Facts and Figures Cautionary Note Regarding Forw ard Looking Statem - - PowerPoint PPT Presentation

FINANCIAL YEAR 2014 RESULT

Facts and Figures

Cautionary Note Regarding Forw ard Looking Statem ents

• 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

• r circumstances on which any such statement is based.

2

3 1 Overview of the Bank section Financial Highlights 2 3 Outlook 4 page 1 0 2 4

The Bank at a Glance

Wema Bank Plc

I ncorporated in Nigeria in 1 9 4 5

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 Retail and SME Banking, Commercial Banking, and targeted areas

• f Corporate Banking.

Presence in South-South, South-West, FCT Regions

1 ,1 2 7 employees

as at 31 December 2014

1 .3 m illion

accounts

1 2 9

branches Agusto & Co – BB+ Fitch - Private Monitored Rating

1 6 0

ATMs Listed on the Nigerian Stock Exchange in February 1991

Diverse Shareholder Base Akintola Williams Deloitte

1 ,5 5 6

PoS Terminals

4

2 0 0 9 2 0 1 0 - 2 0 1 2 2 0 1 4 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 - 2012 2.49% NPLs Poor performance Average performance Improved Profitability …Together to greater heights

…People banking on People

The Bank has been Transform ed

* Market share is based on W em a Bank’s share of I ndustry Deposits

The turnaround plan w hich com m enced in 2 0 0 9 has been im plem ented

5

2 0 1 5

Sufficient Capital (N44billion in Shareholders’ funds) Fully capitalized (CAR of 22% ) Executed Retail Strategy 1.5% of Market Share* Modern processes Cutting-edge CBA Improved service on alternative channels < 3% NPLs – 2014 Consistent Improved Performance

Target Market – Retail & SME Modern Processes Cutting-edge CBA 1 .5 % of Market Share I m proved Capital Position ( 1 8 % CAR) N4 4 billion in Shareholders’ Funds Consistent I m proved Perform ance 2 .4 9 % NPL I ncreased deploym ent of Alternate Channels

A New W EMA has Evolved

I m proved Corporate Governance

Updates on 2 0 1 4 Com m itm ents

MOTI VE TASK Growing Business

• Consistent Deposit growth during the year
• ( Custom er Deposit grow th of 1 7 % )
• Increasing lending to productive sectors
• ( Year-on-year Loan grow th > 3 0 % )
• Growing top line earnings by gradual portfolio shift from money market investments
• ( I nterest incom e grow th of 3 0 % )

Improving efficiency

• Improved operational efficiency through better use of technology
• ( Reduction in Cost to incom e to 8 7 % )
• 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$ 1 1 0 m in trade lines)

Refresh and expand the branch network

• Branch renovation on-going in a number of locations;
• Additional branches being developed
• in key com m ercial 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

7

8 1 Overview of the Bank Section Financial Highlights 2 3 Outlook 4 Page 1 0 2 4

Financial Highlights Revenue Generation Operational Efficiency Margins & Quality

Financial Highlights

2 0 1 4 FY 2 0 1 3 FY

PBT

₦3.1bn ₦1.9bn

PAT

₦2.1bn ₦1.5bn

Capital Adequacy Ratio

18% 27%

EPS ( Adjusted)

6k 8k

Deposits

₦258.96bn ₦217.73bn

Loan book ( Net)

₦149.29bn ₦98.63bn

I nterest I ncom e

₦35.5bn ₦28.5bn

Non I nterest I ncom e

₦6.7bn ₦7.1bn

Cost to incom e ratio

87.7% 95.2%

Cost of funds

5.21% 5.87%

Operating expenses

₦22.1bn ₦20.1bn

Net I nterest Margin

8.27% 7.01%

Return on Equity

7.27% 9.13%

NPLs

2.49% 3.87%

9

Statem ents of P&L and other Com prehensive I ncom e and the Financial Position

I n m illions of Nigerian Naira 2 0 1 4 2 0 1 3 I nterest income 35,453 28,542 I nterest expense (16,901) (16,018) Net interest incom e 1 8 ,5 5 2 1 2 ,5 2 4 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 851 349 Operating income 25,197 20,957 Personnel expenses (10,033) (8,932) Profit before tax 3,094 1,947 I ncome tax expense (721) (351) Profit for the year 2 ,3 7 2 1 ,5 9 7 Fair value gain on available-for-sale investments 1 119 Other comprehensive income for the year, 1 104 Total com prehensive incom e, net of incom e tax 2 ,3 7 4 1 ,7 0 0 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 I n m illions of Nigerian Naira 2 0 1 4 2 0 1 3 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

37,258 102,380 Loans and advances to customers 149,294 98,632 Assets held for sale 2,965

• Property and equipment

14,043 12,468 I ntangible assets 1,002 913 Other assets 2,713 3,408 Deferred tax assets 22,970 23,370 Total Assets 3 8 2 ,5 6 3 3 3 0 ,8 7 2 Liabilities Deposits from banks 3,243 3,397 Deposits from customers 258,956 217,735 Current tax liabilities 339 382 Other liabilities 17,107 10,127 Other borrowed funds 58,382 57,588 Total Liabilities 3 3 8 ,7 9 4 2 8 9 ,4 7 7 Equity Share capital 19,287 19,287 Share premium 48,870 48,870 Regulatory risk reserve 791

• Retained earnings

(34,799 ) (35,663) Other reserves 9,619 8,901 Attributable to Equity Holders 4 3 ,7 6 9 4 1 ,3 9 5 TOTAL LI ABI LI TI ES AND EQUI TY 3 8 2 ,5 6 2 3 3 0 ,8 7 2

1 0

Earnings & Profitability Trends

• Gross earnings increased by 1 9 .9 0 % betw een 2 0 1 3 and 2 0 1 4
• PBT - ₦3 .1 billion in 2 0 1 4 com pared to ₦1 .9 billion in 2 0 1 3 . PBT up 5 8 .8 8 %
• 5

10 15 20 25 30 35 40 45 2010 2011 2012 2013 2014 ₦'million

Annualized Gross Earnings

1 5 1 .3 4 1 2 9 .8 8 1 4 2 .5 6 9 5 .1 5 8 7 .7 2

2010 2011 2012 2013 2014

Cost to I ncom e Ratio

1 1

I m proved revenue base in 2 0 1 4

I nterest I ncom e Non-I nterest I ncom e

• Interest Income: ₦35.45bn in FY2014 up 24.21%

(FY2013: ₦28.54bn)

• Grow th in I nterest I ncom e driven by:

 Grow th in incom e from loans and advances

• Non-Interest Income: ₦6.73bn in FY2014 down 5.21%

(FY2013: ₦7.10bn)  Trading I ncom e increased by 1 4 3 .6 % betw een 2 0 1 3 and 2 0 1 4

5 10 15 20 25

Cash and equivalents Loans and advances Investment securities

₦'million

I nterest I ncom e

1,000 2,000 3,000

Non-I nterest I ncom e

2014 2013

Non I nterest I ncom e 2 0 1 4 2 0 1 3 Retail fees & commissions 2,101 2,168 Corporate fees & commission 2,506 2,048 Other fees and charges 611 917 Foreign exchange trading 851 349 Dividends on AFS equities 22 87 Gains on disposal 22 784 Rental income (i) 51 47 Swift transactions 40 29 Others 528 673 TOTAL NON I NTEREST I NCOME 6 ,7 3 2 7 ,1 0 2

1 2

I nterest Expenses Total Operating Expenses

Interest Expenses increased by 5.52% between FY2013 and FY2014. Operating Expense growth was lower than inflation Rate

Continuous efforts in cost-reduction strategies...

OPERATING EXPENSES (N'000) 2014 2013 Personnel expenses 10,033 8,932 Other operating expenses 4,450 5,095 Professional fees 499 433 AMCON Levy 1,665 1,222 NDIC Premium 1,054 1,062 Printing and stationery 302 304 Advertising and marketing 740 400 Technology & Alternative Channels 634 385 Transport & Communications 356 299 Insurance 279 508 9,890 9,617 Total 19,923 18,549

5,000 10,000 15,000 20,000 2014 2013

I NTEREST EXPENSES ( N'0 0 0 )

Deposits from banks Deposits from customers Other borrowed funds

• 2,000

4,000 6,000 8,000 10,000 12,000

Personnel Others

• Prof. fees

AMCON Levy Advertising Technology Transport Insurance

OPERATI NG EXPENSES

2014 2013

1 3

Liabilities Total Deposits

Deposit from customers increased by ₦41.3bn or 17% between 2013 and 2014. Deposit from Retail and Commercial segment dominated total deposit in both years.

Liabilities Structure

1 4

50 100 150 200 250 300

Deposits from banks Deposits from customers Other liabilities Other borrowed funds

₦'billion

LI ABI LI TI ES STRUCTURE

2 0 1 4 2 0 1 3 ₦'billion ₦'billion Deposits from banks 3.2 3.4 Deposits from customers 259.0 217.7

• Deriv. financial liabilities

0.4

• Current tax liabilities

0.3 0.4 Other liabilities 17.1 10.1 Other borrowed funds 58.4 57.6

• Oblig. Under finance lease

0.3 0.2 Total 3 3 8 .8 2 8 9 .5 2 0 1 4 2 0 1 3 ₦’million ₦’million Corporate 2 4 .3 3 2 1 .9 4 Treasury 1 .6 6 1 .2 4 Consumer 5 6 .7 5 4 7 .4 Public Sector 4 6 .6 3 5 6 .5 1 Commercial 1 2 9 .5 8 9 0 .6 5 TOTAL 2 5 8 .9 5 2 1 7 .7 4

50 100 150 200 250 300 2010 2011 2012 2013 2014 ₦'billion

TOTAL DEPOSI TS

Deposit Mix Deposit by Type

• Deposit liabilities continue

to grow year on year.

• I nitial im pact of PSG CRR

w as a spike in effective cost of funds and decline in yields; how ever the gradual rebasing has ensured cost of funds continue to drop.

• Gradual shift from tenured

deposits com m enced in Q- 4 and w e have seen im pact on cost of funds.

Deposit by Type & Mix - 2 0 1 3 & 2 0 1 4

Term Deposits 44% Current Deposits 44% Savings 12%

2 0 1 4

Term Deposits 40% Current Deposits 45% Savings 15%

2 0 1 3

2 0 1 4 2 0 1 3 ₦’million ₦’million Corporate

2 4 .3 3 2 1 .9 4

Treasury

1 .6 6 1 .2 4

Retail

5 6 .7 5 4 7 .4

Public Sector

4 6 .6 3 5 6 .5 1

Com m ercial

1 2 9 .5 8 9 0 .6 5

TOTAL

2 5 8 .9 5 2 1 7 .7 4

Corporate 9% Treasury 1% Retail 22% Public Sector 18% Commercial 50%

2 0 1 4

Corporate 10% Treasury 0% Retail 22% Public Sector 26% Commerci al 42%

2 0 1 3 1 5

Gross Loan by Type

Loans by Type & Category - 2 0 1 3 & 2 0 1 4

Retail and Com m ercial Banking 5 9 % Corporate Banking 3 2 % Consum er Banking 9 %

2 0 1 4

Retail and Com m ercial Banking 5 0 % Corporate Banking 3 8 % Consum er Banking 1 2 %

2 0 1 3

2 0 1 4 2 0 1 3 ₦’million ₦’million Corporate Banking 48,327 37,650 Retail Banking 13,187 12,001 Com m ercial Banking 87,780 48,980 Total 1 4 9 ,2 9 4 9 8 ,6 3 1

84.0% 15.0% 14.0% 3.9% 2.49%

2010 2011 2012 2013 2014

Declining NPLs

• 20

40 60 80 100 120 140 160

2010 2011 2012 2013 2014

billions

LOANS & ADVANCES TO CUSTOMERS

1 6

Credit Portfolio Analysis

ALUMINIUN AND ALLIED PRODUCTS 13% DOMESTIC TRADE 10% FISHING 1% FOOD PROCESSING 1% HOTEL AND LEISURE 26% OIL - DOWNSTREAM - MARKETING 3% OTHER PROF. ACTIVITIES 4% PROF.S 5% POWER GENERATION 4% REAL ESTATE CONSTRUCTN 6% SPECIALIZED CONSTRUCTN ACTIVITIES 9% STEEL ROLLING 6% TELECOMMUNIC ATIONS 7%

NPL BREAKDOWN

COMMERCIAL PROPERTY 6% DOMESTIC TRADE 12% HOTEL AND LEISURE 4% OIL - DOWNSTREAM - MARKETING 5% OIL - DOWNSTREAM

• TRADING

8% PERSONAL AND PROFESSIONALS 7% REAL ESTATE CONSTRUCTION 6% CAPITAL MARKET 7% SPECIALIZED CONSTRUCTION ACTIVITIES 6% OTHER PROF. ACTIVITIES 6% POWER GEN/ POWER PLANTS 2% OTHERS 22%

BREAKDOWN OF CREDIT PORTFOLIO

• Total Loans as at 2 0 1 4 FY w as N1 4 9 billion. Total Non-Perform ing Loans w as N3 .7 9 billion
• The Bank has continued to diversify its loan portfolio.
• Total Oil & Gas exposure ( upstream , m idstream and dow nstream ) is less than 1 8 % .
• There w as no breach of internal sectoral lim its.

1 7

Year on year im provem ent in Balance sheet trends

1 4 % CAGR in Assets, 1 6 % CAGR in Deposits; 2 7 % CAGR in Loans

• 50

100 150 200 250 300 350 400 450 2010 2011 2012 2013 2014 billions

TOTAL ASSETS

50 100 150 200 250 300 2011 2012 2013 2014 Billions

TOTAL DEPOSI TS

• 20

40 60 80 100 120 140 160 2010 2011 2012 2013 2014 billions

LOANS & ADVANCES

• 10

20 30 40 50 2010 2011 2012 2013 2014 billions

EQUI TY

1 8

The Bank has continued to im prove 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
• f

all credit processes to ensure proper tracking and reporting

• Growing

cyber threat has also warranted improved investment in anti-fraud and related tools

Managing Risk in W em a Bank

1 9

Risk Managem ent Metrics

2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 Gross Risk Assets (₦'billion) 7 0 .6 0 7 0 .1 0 8 3 .7 0 1 0 2 .7 0 1 5 2 .7 0 NPL (₦'billion) 3 7 .4 0 9 .7 0 1 1 .8 9 3 .9 8 3 .7 9 Provisions for Loan Loss (₦'billion) 3 2 .0 0 1 0 .0 0 9 .1 0 3 .9 8 3 .7 9 NPL Ratio ( % ) 5 2 .9 7 1 3 .8 3 1 4 .2 0 3 .8 7 2 .4 9 NPL Coverage Ratio ( % ) 8 5 .5 6 1 0 3 .0 9 7 6 .5 6 1 0 0 .0 0 1 0 0 .0 0 Cost of Risk ( % ) 3 5 .2 4 8 .0 8 5 .9 8 2 .0 1 1 .7

2 0

Key Perform ance Metrics

2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 Net I nterest Margin ( % ) 3 .7 2 6 .7 2 6 .4 4 7 .0 1 8 .2 7 Cost of Funds ( % ) 3 .1 2 3 .0 7 5 .4 2 5 .8 7 5 .2 1 Loan-to-Deposit Ratio ( % ) 3 1 .8 0 4 0 .8 1 4 2 .3 1 4 7 .0 2 5 7 .6 5 Capital Adequacy Ratio ( % )

• 1 3 .8 9
• 1 3 .5 0
• 1 6 .0 0

2 7 .0 0 1 8 .2 2 Liquidity Ratio ( % ) 8 7 .0 0 6 4 .0 6 4 .5 3 7 6 .6 1 3 2 .8 0 Cost to I ncom e Ratio ( % ) 6 0 .7 6 1 4 0 .1 9 1 4 2 .5 6 9 5 .1 5 8 7 .7 2 Earnings per share ( Kobo) 1 5 4

• 6 3
• 4 2

8 6 Net Assets Per Share (₦) 1 .1 6 0 .4 9 0 .1 0 1 .0 7 1 .1 3 Return On Average Equity ( % )

• 1 5 0 .6 4
• 3 7 .6 5
• 1 3 3 .5 8

9 .1 3 7 .2 7 Return On Average Assets ( % ) 7 .5 0

• 1 .7 8
• 2 .1 2

0 .6 8 0 .8 7

2 1

2 2 1 Overview of the Bank Section Financial Highlights 2 3 Outlook 4 Page 1 0 2 4

Outlook for the Nigerian Econom y in 2 0 1 5

Outcom e of the 2 0 1 5 General Elections W eakening Exchange Rates Dam pened Global Grow th Forecasts Adm inistration

• f the 2 0 1 5

Budget

Declining Oil Prices

Diversification

• f the Econom y

I m plem entation

• f the Reform

Agenda Passage of the Petroleum I ndustry Bill Com petition w ithin the Banking I ndustry

All- I nclusive Grow th

2 3

Overarching Goal Grow th Plan Specifics Enablers

W em a Bank Grow th Plan – “Project LEAP”

The Bank is on track for executing the Project LEAP transform ation plan ( 2 0 1 3 – 2 0 1 5 ) . To Efficiently Grow Market Share in Retail & SME Target Markets

I MPROVI NG EFFI CI ENCY

• Participate in high-yield

transactions

• Partner with Banks and other MFIs
• n syndications to take on more

volumes

• Use technology to drive down
• perating costs

GROW I NG 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 I MPROVE NETW ORK 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) I NCREASI NG CAPI TAL POSI TI ON

• Raise Tier-2 Capital ($250m)
• Raise Tier-1 buffer Capital
• Ensure efficient balance sheet

management to minimize capital charge REENGI NEERI NG W ORKFORCE FOR EFFECTI VENESS

• Recruit, equip and train high-

value talent

• Improve Performance

Management framework

• Recalibrate branches for better

service delivery REPOSI TI ONI NG THE W EMA BRAND

• Brand Repositioning program has

commenced

• Engage Shareholders and investing

public through transparent, consistent and convenient Investor Relations PRODUCTS AND SERVI CES CUTTI NG EDGE TECHNOLOGY HI GH VALUE TALENT

2 4

• Improve growth in retail deposits to keep cost of funds low.
• Leveraging mobile solutions and technology as our competitive edge

Low cost

funding

• 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

Efficiency

• Aggressively migrate customers to alternative platforms
• 100% increase in Card activation and PoS uptime

Alternate

Platform s

• Drive better operating margins
• Achieve improved ROEs
• Grow foreign partnerships and syndications

Perform ance 2 0 1 5 EXPECTATI ONS

2 5

Appendices

2 6

Experienced, Skilled and Diverse Board

1 2 3 4 5 6 7 8 9 10 11

1 . Adeyinka Asekun (Chairman) 2 . Segun Oloketuyi (MD/ CEO) 3 . Nurudeen Fagbenro (ED) 4 . Adem ola Adebise (ED) 5 . Moruf Oseni (ED 1 1 . Tina Vukor-Quarshie (Independent) 1 2 . Om obosola Ojo (Independent) 1 3 . Abolanle Matel-Okoh (Non-Exec) 1 4 . Babatunde Kasali (Non-Exec) 6 . W ole Akinleye (ED) 7 . Folake Sanu ( ED) 8 . Ade Adefioye (Non-Exec) 9 . Abubakar Law al (Non-Exec) 1 0 .Sam uel Durojaye (Non-Exec)

12 13 14

• Two Independent Directors
• Varied experience from Banking, Industry, Law and other relevant sectors
• Implementing strong governance and risk controls

2 7

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