestation of our processes, product & service offerings, which has afforded us increasing market penetration. We expect a top-5 finish by 2018, and we have begun working, to achieve this feat.
The delivery on incremental innovations on ALAT remains priority to us, with the roll-out of version 2.0 this week. We believe the launch of ALAT 2.0 is a demonstration of our continued resolve to using technology and innovation – our key strategic determinants, in ensuring continued customer acquisition and reducing our cost to serve. Customer acquisition on ALAT remains strong, with an average of 30,000 opened monthly. We remain excited, as we remain on course to achieve the set year-end target of 350,000 accounts.
As part of efforts to positioning the Bank for continued growth the Bank issued its 182–day and 270-day Commercial Paper (Program 1). The issuance which was successful, was embarked upon to take advantage of certain opportunities within the fast-growing commercial areas. Still on growth, the Bank will embark on a capital reorganization exercise. The essence of the reorganization is majorly to resolve the long-standing negative retained earnings, ensure successive years’ profits can be effectively ploughed back into the business – supporting the Bank’s growth strategy while positioning our shareholders for dividend consideration.