FINANCIAL YEAR 2014 RESULT. Facts and Figures

Transcription

1 FINANCIAL YEAR 2014 RESULT Facts and Figures

2 Cautionary Note Regarding Forward Looking Statements This presentation contains or incorporates by reference forward-looking statements regarding the belief or current expectations of Wema Bank Plc, the Directors and other members of its senior management about the Bank s businesses and the transactions described in this presentation. Generally, words such as could, will, expect, intend, anticipate, believe, plan, seek or similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the Bank and are difficult to predict, that may cause actual results to differ materially from any future results or developments expressed or implied from the forward-looking statements. Such risks and uncertainties include, but are not limited to, regulatory developments, competitive conditions, technological developments and general economic conditions. The Bank assumes no responsibility to update any of the forward looking statements contained in this presentation. Any forward-looking statement contained in this presentation, based on past or current trends and/or activities of Wema Bank should not be taken as a representation that such trends or activities will continue in the future. No statement in this presentation is intended to be a profit forecast or to imply that the earnings of the Bank for the current year or future years will necessarily match or exceed the historical or published earnings of the Bank. Each forward-looking statement speaks only as of the date of the particular statement. Wema Bank expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Wema Bank s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. 2

3 section page 1 Overview of the Bank 4 2 Financial Highlights 10 3 Outlook 24 3

4 The Bank at a Glance Wema Bank Plc Incorporated in Nigeria in 1945 Listed on the Nigerian Stock Exchange in February 1991 Authorized capital of N20billion divided into 40 billion ordinary shares Fully paid up share capital is N19,287,233,041 divided into 38,574,466,082 ordinary shares of 50 kobo each Diverse Shareholder Base Retail and SME Banking, Commercial Banking, and targeted areas of Corporate Banking. Presence in South-South, South-West, FCT Regions Agusto & Co BB+ Fitch - Private Monitored Rating Akintola Williams Deloitte 1,127 employees as at 31 December million accounts 129 branches 160 ATMs 1,556 PoS Terminals 4

5 The Bank has been Transformed The turnaround plan which commenced in 2009 has been implemented Together to greater heights People banking on People Negative Capital position (N45billion) Threshold Capital Sufficient Capital N44billion in Shareholders funds Distressed bank Recapitalized Fully capitalized (CAR of 18%) Containment strategy Reorientation Defined Retail Strategy < 1% Market Share* 1% of Market Share* 1.5% of Market Share* Obsolete processes Business Process Reengineering Modern processes Redundant Core Banking Application (CBA) Procurement & Installation of New CBA Cutting-edge CBA (Finacle 10.2) Improved Alternative Banking Solutions 89% NPLs 15% NPL % NPLs Poor performance Average performance Improved Profitability *Market share is based on Wema Bank s share of Industry Deposits 5

6 A New WEMA has Evolved Target Market Retail & SME Improved Capital Position (18% CAR) 2015 Improved Corporate Governance Sufficient Capital (N44billion in Shareholders funds) Fully capitalized (CAR of 22%) 1.5% of Market Share Executed Retail Strategy Modern Processes Cutting-edge CBA N44 billion in Shareholders Funds Consistent Improved Performance 1.5% of Market Share* Modern processes Cutting-edge CBA Increased deployment of Alternate Channels 2.49% NPL Improved service on alternative channels <3% NPLs 2014 Consistent Improved Performance

7 7 Updates on 2014 Commitments MOTIVE TASK Growing Business Consistent Deposit growth during the year (Customer Deposit growth of 17%) Increasing lending to productive sectors (Year-on-year Loan growth >30%) Growing top line earnings by gradual portfolio shift from money market investments (Interest income growth of 30%) Improving efficiency Improved operational efficiency through better use of technology (Reduction in Cost to income to 87%) ROE, ROA improved during the period as a result of operational efficiency and improvement in yields Improve capacity for business Obtained additional trade lines to boost business growth (Total of US$110m in trade lines) Refresh and expand the branch network Branch renovation on-going in a number of locations; Additional branches being developed in key commercial hubs Lagos, PH, Abuja Deploy alternative channels Continued deployment of alternative channels POS, ATMs and mobile applications Better Risk Management Strengthened risk management framework Continued diversification of Risk Asset portfolio

8 Section Page 1 Overview of the Bank 4 2 Financial Highlights 10 3 Outlook 24 8

9 Financial Highlights 2014 FY 2013 FY Financial Highlights PBT 3.1bn 1.9bn PAT 2.1bn 1.5bn Capital Adequacy Ratio 18% 27% EPS (Adjusted) 6k 8k Deposits bn bn Revenue Generation Loan book (Net) bn 98.63bn Interest Income 35.5bn 28.5bn Non Interest Income 6.7bn 7.1bn Operational Efficiency Cost to income ratio 87.7% 95.2% Cost of funds 5.21% 5.87% Operating expenses 22.1bn 20.1bn Net Interest Margin 8.27% 7.01% Margins & Quality Return on Equity 7.27% 9.13% NPLs 2.49% 3.87% 9

10 Statements of P&L and other Comprehensive Income and the Financial Position In millions of Nigerian Naira Interest income 35,453 28,542 Interest expense (16,901) (16,018) Net interest income 18,552 12,524 Write back on financial assets (88) 1,330 Net interest income after impairment charge 18,464 13,854 Fee and commission income 5,219 5,133 Net trading income Operating income 25,197 20,957 Personnel expenses (10,033) (8,932) Profit before tax 3,094 1,947 Income tax expense (721) (351) Profit for the year 2,372 1,597 Fair value gain on available-for-sale investments Other comprehensive income for the year, Total comprehensive income, net of income tax 2,374 1,700 Profit attributable to: Equity holders of the Bank 2,372 1,597 Total comprehensive income for the year 2,373 1,700 Earnings per share-basic (kobo) 6 8 In millions of Nigerian Naira Assets Cash and cash equivalents 52,130 31,314 Restricted deposits with CBN 70,056 25,673 Pledged assets 25,776 21,830 Available for Sale 1,614 7,180 Held for Trading 2,341 - Held to Maturity 37, ,380 Loans and advances to customers 149,294 98,632 Assets held for sale 2,965 - Property and equipment 14,043 12,468 Intangible assets 1, Other assets 2,713 3,408 Deferred tax assets 22,970 23,370 Total Assets 382, ,872 Liabilities Deposits from banks 3,243 3,397 Deposits from customers 258, ,735 Current tax liabilities Other liabilities 17,107 10,127 Other borrowed funds 58,382 57,588 Total Liabilities 338, ,477 Equity Share capital 19,287 19,287 Share premium 48,870 48,870 Regulatory risk reserve Retained earnings (34,799 ) (35,663) Other reserves 9,619 8,901 Attributable to Equity Holders 43,769 41,395 TOTAL LIABILITIES AND EQUITY 382, ,872 10

11 Earnings & Profitability Trends 'million Annualized Gross Earnings Cost to Income Ratio Gross earnings increased by 19.90% between 2013 and 2014 PBT - 3.1billion in 2014 compared to 1.9billion in PBT up 58.88% 11

12 Improved revenue base in 2014 Interest Income Interest Income Non-Interest Income Non Interest Income Retail fees & commissions 2,101 2,168 Corporate fees & commission 2,506 2,048 Other fees and charges Foreign exchange trading Dividends on AFS equities Gains on disposal Rental income (i) Swift transactions Others TOTAL NON INTEREST INCOME 6,732 7,102 Interest Income: 35.45bn in FY2014 up 24.21% (FY2013: 28.54bn) Growth in Interest Income driven by: Growth in income from loans and advances Non-Interest Income: 6.73bn in FY2014 down 5.21% (FY2013: 7.10bn) Trading Income increased by 143.6% between 2013 and 2014 'million ,000 2,000 1,000 0 Cash and equivalents Loans and advances Non-Interest Income Investment securities 12

13 Continuous efforts in cost-reduction strategies... Interest Expenses INTEREST EXPENSES (N'000) 20,000 15,000 10,000 Interest Expenses increased by 5.52% between FY2013 and FY2014. Total Operating Expenses OPERATING EXPENSES (N'000) Personnel expenses 10,033 8,932 Other operating expenses 4,450 5,095 Professional fees AMCON Levy 1,665 1,222 NDIC Premium 1,054 1,062 Printing and stationery Advertising and marketing Technology & Alternative Channels Transport & Communications Insurance ,890 9,617 Total 19,923 18,549 Operating Expense growth was lower than inflation Rate 5, ,000 10,000 8,000 6,000 4,000 2, Deposits from banks Deposits from customers Other borrowed funds OPERATING EXPENSES Personnel Others Prof. fees AMCON Levy Advertising Technology Transport Insurance 13

14 Liabilities Structure Liabilities LIABILITIES STRUCTURE 'billion 'billion Deposits from banks Deposits from customers Deriv. financial liabilities Current tax liabilities Other liabilities Other borrowed funds Oblig. Under finance lease Total Deposit from customers increased by 41.3bn or 17% between 2013 and 'billion Deposits from banks Deposits from customers Other liabilities Other borrowed funds Total Deposits TOTAL DEPOSITS million million Corporate Treasury Consumer Public Sector Commercial TOTAL 'billion Deposit from Retail and Commercial segment dominated total deposit in both years

15 Deposit by Type & Mix & 2014 Deposit Mix 2014 Savings 12% Current Deposits 44% Term Deposits 44% 2013 Savings 15% Current Deposits 45% Term Deposits 40% Deposit liabilities continue to grow year on year. Initial impact of PSG CRR was a spike in effective cost of funds and decline in yields; however the gradual rebasing has ensured cost of funds continue to drop. Gradual shift from tenured deposits commenced in Q- 4 and we have seen impact on cost of funds. Deposit by Type 2014 Corporate 9% Treasury 1% 2013 Corporate 10% Treasury 0% million million Corporate Commercial 50% Retail 22% Commerci al 42% Retail 22% Treasury Retail Public Sector Public Sector 18% Public Sector 26% Commercial TOTAL

16 Loans by Type & Category & 2014 LOANS & ADVANCES TO CUSTOMERS Declining NPLs % billions % 14.0% % 2.49% Gross Loan by Type 2014 Consumer Banking 9% 2013 Consumer Banking 12% Corporate Banking million million 48,327 37,650 Corporate Banking 32% Retail and Commercial Banking 59% Corporate Banking 38% Retail and Commercial Banking 50% Retail Banking 13,187 12,001 Commercial Banking Total 87,780 48, ,294 98,631 16

17 Credit Portfolio Analysis BREAKDOWN OF CREDIT PORTFOLIO NPL BREAKDOWN POWER GEN/ POWER PLANTS 2% OTHER PROF. ACTIVITIES 6% SPECIALIZED CONSTRUCTION ACTIVITIES 6% OTHERS 22% CAPITAL MARKET 7% REAL ESTATE CONSTRUCTION 6% COMMERCIAL PROPERTY 6% DOMESTIC TRADE 12% PERSONAL AND PROFESSIONALS 7% HOTEL AND LEISURE 4% OIL - DOWNSTREAM - MARKETING 5% OIL - DOWNSTREAM - TRADING 8% SPECIALIZED CONSTRUCTN ACTIVITIES 9% REAL ESTATE CONSTRUCTN 6% POWER GENERATION 4% STEEL ROLLING 6% PROF.S 5% OTHER PROF. ACTIVITIES 4% OIL - DOWNSTREAM - MARKETING 3% TELECOMMUNIC ATIONS 7% ALUMINIUN AND ALLIED PRODUCTS 13% DOMESTIC TRADE 10% FISHING 1% HOTEL AND LEISURE 26% FOOD PROCESSING 1% Total Loans as at 2014FY was N149 billion. Total Non-Performing Loans was N3.79 billion The Bank has continued to diversify its loan portfolio. Total Oil & Gas exposure (upstream, midstream and downstream) is less than 18%. There was no breach of internal sectoral limits. 17

18 Year on year improvement in Balance sheet trends TOTAL ASSETS TOTAL DEPOSITS billions Billions EQUITY 160 LOANS & ADVANCES billions billions % CAGR in Assets, 16% CAGR in Deposits; 27% CAGR in Loans 18

19 Managing Risk in Wema Bank The Bank has continued to improve its business despite the changing risk universe Challenging macroeconomic conditions Tightening regulation Basel Requirements Technology and Automation Protecting Customer information New sources of Risk The Bank continues to stress test its portfolio for various economic scenarios and make necessary improvements in risk framework Changing economic conditions and expected growth in business volumes require improved capital buffers The Board has approved a 3-year Capital Management plan to cover proposed Basel requirements and ensure improved capital buffer against changing macro-economic conditions and growth in business volumes The Bank has commenced the full automation of all credit processes to ensure proper tracking and reporting Growing cyber threat has also warranted improved investment in anti-fraud and related tools 19

20 Risk Management Metrics Gross Risk Assets ( 'billion) NPL ( 'billion) Provisions for Loan Loss ( 'billion) NPL Ratio (%) NPL Coverage Ratio (%) Cost of Risk (%)

21 Key Performance Metrics Net Interest Margin (%) Cost of Funds (%) Loan-to-Deposit Ratio (%) Capital Adequacy Ratio (%) Liquidity Ratio (%) Cost to Income Ratio (%) Earnings per share (Kobo) Net Assets Per Share ( ) Return On Average Equity (%) Return On Average Assets (%)

22 Section Page 1 Overview of the Bank 4 2 Financial Highlights 10 3 Outlook 24 22

23 Outlook for the Nigerian Economy in 2015 Weakening Exchange Rates Outcome of the 2015 General Elections Implementation of the Reform Agenda Administration of the 2015 Budget Declining Oil Prices Diversification of the Economy Dampened Global Growth Forecasts All- Inclusive Growth Passage of the Petroleum Industry Bill Competition within the Banking Industry 23

24 Wema Bank Growth Plan Project LEAP The Bank is on track for executing the Project LEAP transformation plan ( ). Overarching Goal To Efficiently Grow Market Share in Retail & SME Target Markets Growth Plan Specifics IMPROVING EFFICIENCY Participate in high-yield transactions Partner with Banks and other MFIs on syndications to take on more volumes Use technology to drive down operating costs INCREASING CAPITAL POSITION Raise Tier-2 Capital ($250m) Raise Tier-1 buffer Capital Ensure efficient balance sheet management to minimize capital charge GROWING MARKET SHARE Grow our core business of Retail & Commercial Banking Strategically focus our resources on savings accounts and demand deposit accounts Aggressively deploy alternative channels to grow customer base REENGINEERING WORKFORCE FOR EFFECTIVENESS Recruit, equip and train highvalue talent Improve Performance Management framework Recalibrate branches for better service delivery IMPROVE NETWORK SPREAD Become a National Bank operator (National authorization by the CBN) Focus on the high-growth Retail & Commercial locations Open smaller and efficient branches (10 per year) REPOSITIONING THE WEMA BRAND Brand Repositioning program has commenced Engage Shareholders and investing public through transparent, consistent and convenient Investor Relations Enablers PRODUCTS AND SERVICES CUTTING EDGE TECHNOLOGY HIGH VALUE TALENT 24

25 2015 EXPECTATIONS Low cost funding Improve growth in retail deposits to keep cost of funds low. Leveraging mobile solutions and technology as our competitive edge Efficiency Improve cost to income ratio (75-80%) Continue to drive retail deposits, technology, innovation to keep costs low Finalise Tier-2 Capital raise of US$100m Alternate Platforms Aggressively migrate customers to alternative platforms 100% increase in Card activation and PoS uptime Performance Drive better operating margins Achieve improved ROEs Grow foreign partnerships and syndications 25

26 Appendices 26

27 Experienced, Skilled and Diverse Board Two Independent Directors Varied experience from Banking, Industry, Law and other relevant sectors Implementing strong governance and risk controls Adeyinka Asekun (Chairman) 2. Segun Oloketuyi (MD/CEO) 3. Nurudeen Fagbenro (ED) 4. Ademola Adebise (ED) 5. Moruf Oseni (ED 6. Wole Akinleye (ED) 7. Folake Sanu (ED) 8. Ade Adefioye (Non-Exec) 9. Abubakar Lawal (Non-Exec) 10.Samuel Durojaye (Non-Exec) 11. Tina Vukor-Quarshie (Independent) 12. Omobosola Ojo (Independent) 13. Abolanle Matel-Okoh (Non-Exec) 14. Babatunde Kasali (Non-Exec) 27

28 Draw a Purple Line today and Experience the touch of Great Relationships.