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Wema Bank Continues to Sustain Growth

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wema bank - Investors King
  • Wema Bank Continues to Sustain Growth

There is no doubt that the Nigerian banking sector has been facing some challenges due to weakness in the country’s macroeconomic indices.

From a decline in the quality of assets in the industry, to rising non-performing loans (NPLs) ratio, decline in core liquid assets, among others, some banks have been struggling to weather the storm.

Fitch Ratings recently noted that the banking industry will remain challenging considering low oil prices, continued disruptions in oil production and constraints regarding the forex liquidity. As such, the industry could witness a rise in non-performing loan (NPL) ratios, though Fitch expects banks to remain profitable in 2016.

However, the rating agency affirmed Wema Bank’s Long-term National Rating of Wema Bank at BBB-. This, the agency said was reflective of the bank’s stable outlook and continued viability, in spite of the challenging macro-economic environment. The Long-term IDR of Wema Bank also remained Stable at B-, as the rating was driven by the bank’s VR. It stated that it does not expect any material change in the bank’s intrinsic creditworthiness.

Wema Bank’s strengths, which underpin its long and short-term ratings, include the bank’s strong risk management culture, low NPL exposure and good liquidity levels.

Managing Director of Wema Bank, Mr. Segun Oloketuyi, stated that the rating was an affirmation of the bank’s continued transformation, risk culture and positioning, as one of the major players within Nigeria’s retail banking landscape. He said the bank’s affirmed rating further reinforced its resolve to remain a smarter and efficient bank, driven by innovation and technology.

The Journey So Far

The bank celebrated its 71st anniversary in May this year. Established on May 2, 1945 as Agbonmagbe Bank, the financial institution has undergone rapid transformation. Widely reputed as the longest surviving and most resilient indigenous Nigerian bank, Wema Bank Plc has over the years, diligently offered a fully-fledged range of value-adding banking and financial advisory services to the Nigerian public.

Incorporated in 1945 as a Private Limited Liability Company (under the old name of Agbomagbe Bank Limited) and commencing banking operations in Nigeria the same year, Wema Bank later transformed into a Public Limited Company (PLC) in April 1987 and was listed on the floor of the Nigerian Stock Exchange (NSE) in January 1990. On February 5, 2001, Wema Bank Plc was granted a universal banking licence by the Central Bank of Nigeria (CBN), thus allowing it over the years to provide the Nigerian public with diverse financial and business advisory services.

Wema Bank after staying for seven years as a regional bank decided to upgrade to a national bank and has rising from a negative position, to a profitable financial institution, despite the challenges in the industry.

In its 2016 half year financials, Wema bank reported an 11 per cent rise in profit and a 15 per cent rise in turnover. The bank delivered an Interest income of N20.2 billion, a 15 per cent increase from N17.5 billion in the first half of 2015, while its fee and commission income also jumped by 42.3 per cent, from N2.2 billion in the first half of 2015 to N3.1 billion in the first half of 2016. The bank also recorded a 13.7 per cent growth in total assets, from N344.64 billion in the first half of 2015 to N391 billion in the first half of 2016. Furthermore, its operating expenses grew marginally by 2.7 per cent.

“Six years ago, we took a decision to refocus the bank’s operations on its areas of strength and build a sustainable institution. We took advantage of the new licensing regime and applied for a regional authorisation with a pledge to expand in the near future, once the turnaround project was completed.

“The bank’s transformation was implemented in three phases -first to stabilise the bank, second to prepare the building blocks for growth and third to go for growth. We are now within the third phase of the transformation project,” Oloketuyi explained.

He added: “The 2016 financial year has been characterised by deceleration on a number of economic indicators coupled with increasing energy costs, intensified by rising inflation, all within a tough operating environment.

“In spite of these challenges, Wema Bank has been able to deliver a modest improvement in the first half of the year. We commence the second half of the year with a sense of cautious optimism; well aware that the economic fundamentals point to an economy heading for further slowdown, yet hopeful that additional fiscal initiatives will be implemented to stimulate growth.”

Capital Raising

The bank receyelp raised N50 billion tier-2 capital, by issuing a bond. The first tranche was N20 billion and the second tranche was N30 billion.
“In recapitalising an institution, what you need to watch out is your optimum capital. Sometimes, if you make it all tier-1, it may not just be the optimal that you need. So, sometimes you also need to have some dose of tier-2.

“In 2009 when we took over, we had a distressed institution and all indices pointed to that direction. As at December 2009, the audited financial statement showed a negative capital of N45 million and the bank was totally on its knees. The share of market we had then was less 0.6 per cent. Equipment and processes and the platforms we were running were obsolete and the core banking application we had which is the platform we use to serve our customers, was old to the level that it couldn’t be supported by those who supported them.

“The non-performing loan ratio was 89 per cent and the performance of the bank was poor. So, we came in and said we need to have a containment strategy to stop the bleeding and stabilise the bank. So, between 2010 and 2014, was largely to give life back to the bank.

“A distressed bank needs to be turned around to a performing bank. Of course, you need capital for any business, more so for banking which is a regulated business. So, the first major assignment we did was to recapitalise the bank. Today we have been able to completely turn around the bank,” Oloketuyi explained.

Promoting Financial Inclusion

In its bid to promote financial include, Wema Bank in collaboration with Etisalat Nigeria recently collaborated to introduce the ‘WemaEasySavers,’ a tier-1 savings account, targeted at youths. The USSD based account is a seamless process where existing Etisalat customers can open instant account by dailing *945*10# and can be used instantly for transactions of up to N30,000 daily. However, it can be upgraded any time to other account types that give higher transaction limits.

Speaking at the launch, Oloketuyi said the initiative marked the beginning of greater things to come and greater services in Wema bank as the bank forges ahead with its growth strategy. He also said the bank has been stabilised and on the path of growth, and has invested a lot on technology which positioned it to receive this strategic partnership with Etisalat.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Dangote Urges NNPC, Marketers to Halt Petrol Imports and Source Locally from Lagos Refinery

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Aliko Dangote - Investors King

The founder and Chief Executive of Dangote Group, Aliko Dangote, has urged the Nigerian National Petroleum Company (NNPC) and independent oil marketers in Nigeria to halt petrol imports and source the product from his Lagos refinery.

Dangote made this appeal on Tuesday at the State House, Abuja, while addressing Nigeria’s fuel scarcity issue after a meeting with President Bola Tinubu.

According to the business mogul, the country should not rely on petrol imports when his refinery has over 500 million litres in storage.

Investors King reported that oil dealers in Nigeria resumed importing petrol from abroad, claiming Dangote’s refinery could not meet demand. The marketers said they turned to foreign refiners to avert fuel shortages.

During the press briefing at the State House, however, Dangote emphasized that he should not be blamed for the scarcity or the long queues at petrol stations, as he is only a producer, not a retailer.

Dangote revealed that the NNPC’s reluctance to buy from his refinery costs him money daily.

He explained, “We are producers. I have a refinery. I’m not in the business of retail. If I were, then you could hold me responsible. But what I’m saying is that the retailers should please come forward and pick up the supply. If they don’t, what do you expect me to do? There is nothing I can do.”

“I expect either the NNPC or marketers to stop importing and collect the supply we have here. Keeping millions of litres in storage costs me daily,” Dangote added.

Fuel scarcity has plagued Nigeria since Bola Tinubu announced the end of the fuel subsidy upon assuming office. Despite the establishment of Dangote Refinery in Lagos, Nigerians hoped that petrol scarcity would soon be a thing of the past. While the refinery promised 650,000 barrels per day, the problem persists with no end in sight.

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Dangote Cement Sees 69% Revenue Hike Amid Sluggish 0.6% Profit Growth in Q3

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Dangote Cement - Investors King

Dangote Cement reported sluggish profit growth as profit after tax inched slightly higher by 0.6% by N279.1 billion in the first nine months ended September 30, 2024.

In the company’s unaudited financial statements obtained by Investors King, group revenue rose 69.1% to N2.560 trillion while EBITDA appreciated 37.1% to N908.7 billion.

Earnings per share appreciated by 2.9% to N16.55 and net debt stood at N1.050 trillion. See other details below.

Dangote Cement Financial highlights

• Group revenue up 69.1% to ₦2,560.6B
• Group EBITDA up 37.1% to ₦908.7B; 35.5% margin
• Nigeria EBITDA up 37.3% to ₦697.4B; 45.5% margin
• Pan-Africa EBITDA up 45.4% to ₦247.1B; 22.6% margin
• Profit after tax up 0.6% at ₦279.1B
• Earnings per share up 2.9% at ₦16.55
• Net debt of ₦1,050.5B; net gearing of 48.6%

Operating highlights

• Group volumes up by 1.9% to 20.7Mt
• Rebound in Nigeria volumes, up 9.5% to 13.2Mt
• Exported 22 ships of clinker from Nigeria to Ghana and Cameroon
• Nigeria cement and clinker exports up 75.5% at 873Kt ESG highlights
• Commissioned 11 of the 17 Alternative Fuel Projects across the Group
• Arrival of 1500 full CNG trucks to support cost saving initiatives

Arvind Pathak, Chief Executive Officer, said: “Our financial results for the nine months period demonstrate superior performance across key metrics, as we diligently execute our strategic priorities for the year. Group volumes grew by 1.9% year-on-year to 20.7Mt, largely due to a significant rebound in Nigeria. This growth was supported by promotional activities and enhanced route-to-market solutions, which helped mitigate the impact of adverse
weather conditions.

Despite the challenges of elevated inflation, high borrowing costs, and further currency depreciation that characterized the nine-month period, our business showed remarkable resilience. This was achieved through a strong focus on cost minimisation and our diversified business model.

Group revenue surged by 69.1% to ₦2,560.6 billion, while EBITDA increased by 37.1% to ₦908.7 billion. As such, PAT closed at ₦279.1 billion, a modest 0.6% increase on the back of FX loss. Both our revenue and EBITDA for the nine-month period have already exceeded our full-year 2023 performance, with additional growth potential anticipated in the last quarter. I am pleased with the Company’s overall performance, as key financial indicators are
showing positive trends.

Leveraging our robust export-to-import strategy, Dangote Cement successfully completed 22 shipments of clinker from Nigeria to Ghana and Cameroon. This effort resulted in a 75.5% increase in our Nigerian exports, highlighting our commitment to promoting Africa cement self-sufficiency.

Looking ahead, our key focus remains on enhancing efficiency and delivering greater value. We will continue to prioritise innovation, cleaner energy transition, and cost leadership towards achieving our vision of transforming Africa and building a sustainable future.”

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Nigeria’s CAP Plc Reports Robust Q3 Growth, Profit Before Tax Soars 204%

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Chemical & Allied Products (CAP) Plc - Investors King

Chemical and Allied Products Plc, one of the leading paints and coatings companies in Nigeria, grew revenue by 47% in the third quarter ended September 2024 to N8 billion.

The company disclosed in its unaudited financial statement obtained by Investors King.

Gross profit jumped 58% to N3.5 billion while gross margin did 43% in the period under review. Operating profit rose by a whopping 185% to N1.2 billion. Check other financial details below.

Key Financial Details for Q3 2024

• N8.0 billion revenue, 47% higher than Q3 2023.
• Gross profit 58% higher at N3.5 billion. Gross margin of 43%, 3 percentage points higher.
• Operating profit 185% higher at N1.2 billion. Operating margin of 15%, 7 percentage points higher.
• Profit before tax of N1.3 billion, 204% higher than N414 million recorded in Q3 2023.

Key Financial Details for 9M 2024

• N23.7 billion revenue, 55% higher than 9M 2023.
• Gross profit 55% higher at N9.0 billion.
• Operating profit 71% higher at N2.8 billion. Operating margin of 12%, 1 percentage point higher.
• Profit before tax of N3.9 billion, up 69% from N2.3 billion in 9M 2023.

Commenting on the results, Managing Director, Bolarin Okunowo, stated: “We are pleased to report a strong set of results for Q3 2024, demonstrating the resilience of our business model and our ability to navigate a challenging operating environment. We recorded growth in revenue, operating profit, and profit before tax of 47%, 185%, and 204% respectively.

“This was achieved by executing our strategic growth objectives and prioritizing operational efficiency. Looking ahead to the last quarter of the year, we remain focused on delivering profitable growth and enhancing our customer experience.”

 

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