Wema Bank’s Q3 2024 Report: Record Profit Growth and Strong Interest Income Boost Results
Wema Bank has released its third-quarter results for 2024, showcasing an impressive rise in pre-tax profits to N30.050 billion, up from N10.059 billion in the same quarter last year. This strong quarterly performance has propelled the bank’s nine-month pre-tax profits to N60.616 billion, a significant milestone.
Key Financial Highlights (Q3 2024 vs Q3 2023)
- Interest Income: N83.843 billion (+65.00% YoY)
- Interest Expense: N41.214 billion (+47.48% YoY)
- Net Interest Income: N42.429 billion (+86.39% YoY)
- Net Impairment Loss on Financial Assets: N7.026 billion (+254.32% YoY)
- Net Interest Income after Impairment Charge for Credit Losses: N35.603 billion (+70.45% YoY)
- Net Fees and Commission Income: N14.833 billion (+117.70% YoY)
- Operating Income: N61.609 billion (+92.04% YoY)
- Profit After Tax: N26.140 billion (+198.78% YoY)
- Earnings Per Share: N4.88 (+79.41% YoY)
- Loans and Advances to Customers: N1.003 trillion (+25.24% YoY)
- Cash and Cash Equivalents: N213.579 billion (-3.02% YoY)
- Total Assets: N3.093 trillion (+37.56% YoY)
- Customers’ Deposits: N2.292 trillion (+23.90% YoY)
Revenue Drivers and Insights
A detailed analysis of Wema Bank’s third-quarter performance reveals that interest income was a central driver of growth, contributing N83.348 billion, or 76% of total gross earnings. This growth was largely fueled by income from loans and advances extended to customers and banks, which accounted for 66% of the total interest income. Additionally, Wema Bank saw robust growth in non-interest income, which contributed N26.106 billion to pre-tax profits.
Foreign exchange revaluation gains also made a notable impact, with the bank reporting N8 billion in FX revaluation gains for the quarter, a 140% year-on-year increase. Net fees and commission income, which more than doubled to N14.833 billion, was bolstered by gains from FX transactions and fees on electronic products.
Positive Outlook and Stock Performance
Investors are likely to view these results favorably, potentially driving up interest in Wema Bank’s shares. The stock has performed exceptionally well this year, delivering a year-to-date gain of 43% and recording a 47% gain last year. The strong financials, combined with growing interest and non-interest income, reinforce Wema Bank’s position as a leading performer in the banking sector.
Challenges and Risk Factors
Despite these strong results, Wema Bank faces ongoing challenges. Heightened risk in the financial environment and new capital requirements may exert pressure on overall profitability. In the third quarter, impairment charges on loans and advances surged by 230% to N6.745 billion, raising the nine-month impairment provision to N11.933 billion, compared to N2.946 billion in the same period last year.
While Wema Bank’s profitability has seen remarkable growth, the increase in impairment charges underscores underlying risks that could potentially erode future earnings if not managed effectively.
Source: Nairametrics
