Wema Bank’s shareholders give nod to capital reconstruction exercise

As part of effort in achieving its targeted clean clear balance sheet, Wema Bank Plc, has received the approval of its Shareholders’ towards the attainment of its Scheme of Capital Re-organisation exercise.

This is even as the lender continued to show signs of resilience, despite the economic conditions, to record a significant growth of 16.79 per cent from N37.89 billion of Gross earnings in Q3’2016, compare to N45.38 billion declared in Q3’2017, the bank’s current financial report has showed.

The new approval, was given at its Extraordinary General Meeting (EGM) held in Lagos, over the weekend. With this new development, 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.

The bank, also explained that as part of its next steps, will approach the Federal High Court for approval on the resolutions passed by the Shareholders. The approvals 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.

But while commenting on the unaudited Q3’2017 financial results of the bank, the Managing Director/CEO, Segun Oloketuyi provided further insights into the performance of the Bank during the period. He, therefore, noted that the growth in the bank gross earnings is an evidenced by its growing brand acceptance and increased customer patronage.

Although, he explained that the growth of 16.79 per cent from N37.89 billion in Q3’2016 to N45.38 billion as at Q3’2017 in the bank gross earnings was supported by increased contribution from non-interest income which rose by 35.74 per cent from N5.96 billion in Q3’2017 to N8.09 billion, as at Q3’2017.

According to him, 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 20.81per cent 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 8^thposition in the annual KPMG industry customer service annual survey from 13^th 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”, he explained.

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.