Wema Bank’s Profit Soars To N30bn In Q3, Nine-Month Pre -Tax Earnings Reach N60.6bn

In its third-quarter results for 2024, Wema Bank has reported a pre-tax profit of N30.05 billion, up sharply from N10.06 billion in the same quarter last year.

This significant growth has lifted the bank’s pre-tax earnings for the first nine months to N60.62 billion, underlining its success in generating revenue across multiple income lines and strengthening its position in the Nigerian banking sector.

A key driver of Wema Bank’s outstanding results was its robust interest income, which surged to N83.84 billion—a 65 percent increase year-over-year. This income stream, primarily derived from loans and advances to customers and other banks, accounted for 76 percent of the bank’s total earnings. The expansion in interest income was complemented by a remarkable 86.4 percent jump in net interest income, which reached N42.43 billion. Even after accounting for impairment charges, net interest income stood strong at N35.6 billion, up 70.5 percent from the previous year.

Wema Bank also saw gains in its non-interest income, which contributed N26.11 billion to its earnings. This area was bolstered by a substantial increase in net fees and commission income, which more than doubled to N14.83 billion, driven largely by foreign exchange (FX) transactions and a rise in fees on electronic banking products. Additionally, the bank recorded an FX revaluation gain of N8 billion, reflecting a 140 percent year-over-year growth and further contributing to its financial growth.

The bank’s stellar performance this year has not gone unnoticed by investors. As one of the best-performing banking stocks in 2024, Wema Bank’s share price has appreciated by 43 percent year-to-date, following an impressive 47 percent gain last year. Analysts expect these strong financials to continue attracting investor interest, potentially giving the bank a further boost in its market valuation.

However, Wema Bank’s upward trajectory comes with certain challenges. The bank operates in a high-risk environment and faces increasing regulatory capital requirements, which could pose constraints on future profitability. Impairment charges on loans and advances rose by a striking 230 percent in Q3 to N6.75 billion, with the nine-month impairment provision hitting N11.93 billion, up from N2.95 billion in the same period last year. These heightened impairment charges signal potential risks that, if not mitigated, could impact the bank’s future earnings.

In sum, Wema Bank’s Q3 2024 results reflect a powerful blend of growth in interest and non-interest income, backed by significant FX gains. However, the rise in impairment costs and regulatory pressures suggests that the bank will need to carefully manage its risk exposure to maintain its profitability in the coming quarters.