Wema Bank Nigeria Plc has hit the highest profit on record as a share reconstruction helped bolster the lender’s share price, which validates the ingenuity of the management and board of directors.
The rise in interest rate is also a boon for the small and mid-sized bank, and earnings reports so far have shown that lenders may record improved return on equity on the back of an uptick in income from treasury bills.
For instance, Wema Bank’s net income increased by 14.95 percent to 10.07 billion from N8.76 billion as at March 2021.
In the past three years, profits have been growing steadily, and there are positive prognosis about future earnings growth.
Interest income from loans and advances spiked by 52.37 percent to N25.02 billion as at March 2022, which is the largest expansion at the top line (revenue) in over a decade.
Non-Interest income, the difference between the revenue generated from a bank’s interest-bearing assets and the expenses associated with paying its interest-bearing liabilities, rose by 14.95 percent to N10.07 billion as at December 2021.
The lender saw return on average equity move to 15.65 percent in the period under review from 7.44 percent the previous year.
Wema Bank share price has gained 169 percent so far this year, outperforming the NGXASI Index, thanks to a share reconstruction that reduced the total number of ordinary shares.
The bank had secured shareholders and regulatory approvals to undertake a share reconstruction as part of a new recapitalisation programme.
Under the Wema Bank share reconstruction, the bank’s issued and fully paid shares were reconstructed from about 38.575 billion ordinary shares of 50 Kobo each to 12.858 billion ordinary shares of 50 Kobo each on the basis of exchange ratio of one new post-reconstruction share for every three old pre-reconstruction shares held.