Wema Bank NPL increases to 2.9% in H1 2015 as PBT decline to N1.17bn

The Non-performing Loan ratio of Wema Bank climbed to 2.9 per cent in the first of half of 2015, despite threat to publish names of chronic debts.

The bank’s NPL ratio was 2.5 per cent in H1 2014.

The H1 2015 financial result of Wema Bank released yesterday showed that its net interest income also declined from N1.70 billion in H1 2014 to N1.17 billion as as its profit before tax also took a backward movement from N1.70 billion in H1 2014 to N1.17 billion.

The bank was able to cut down its other operating cost to N4.98 billion from N5.04 billion in H1 2014 and its gross earnings grew to N20.87 billion from N20.82 billion in the corresponding period in 2014.

The result also showed that its loans and advances declined from N149.29 billion as at December 2014 to N134.57 billion in H2015.

The Managing Director, Wema Bank, Mr. Segun Oloketuyi, said in spite of the tough operating environment in the first half of 2015, which he attributed to economic headwinds, regulatory restrictions and political uncertainty, the Bank was to sustain its financial performance, albeit, on a lower level compared to the same period in 2014.

“The first quarter of the year was characterized by election-related activities and political maneuverings with limited emphasis on economic matters, while the second quarter was largely characterized by the continued pressure on the currency, the tight monetary policy conditions and the low level supply of petroleum products.

All these issues affected consumer discretionary spending and indeed the growth in our Retail volumes.

Due to the lack of economic policy clarity so far in 2015, investment decisions have been tentative. In addition, the CRR harmonization has reduced liquidity with significant impact on  margins from money market investments.

We are confident that as the new administration settles into office, its policy thrust will become clearer, hence, enabling us to continue to make well informed lending decisions mitigate risk exposures and further expand our customer base,” he explained.

For the Chief Finance Officer of the bank, Mr. Tunde Mabawonku,

“Operationally, the Bank has continued to efficiently deploy its assets. Our loans to deposits ratio has moderated to 57.1%, compared to 57.6% as at December 2014, through a cautious approach to our lending, pending policy clarity from the new administration.

 The liquidity squeeze and tight monetary policy conditions affected our yields from money market investments.

Technically, banks can only lend 39% of available resources, as CRR is 31% and liquidity remains 30%.

We therefore used the first few months of the financial year to streamline our mix of deposits and funding sources.

This has resulted in slightly smaller deposit liabilities volumes but a better cost of funds.”

He projected that there would be an improved economic activity and systemic liquidity once the “bail-out” talks are concluded in the H2 of this year.

Mr. Mabawonku hoped that there is more clarity on the economic policy of the new administration, which would fast track economic activities in the country.

“Our expectation is that economic activities will pick up from August/September this year and the momentum will be sustained throughout the remaining months of the year.

“While general economic conditions and the regulatory environment remain tight, we believe that our lending strategies, embedded risk management culture and continuous cost savings will enable us stand firm throughout this period.

We remain on track to deliver the 2015 financial projections,” he stated optimistically..