Wema Bank Plc maintained the path of defiant growth for the second year in 2022, lifting after-tax profit by close to 42 per cent to N12.6 billion at full year. With that, the bank set another impressive growth record in the year after finishing the 2021 financial year with a stellar record of 95 per cent advance in the bottom line.
The retained strength for profit improvement leaned on strong revenue growth amidst rising interest expenses experienced throughout the year. Unaudited results of the bank for the full year ended December 2022 show gross earnings of over N129 billion, representing a top record growth of 38 percent for the year and the strongest revenue growth for the bank in more than a decade.
It is an accelerated growth in revenue for the second year from a 15 per cent increase in gross earnings to N93.6 billion at the end of 2021. The bank’s earnings details for the 2022 operations show that net gain in the value of investment securities was the revenue growth driver in the year with a leap of about 163 per cent to almost N1.5 billion.
The figure marks the biggest income the bank has earned from that revenue line in many years. This is followed by a similar breakout growth of 155 per cent in net trading income to roughly N4 billion, a rebound from two preceding years of sharp drops.
The third leg of the strong revenue growth in the year is interest income which rose by 39.6 per cent to over N104 billion for the year. This marks the strongest improvement in interest earnings for Wema Bank since 2013.
The growth record measures well over two times the increase of almost 16 per cent in interest income to N74.8 billion at the end of 2021.
Net fee and commission income also registered strong growth at 23.6 percent to N16.6 billion, slowing down however from over 59 per cent jump to N13.4 billion in the 2021 full year.
The only disappointment in revenue performance for the bank is other income which went down by 12 per cent in the year to N2.9 billion – a drop for the second year after going down by 20.4 per cent to N3.3 billion in 2021.
The bank’s management faced the industry-wide challenge of rising interest expenses in 2022, which grew well ahead of interest income at 52.4 per cent to over N53 billion. Interest expenses claimed 51 per cent of interest earnings in 2022, rising from 46.7 per cent in the preceding year.
Despite the incursion from interest expenses, net interest income still grew by over 28 per cent to N51 billion. Reinforcement came from cost saving from net impairment loss on financial assets – which went down for the second year by 4.5 per cent to N2 billion at the end of the year.
Credit loss expenses had dropped by 62.7 per cent for Wema Bank in 2021, cutting the charges to the lowest level in six years at the end of 2022.
The revenue gains and cost savings enabled the bank to push operating income by almost 31 per cent to N74 billion at the end of the year.
The bank’s management extracted further cost saving from operating expenses, which grew at a moderated rate of 34.5 per cent to N59.5 billion. Operating cost margin stepped down from 47.2 per cent to 46 per cent over the review period.
The slowdown in operating costs helped to dilute the high growth in interest expenses, which helped the bank to defend its net profit margin at 9.8 per cent after a major improvement to 9.5 per cent in 2021.
Wema Bank closed the 2022 operations with earnings per share of 98 kobo, rising from 23 kobo per share in 2021. The increase reflects mainly a share reconstruction that slashed the volume of shares by two-thirds in the year.
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