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FY2020 ResultsI N V E STO R / A N A LYSTS ’ P R E S E N TAT I O N
• This presentation contains or incorporates by reference “forward-looking statements” regarding the belief or currentexpectations of Wema Bank Plc, the Directors and other members of its senior management about the Bank’s businessesand 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 andassumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the controlof the Bank and are difficult to predict, that may cause actual results to differ materially from any future results ordevelopments expressed or implied from the forward-looking statements. Such risks and uncertainties include, but are notlimited 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 WemaBank should not be taken as a representation that such trends or activities will continue in the future. No statement in thispresentation is intended to be a profit forecast or to imply that the earnings of the Bank for the current year or future yearswill necessarily match or exceed the historical or published earnings of the Bank. Each forward-looking statement speaksonly as of the date of the particular statement. Wema Bank expressly disclaims any obligation or undertaking to releasepublicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Wema Bank’sexpectations with regard thereto or any change in events, conditions or circumstances on which any such statement isbased.
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Forward Looking Statements
Cautionary Note Regarding
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Content• The Operating Environment
• Overview of The Bank
• FY 2020 Performance Review
• Risk Management
• Capital and Funding
• 2021 Outlook and Strategy
• Appendix
4P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
The Operating Environment
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5P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
66.00
22.76
41.15 40.9551.80
38.60
35.16
36.19 35.74 35.37
Q4'19 Q1'20 Q2'20 Q3'20 Q4'20
Brent Crude Oil (US$/b) Exernal Reserves (US$'bn)
• Inflation surged all through the year, up from FY’2019 figures. Inflation figuresstarted the year at 12.13% and rounded off at 15.75%. This growth was drivenby high food prices, insecurity, introduction of higher electricity tariffs, upwardreview of PMS price, and the pass-through effect of the pandemic.
• GDP grew by 0.11% in Q4’2020, bringing an end to two consecutive quarters ofcontraction (Q2, -6.10% and Q3, -3.62%) and easing the country out of arecession.
• Foreign reserves started the year below the $40bn benchmark. Depressedcapital inflows and steadily reducing reserves led the CBN to adjust the currencytwice, resulting in a 24% depreciation of the value of the Naira.
• Yields on Treasury Bills across all tenures dipped steadily last year, following theCBN’s restriction of OMO securities investment to banks and foreign investorsalong with the decision to re-issue only a portion of the maturing OMOinvestment.
Operating Environment
362
360
460 465 470
365
387
387 386 400
Q4'19 Q1'20 Q2'20 Q3'20 Q4'20
Parallel Interbank
7.98%
3.32%2.13%
1.23% 0.22%
9.06%
4.31%2.82% 1.67% 0.38%
10.92%
6.06%
4.15%3.29%
1.03%
Q4'19 Q1'20 Q2'20 Q3'20 Q4'20
Average 91 days T/Bills yield (%) Average 1-year T/Bills yield (%)
Average 182 days T/Bills yield (%)
Inflation & GDP growth
Brent Crude & External Reserves
Parallel & Interbank
T/Bills yield
12.13% 12.30% 12.60% 13.20%15.75%
2.27% 1.87%
-6.10%-3.62%
0.11%
Q4'19 Q1'20 Q2'20 Q3'20 Q4'20
Inflation (Y-o-Y%) GDP growth rate (Y-o-Y%)
• COVID-19’s disruptive impact resulted in major shocks across the globaleconomic landscape. Global supply chains, consumer demand, and financialsystems were all impacted along with the attendant loss of life.
• A breakout of civil unrest and discontent was also felt across the globe, asepitomized in Nigeria’s #EndSARS protests in October. This also had negativeimpacts for business and the economy.
• Oil prices started the year with an upward trend but dipped sharply with theemergence of the global pandemic. Subsequent periods had a swing in prices asa result of agreements around oil production cuts between OPEC and Russia,and the price per barrel hit $51.27 at the end of the year as news of approvedvaccines made the rounds.
Global Economy
Domestic Economy
6P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Policy EnvironmentFeverish regulatory action to stay the fall of the Naira
• First Monetary Policy Committee (MPC) meetingfor the year, Cash Reserve Ratio (CRR) raised by500bp to 27.5%, all other parameters remainunchanged.
• Prohibition of registration of Forms M for theimportation of fertilizers, and of milk and itsderivatives (to all, save, six companies in the caseof the latter).
• CBN slashes interest rates on all applicableintervention facilities for 1-year effective March 1,2020.
• CBN suspends sale of FX to BDCs.
• MPR was maintained at 13.50% by the MPCalongside other parameters.
• CBN debits banks N1.4trn for failing to meet CRRtargets.
• CBN adjusts exchange rate for import dutypayment from N326/$1 to N361/$1.
• MPR reduced to 12.50%, all other rates retained.
• CBN approves regulatory forbearance for therestructuring of credit facilities in the OFIsubsector.
• CBN expands scope of regional banks in Nigeria, givescompliance timeframe.
• The apex bank adds Maize to the “41 banned list”.
• CBN reserves 60% of N220 billion MSMEs fund forwomen.
• CBN removes “third parties” from buying forex routedthrough Form M.
• MPC reduced MPR to 11.5%, asymmetric corridors werealso reduced to +100/-700 basis points around the MPRwhile other parameters were retained.
• CBN announces that it will pursue expansionarymonetary policies to fight recession.
• CBN retains MPR at 11.5% alongside allother parameters.
• CBN provides clarification on theoperations of Domiciliary accounts
• The CBN directs beneficiaries to receiveforeign transfers through IMTOs in foreigncurrency either in cash or paid into theirdomiciliary accounts.
• The Apex Bank issues a new licensingcategorization for Nigerian Paymentsystem.
7P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Key Takeaways
The operating environment (global anddomestic) in 2020 was dominated by theCOVID-19 pandemic, which had widereaching implications for sectors rangingfrom Oil & Gas to Tourism & Hospitality.A series of fiscal and monetary reactionsintended to curb the impact of thispandemic and save lives created aturbulent business environment fororganizations, who were also scramblingto adjust to the “New Normal”.
The Federal Government, in a bid to offersupport and bolster economic activity,launched a number of intervention fundsand suspended interest payments onstate government debts.
As a reaction to the effects of thepandemic, the fiscal and monetaryauthorities rolled out a series of policiesintended to mitigate the worst of theexpected shocks. Notably, the CentralBank dropped the Monetary Policy Rate(MPR) first from 13.5% to 12.5%, andthen from 12.5% to 11.5% - a rate whichit has maintained since Q3 2020.
8P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s www.wemabank.com
Overview of The Bank
9P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Over
350,000Shareholders
₦81.38bn in Total Earnings
₦979.92bnin Total Assets
560,000+ accounts
opened
35bn transactions
executed
170,000+ cards issued
Listings
OW
NE
RS
HIP
CH
AN
NE
LS
Overview of the Bank
GO
VE
RN
AN
CE
Sustainability Partnerships
Bbb- (Stable)
Bbb- (Stable)
Bbb- (Stable)
Board Members: 12
Non- Executives: 7
Executives: 5
2.57mnAccounts
394ATMs
157Branches
57%
43%
4,591Agency Banking
Partners
1,251Professional Staff
12,468POS terminals
Awards
10P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Transaction Value (in ₦’ billions)
Transaction Volume (in ₦’ millions)
6.480.17 0.40
39.74
23.7516.80
0.16 0.98
37.2843.14
ALAT (Mobile) ALAT (Web) ATM CARDS* POS USSD
FY'19 FY'20
206.20
5.19 89.55
311.37
100.15 169.56
684.99
7.09
167.28
377.11
131.15
290.62
ALAT (Mobile) ALAT (Web) ATM CARDS POS USSD
FY'19 FY'20
Channels Performance
*Number of cards: 312,283 (FY’19); 364,381 (FY’20)
Growth recorded across the Bank’s channels, in line with our digital aspirations.
438.61
655.75
11P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
We have offered a robust platform for SMEs; Gaming & Entertainment
Developing new capabilities
12P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Initiatives Objective
Internal Readiness
• Our disaster recovery sites were put on heightened alert. Business continuity plans to preserveessential business functions and ensure business continuity were also revamped & aligned withthe new health focus.
• The Bank focused on ensuring that there was sufficient liquidity to meet daily operations andregulatory requirements ensuring a deferral to liquidity considerations over profitability ones.
• The bank identified opportunities for revenue growth in new business areas, particularly inindustries like pharmaceuticals and healthcare, supporting with loans and transactional services.
• The Bank stress tested its balance sheet frequently using various scenarios.
• We prepared internally for the possible devaluation of the Naira and increased defaults in the Oil& Gas and other sectors. Finally, we put in place mechanisms to insulate us from increased non-availability of funds from the Central Bank.
• The Bank reviewed credit (Naira & FX) exposures to covid-19 impacted sectors & others –hospitality, aviation, etc. and worked with the customers to mitigate impact.
People Readiness
• We ensured that all clients were engaged actively by our relationship managers to identify painpoints and work to help with issue resolution during the period.
• During the lockdown period, it was essential to support customers by ensuring that all onlinecapabilities enjoyed 100% uptime, including POS and mobile banking platforms. The bank focusedon ensuring the successful execution of this target.
• We put in place the recommended precautionary measures and infrastructure required to combatthe spread of the virus across all our locations.
• We reskilled and re-tooled our workers in line with the requirements of the new ways of working.We also rolled out a Remote Working policy for our staff and limited in-office working days.
Wema Bank’s response to the COVID-19 pandemicWe created a “New-Normal” squad
13P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Comments from Social Media
Wema Bank response to the COVID-19 pandemic…/2We continued to operate responsibly while supporting our customers
Lagos Ogun
Oyo Osun
14P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s www.wemabank.com
FY 2020 PERFORMANCE REVIEW
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15P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Earnings, Profit, Capital FY’2020 FY’2019 FY’2018
Gross earnings ₦81.38bn ₦94.89bn ₦71.53bn
PBT ₦5.93bn ₦6.76bn ₦4.80bn
PAT ₦4.58bn ₦5.20bn ₦3.33bn
CAR 15.01% 13.60% 18.01%
EPS 11.90k 13.50k 8.6k
Revenue Generation
Deposits ₦804.87bn ₦577.28bn ₦369.20bn
Loan (Net) ₦360.08bn ₦289.24bn ₦252.20bn
Interest income ₦64.55bn ₦70.68bn ₦57.63bn
Non-Interest income ₦16.83bn ₦24.21bn ₦13.89bn
Operating Efficiency
Cost-to-Income 85.89% 84.66% 87.16%
Yield on Assets 12.01% 16.47% 17.75%
Operating Expenses ₦36.11bn ₦37.30bn ₦32.58bn
Margin & Asset Quality
Net interest margin 5.74% 6.42% 7.08%
ROAE (annualized) 10.03% 14.71% 9.43%
ROAA (annualized) 0.61% 1.02% 1.09%
NPL (%) 4.70% 7.38% 4.98%
Loan to deposits 43.24% 48.61% 68.31%
Interest Coverage ratio 130.64% 100.84% 120.46%
Liquidity ratio 31.04% 32.37% 32.05%
2020 Financial Year Highlights
16P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
14.24%
Gross Earnings of N81.38 billion, a YoYdecline of 14.24% from N94.89 billion inFY 2019, on the back of a decline of8.67% and 30.48% in Interest Incomeand Non-Interest Income respectively.
Gross earnings
Operating Expense closed at N36.11billion, a drop of 3.19% (FY 2019;N37.30billion). This is on the back of aconscious effort to reduce cost andimprove cost to income ratio.
Net Loans and Advances ofN360.08illion a YoY growth of 24.49%(FY 2019; N289.24billion).
Profit Before Tax (PBT) of N5.93 billion, adecline of 12.25% YoY from N6.76 billionin FY 2019.
Customer Deposit of N804.87 billion, aYoY growth of 39.42%, (FY 2019; N577.28billion), with an improved CASA to termdeposit mix.
Total Asset of N979.52billion, a YoYgrowth of 36.83% (FY 2019; N715.87billion ).
Profit Before Tax
12.25%
3.19%
Operating expenses
Total Assets
36.83%
Customer Deposits
39.42%
24.49%
Net Loans and Advances
Performance YoY affected by the lull in business
2020 Financial Year Highlights
17P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
45.79
65.2771.53
94.89
81.38
FY'16 FY'17 FY'18 FY'19 FY'20
Gross Earnings (N’bn)
Performance YoY affected by the lull in business
Earnings Trend
Interest Income
74%
Non Interest
Income 26%
Interest
Income 80%
Non Interest
Income 20%
Income Mix (FY’20) Income Mix (FY’19)
➢ Gross Earnings of ₦81.38billion, a decline of 14.24% YoY (FY’19 ₦94.89billion), driven by 8.67% and 30.48%drop in interest income and non-interest income, respectively.
➢ Gross Earnings for the year is a mix of Interest Income and Non-Interest Income of 80% and 20%respectively. (FY 2019: Interest Income 74%, Non-Interest Income: 26%).
COMMENTS
18P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Interest Income (N’bn)
Performance YoY affected by the lull in business
Earnings Trend…contd.
➢ Interest Income down by 8.67% to N64.55billion from N70.68billion in FY’19, drivers include:• Money Market Investment up by 107.80% y/y to N3.41billion From N1.64billion in FY’19.• Interest on Loans and Advances down by 13.18% y/y to N53.70billion from N61.84billion in FY’19• Investment Securities up by 3.51% y/y to N7.45billion from N7.20billion in FY’19.
➢ Non-Interest Income of N16,83billion from N24,21billion in FY’19, a decline of 30.48%, the drivers are:• Net Fees and Commission growth of 5.29% y/y to N8.42billion from N8.00billion in FY 2019. While there was growth in credit related and other fees,
electronic product fees declined by 30.58% (FY’20: N2.61billion; FY 2019: N3.76billion), on the back of CBN reviewed charges and fees for bankingservices which took effect in January 2020 and reduced activities during the year occasioned by the Covid-19 lockdown.
• Net Trading Income down y/y to N3.94billion from N14.79bn in FY 2019, this is due to reduced earnings on Treasury Bills (FY’20: N3.60billion; FY 2019:N14.52billion),
COMMENTS
Non-interest Income (N’bn)
0.61 0.15 1.31 1.64 3.41
38.29 45.01
51.01 61.84 53.70
5.14
7.92 5.32
7.20 7.45
44.04
53.07 57.63
70.68 64.55
FY'16 FY'17 FY'18 FY'19 FY'20
Money Market Investment Loans & Advances Investment Securities
6.19 5.64 6.51 8.00 8.42
2.124.98
5.53
14.79
3.941.49
1.571.86
1.42
4.47
FY'16 FY'17 FY'18 FY'19 FY'20
Net Fees & Commission Net Trading Income Others
9.8012.20
13.8916.83
24.21
19P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Cost of funds improved as interest rates dropped
Interest Expense
➢ Interest Expense dropped by 24.60% y/y, despite the significant growth in deposit (39.42% y/y), driven by lowerinterest rate on deposit.
➢ Cost of funds dropped to 4.33% in FY 2020 from 6.90% in FY 2019
➢ Net Interest Income grew to N30.85billion y/y from N25.98billion in FY 2019.
COMMENTS
Interest Expense (N’bn) Net Interest Income (N’bn)
25.77
32.8930.00
44.70
33.7
FY'16 FY'17 FY'18 FY'19 FY'20
18.68 19.77
27.02 25.98
30.85
FY'16 FY'17 FY'18 FY'19 FY'20
20P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
FY'2020 FY'2019 YoY
In thousands of Nigerian Naira
Personnel expenses 14,082,228 14,870,989 -5.30
AMCON Levy 3,999,690 2,759,640 44.94
Depreciation and amortization 3,136,273 3,316,846 -5.44
NDIC Premium 2,400,075 1,742,504 37.74
Repairs and maintenance 1,933,390 1,903,682 1.56
Advertising and marketing 1,652,720 1,266,180 30.53
Technology and alternative channels 1,468,995 2,548,421 -42.36
Service charge 933,525 1,143,074 -18.33
General administrative expenses 893,645 1,078,029 -17.10
Other Professional fees 714,450 1,024,931 -30.29
Transport & Communications 474,971 540,394 -12.11
Security expenses 437,702 601,834 -27.27
Diesel Expenses 430,057 568,355 -24.33
Printing and stationery 414,028 438,277 -5.53
Others 3,141,684 3,499,990 -10.24
Total 36,113,433 37,303,146 -3.19
10.35 10.0012.34
14.87 14.08
2.31 2.322.62
3.32 3.14
12.13 14.45
17.62
19.1218.89
FY'16 FY'17 FY'18 FY'19 FY'20
Personnel Expenses Dep & Amortisation Statutory & Other Expenses
24.79 26.77
32.58
37.30 36.11
➢ Efforts towards cost optimization yielded positive results as total operating expenses reduced by 3.19% toN36.11billion y/y from N37.30billion in FY 2019 despite the increase in inflation (Dec’20 inflation: 15.75%).
➢ AMCON Levy & NDIC Premium increased y/y by 45% and 38% respectively.
➢ Cost to income ratio (CIR) remained flat at 85.89% (FY 2019: 85%).
COMMENTS
Operating Expenses (N’bn)
Continuous efforts in cost reduction strategies
Efficiency
21P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
6.57 6.61
7.08
6.42
5.74
FY'16 FY'17 FY'18 FY'19 FY'20
15.65
17.76 17.7516.47
12.01
FY'16 FY'17 FY'18 FY'19 FY'20
➢ Yield on Asset down to 12.01% from 16.47% in FY 2019
➢Net Interest Margin (NIM) down to 5.74% from 6.42% in FY 2019
COMMENTS
Yield on Assets (%) Net Interest Margin (%)
Margin still dependent on market rates
Efficiency & Margin Analysis
22P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
27%
15%53%
5%
DEMAND SAVINGS TIME DOM
24%
7%
38%
31%
Retail Corporate Treasury Commercial/SME
283254
369
577
805
FY'16 FY'17 FY'18 FY'19 FY'20
37%
11%
35%
17%
Retail Corporate Treasury Commercial/SME
Customer Deposits (N’bn) Deposit Mix (FY‘19) Deposit Mix (FY'20)
Deposit Type (FY ‘19) Deposit Type (FY ‘20)
➢ Customer Deposits grew by 39.34% to N804.87billion fromN577.28 billion in FY 2019. CASA balances increased to47% of total deposit from 39% in FY 2019.
➢ Deposit mix improved, but still below the ideal structure
➢ Cost of funds down to 4.33% in FY 2020 from 6.90% in FY2019.
23%
13%
61%
3%
DEMAND SAVINGS TIME DOM
Deposit growth and mix improved
Deposits Analysis
COMMENTS
23P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s www.wemabank.com
Risk Management
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24P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
225.47272.3
314.00 336.15 333.23
36.12
29.07
35.9837.06 41.81
FY 2018 FY 2019 H1 2020 Q3 2020 FY 2020
LCY FCY
Total Loans by Segment – 2020FY Total Loans by Segment –2019FY
261.59301.37
349.98373.21 375.04
COMMERCIAL /SME
43%
CORPORATE
43%
PUBLIC
SECTOR
6%
INDIVIDUAL
8%
Gross loans and advances to Customers (N’bn)
Loan Portfolio Analysis
➢ Gross loans and advances increased by 24.45% y/y(From N301.37billion to N375.04billion)
➢ NPL ratio closed at 4.70% (FY 2019; 7.38%)
COMMENTS
CORPORATE
48%
PUBLIC
SECTOR
5%
INDIVIDUAL
8%
COMMERCIAL /SME…
25P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
4Others include Admin services, human health, ICT, water supply sewage,Arts, entertainment and recreation, Human health and social networks
➢ The Oil and Gas exposure consists of downstream trading entities and an upstreamsyndicated loan.
➢ General Sector comprises mainly all the personal loans, religious organizations, NGOsand logistic companies, while “General Commerce’ Sector covers loans to commercialbusinesses that deal in general goods.
➢ Construction Sector contains loans that are meant for contract-based constructionwhere repayments are obtained from contract payments whereas, Real Estate Sectorcovers loans for commercial and residential real estate where repayments come fromrents, sales and leases proceeds.
COMMENTS
Transportationand Storage
6% Power andEnergy
Professional, Scientific & Technical Services
3% 2%
Manufacturing8%
Oil & Gas
16%
Government
6%
General Commerce
17%
General
14%
Finance & Insurance
1%Education2%
Capital Market
2%
Agriculture, Forestry &
Fishing
3%
Construction
14%
Real Estate Activities
6%
Loan Distribution By Sector – FY’20
Well diversified Loan Book
Loan Portfolio Analysis
SECTOR FY 2020 FY 2019
(Nbn) (Nbn)
OIL & GAS 60.47 57.73
GENERAL COMMERCE 62.41 49.94
CONSTRUCTION 54.02 42.47
GENERAL 53.81 26.28
TRANSPORTATION & STORAGE 21.48 24.14
REAL ESTATE ACTIVITIES 22.85 22.54
GOVERNMENT 23.80 17.12
MANUFACTURING 30.37 16.77
POWER & ENERGY 6.19 15.36
AGRIC, FORESTRY & FISHING 10.10 11.72
PROFESSIONAL SCIENTIFIC & TECH 10.12 8.82
FINANCE & INSURANCE 2.50 3.16
EDUCATION 7.27 2.46
CAPITAL MARKET 6.18 0.40
OTHERS 3.47 2.46
GRAND TOTAL 375.04 301.37
26P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
SECTOR FY 2020 (%) FY 2019 (%)
(Nbn) (Nbn)
OIL & GAS 0.09 0.51 1.08 4.85
GENERAL COMMERCE 6.88 39.12 7.45 33.49
CONSTRUCTION 0,33 1.89 3.63 16.31
GENERAL 4.77 27.14 3.94 17.73
TRANSPORTATION & STORAGE 1.46 8.31 0.22 1.00
REAL ESTATE ACTIVITIES - - 2.83 12.73
GOVERNMENT 0.03 0.15 0.04 0.17
MANUFACTURING 1.63 9.29 0.49 2.22
POWER & ENERGY - - - -
AGRIC, FORESTRY & FISHING 0.75 4.28 0.65 2.92
PROFESSIONAL SCIENTIFIC & TECHNICAL 0.79 4.47 1.50 6.73
FINANCE & INSURANCE 0.08 0.47 0.14 0.62
EDUCATION 0.07 0.39 0.23 1.05
CAPITAL MARKET - - - -
OTHERS 0.70 3.97 0.04 0.18
GRAND TOTAL 17.59 100.00 22.24 100.00
Low Non-Performing Loans and Adequate Coverage
NPL Portfolio Analysis Net Loans and Loan to Deposit Ratio
227 216252
289
360
0
50
100
150
200
250
300
350
400
FY'16 FY'17 FY'18 FY'19 FY'20
0%
20%
40%
60%
80%
100%
120%
140%
Net Loans LDR
5.07%
3.52%
4.98%
7.38%
4.70%
0%
20%
40%
60%
80%
100%
120%
140%
0%
1%
2%
3%
4%
5%
6%
7%
8%
FY'16 FY'17 FY'18 FY'19 FY'20
NPL Coverage Ratio
FY 2020 (N’mn) 2019 FY (N’mn)
LCY Gross Loans 333,230 272,,302
FCY Gross Loans 41,809 29,066
Total 375,039 301,368
LCY NPLs 17,593 22,168
FCY NPLs 5.41 76
Total 17,598 22,244
Asset Quality
27P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s www.wemabank.com
Capital & Funding
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28P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
2020 FY
N’m
2019 FY
N’m
Share Capital 19,287 19,287
Share Premium 8,698 8,698
Retained Earnings 7,104 3,254
Other Reserves 24,053 23,961
Total Equity 59,142 55,161
Shareholders Funds (N’mn)
Funding Sources
The Bank is a commercial bank with national authorization license at 10%.
Capital Adequacy Ratio (N’m)
Total Regulatory Capital
Total Risk Weighted Assets 278,133,743
Capital Adequacy Ratio 15.01%
41,760,881
48.5 49.6 51.8 55.2
59.1
FY'16 FY'17 FY'18 FY'19 FY'20
Total Equity (N’bn)
Customer Deposit , 82%
Current Tax
Liabilities, 0%
Other borrowed
Funds, 8%
Lease Liabilities,
0% Other Liabilities,
4%
Shareholders
Fund, 6%
Capital Ratio & Funding
COMMENTS
➢ Capital Adequacy Ratio at 15.01% is above the10%regulatory requirement for commercial banks(CAR FY 2019; 13.60%)
➢ Total Equity has grown YoY by 7.22% toN59.14billion
29P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Capitalization and Liquidity
➢ Capital Adequacy and Liquidity ratios above the regulatory requirements of 30% (for Liquidity) and15% (for Capital adequacy Ratio).
➢ Capital base predominately made up of Tier I (core capital) which consists of share capital andreserves.
COMMENTS
Liquidity & Capital Adequacy Ratio Capital Mix
82.38%86.03%
74.74% 75.00% 75.02%
17.62%13.97%
25.26% 25.00% 24.98%
FY'16 FY'17 FY'18 FY'19 FY'20
Tier I TierII
30.91%
22.11%
32.05% 32.37%30.04%
11.07%14.32% 15.13%
13.60%15.01%
FY'16 FY'17 FY'18 FY'19 FY'20
Liquidity Capital Adequacy Ratio
30P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
7.0
5.8
8.6
13.5
11.9
FY'16 FY'17 FY'18 FY'19 FY'20
EPS (Kobo)Comment
• Earnings Per Share (EPS) has grown over the years, ithowever dipped in FY 2020 to 11.90k from 13.50k in FY2019.
• The bank has recommended a dividend payment of 4kobo per share for FY 2020 (FY 2019; 4kobo per share),in line with the Board’s approved dividend policy. Thistranslates into a dividend yield of 6%. This will be the3rd consecutive year that the bank has paid dividends.
Payment of dividends for the 3rd consecutive year
Earnings Per Share
31P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Earnings, Profit, Capital Q1’2021 Q1’2020 FY’2020
Gross earnings ₦19.37bn ₦20.78bn ₦81.38bn
PBT ₦1.51bn ₦1.13bn ₦5.93bn
PAT ₦1.30bn ₦0.98bn ₦4.58bn
CAR 14.75% 11.60% 15.01%
EPS 13.60k 10.00k 11.90k
Revenue Generation
Deposits ₦795.54bn ₦596.44bn ₦804.87bn
Loan (Net) ₦367.69bn ₦289.24bn ₦360.08bn
Interest income ₦16.32bn ₦16.89bn ₦64.55bn
Non-Interest income ₦3.05bn ₦3.88bn ₦16.83bn
Operating Efficiency
Cost-to-Income 87.02% 88.74% 88.89%
Yield on Assets 10.04% 13.47% 12.01%
Operating Expenses ₦10.11bn ₦8.90bn ₦36.11bn
Margin & Asset Quality
Net interest margin 5.90% 5.41% 5.74%
ROAE (annualized) 9.98% 8.23% 10.03%
ROAA (annualized) 0.59% 0.58% 0.61%
NPL (%) 3.78% 7.38% 4.70%
Loan to deposits 44.70% 51.59% 43.24%
Interest Coverage ratio 189.14% 100.52% 130.64%
Liquidity ratio 19.69% 11.17% 31.04%
Q1’2021 Financial Year Highlights
32P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Stable & Consistent Performance
421 387489
716
980
FY'16 FY'17 FY'18 FY'19 FY'20
227 216252
289
360
FY'16 FY'17 FY'18 FY'19 FY'20
283 254
369
577
805
FY'16 FY'17 FY'18 FY'19 FY'20
45.79
65.2771.53
94.89
81.38
FY'16 FY'17 FY'18 FY'19 FY'20
Gross Earnings (N’bn) Customer Deposits (N’bn)
Total Assets (N’bn) Net Loans & Advances (N’bn)
33P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
2021 Outlook & Strategy
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34P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Focus will be on economic expansion and curtailing inflationary pressures
Economic Outlook
Inflation –
• Inflation inched above 18.1% in March
2021. This will further exacerbate
issues with consumer buying power.
• Prices will continue to rise in 2021.
Oil Prices, Production–
• Despite the increase in crude oil prices,
Nigeria isn’t producing or selling enough
crude to plug revenue shortfalls and grow
foreign reserves significantly.
Exchange Rate Policy, External
Reserves and Capital Flows –
• We are seeing an increasing
divergence of the forex rates and
the likely devaluation of the Naira.
This will continue all year.
Interest Rates –
• Moving past the low rates of Q1 2021,
we expect to see an upward trend
over the rest of the year as the CBN &
FG start to position to attract external
& domestic funding.
Trade –
• We expect improvements in foreign trade
figures, as demand conditions improve across
the globe.
• Foreign investment inflows will be higher than
the US$9.7 billion recorded in 2020 but below
the pre-COVID-19 level of US$24 billion.
Security -
• The significant insecurity issues
across the country will continue to
heighten all year in the run up to
the 2023 elections.
The need to drive growth and equally curtail the pace of inflationary pressure will put the CBN in a dilemma to either raise Monetary Policy Rates to curtail inflation or continue to hold MPR low to support growth.
35P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s Source: Overview of the World Economic Outlook Projections
-7.0
-1.8 -1.9
-9.9-8.2
2.3
-4.9-3.5 -3.3
2020
2021
2022
Most of the large economies will return to growth in 2021, which will help drag other economies along.
Economic Outlook
3.1 2.53.4
5.3 5.8
8.4
3.6
6.4 6.0
2.0 2.3
4.0
5.14.2
5.6
3.4 3.54.4
36P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
We have set our aspiration to becomethe Dominant Digital Banking Platform in
Nigeria
Strategic Overview – 2020-2023
37P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
37
To become the Most Dominant Digital Banking Platform in Nigeria
Digital Innovation
Optimize the balance sheet, improve
deposit, increase capital to build head room for more asset
creation and strengthen the bank
against shocks
Balance Sheet
Optimization
Customer Growth
& Sales
Optimization
Ecosystem
Development
Customer
Experience
Transformation
Data & Intelligence Talent &
Culture
Back/Middle Office
DigitizationInorganic
Growth
Increase active customer base,
review our value propositions,
reactivate dormant customers, acquire
new customers both traditionally and digitally, leverage analytics, to push
product penetration and alternative
channel migration
Become the bank of choice for fintech and technology start-ups
for technology, business and banking services through an open architecture;
Roll out digital offerings to the African Market
To become a market leader in
customer experience and service delivery,
build service design capabilities,
revamp existing customer journeys
and rebuild customer support
and issue resolution
architecture
Design and deploy the right architecture and infrastructure to drive the bank’s data
aspirationsDrive the skills and
culture to ensure that data and insights are embedded into the bank’s day to day operations and
engagement with customers
Build world class, highly engaged
workforce with best in class employee
value propositions, recruitment, learning
and performance management
processes; Ensure business
sustainability by building leadership capabilities across the enterprise to
drive strategy execution and culture change
Ensure platform reliability and stability
to prevent revenue losses; aggressively pursue middle and
back-office automation and
digitization to increase efficiency
and reduce associated costs;
drive cost governance and controls across
the enterprise
Actively seek opportunities to acquire viable
fintechs and other small FIs to boost
customer base and transactions;
Explore an opportunity for
M&A with another Commercial Bank
Driving Growth through Digital Capabilities in the long term…..
Strategic Thrust (2020-2023)
38P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Appendix
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39P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Wema Bank Plc
Consolidated and Separate Financial Statements
For the period ended 31st December, 2020
Statement of Profit or loss and other Comprehensive Income
In thousands of Nigerian Naira 12 Months9 Months12 Months 12 Months 12 Months
31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19
Gross Earnings 81,382,795 94,890,127 79,876,995 93,389,811
Interest income 64,552,522 70,682,043 63,046,722 69,181,727
Interest expense (33,702,510) (44,696,360) (32,189,452) (43,197,658)
Net interest income 30,850,012 25,985,683 30,857,270 25,984,069
Net impairment loss on financial assets (5,635,165) (6,130,600) (5,635,165) (6,130,600)
Net interest income after
impairment charge for credit losses 25,214,847 19,855,083 25,222,105 19,853,469
Net gain on FVTPL investment securities 326,274 234,124 326,274 234,124
Net fee and commission income 8,422,108 7,998,793 8,422,108 7,998,793
Net trading income 3,940,031 14,789,480 3,940,031 14,789,480
Other income 4,141,860 1,185,687 4,141,860 1,185,687
16,830,273 24,208,084 16,830,273 24,208,084
Operating income 42,045,120 44,063,167 42,052,378 44,061,553
Personnel expenses (14,082,228) (14,870,989) (14,082,228) (14,870,989)
Depreciation and amortization (3,136,273) (3,316,846) (3,136,273) (3,316,846)
Other operating expenses (18,894,932) (19,115,311) (18,887,354) (19,102,890)
Profit before tax 5,931,687 6,760,021 5,946,523 6,770,828
Income tax expense (1,354,306) (1,560,080) (1,354,306) (1,560,080)
Profit for the year 4,577,381 5,199,940 4,592,217 5,210,748
BankGroup
Statement Of Profit Or Loss And Other Comprehensive Income
40P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Statement of Financial Position 31 December 2020
Consolidated and Separate Financial Statements
For the period ended 31st December, 2020
Statement of financial Position
31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19
In thousands of Nigerian Naira
Cash and cash equivalents 97,524,936 65,974,273 97,527,858 65,967,028
Restricted Deposit with CBN 246,974,959 137,392,701 246,974,959 137,392,701
Pledged assets 27,454,662 26,925,527 27,454,662 26,925,527
Investment securities:
Fair value through other comprehensive income 56,580,275 1,793,543 56,581,275 1,794,543
Fair Value through profit or loss 78,225,951 105,164,284 78,225,951 105,164,284
Held at amortised cost 48,992,774 43,142,925 38,052,786 32,234,960
Loans and advances to customers 360,076,079 289,239,870 360,076,079 289,239,870
Investment properties 38,388 39,330 38,388 39,330
Right of Use 621,528 509,963 621,528 509,963
Property and equipment 21,517,323 20,637,634 21,517,323 20,637,634
Intangible assets 1,391,549 974,069 1,391,549 974,069
Other assets 21,883,615 4,879,789 21,883,615 4,879,789
Deferred tax assets 18,236,111 19,195,906 18,236,111 19,195,906
979,518,151 715,869,814 968,582,084 704,955,604
Deposits from banks - 3,638,400 - 3,638,400
Deposits from customers 804,873,392 577,283,469 804,873,392 577,283,469
Lease Liabilities 22,875 72,584 22,875 72,584
Current tax liabilities 394,511 905,364 394,511 905,364
Other liabilities 41,562,149 30,039,084 41,522,098 29,996,610
Other borrowed funds 73,523,471 48,770,306 62,416,375 37,702,326
920,376,398 660,709,207 909,229,251 649,598,753
EQUITY
Share capital 19,287,233 19,287,233 19,287,233 19,287,233
Share premium 8,698,230 8,698,230 8,698,230 8,698,230
Regulatory risk reserve 5,536,119 7,577,698 5,536,119 7,577,698
Retained earnings 7,103,647 3,254,018 7,314,727 3,450,262
Other reserves 18,516,524 16,343,427 18,516,524 16,343,427
EQUITY ATTRIBUTABLE TO 59,141,754 55,160,607 59,352,833 55,356,851
EQUITY HOLDERS OF THE BANK
TOTAL LIABILITIES AND EQUITY 979,518,152 715,869,813 968,582,084 704,955,604
Group Bank
41P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Consumer Lending
RETAIL BANKING
DEPOSIT LOANS PBT
2.54 million+Customers
Retail Focused Customer Base
₦194.59billionDeposits
₦29.96billionLoans
₦1.13billionPBT
24% 8% 19%
Large corporates, Multinationals, Energy, Telecoms, Maritime etc.
CORPORATE BANKING
DEPOSIT LOANS PBT
450+Customers
₦500m +Turnover
₦330.32billionDeposits
₦162.10billionLoans
₦2.48billionPBT
41% 43% 42%
Streamlined products that provides for the heartbeat of the Nigerian Economy
SMALL AND MEDIUM SCALE ENTERPRISES
DEPOSIT LOANS PBT
78,000+Customers
under ₦250mTurnover
₦21.66billionDeposits
₦5.84billionLoans
₦0.51billionPBT
3% 2% 9%
All Government Parastatals
PUBLIC SECTOR
DEPOSIT LOANS PBT
Federal, State and Local Governments
Ministries, Departments & Agencies
₦51.66billionDeposits
₦23.80billionLoans
₦0.64billionPBT
6% 6% 11%
Curated Products for Mid Size Companies
COMMERCIAL BANKING
DEPOSIT LOANS PBT
300+Customers
₦250- 500mTurnover
₦206.64billionDeposits
₦153.36billionLoans
₦1.19billionPBT
26% 41% 20%Business Segmentation
42P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
Slight changes on the Board……
Ademola AdebiseManaging Director/CEO
Abubakar LawalNon-Executive Director
Omobosola Ojo
Independent Non-Executive
Moruf OseniDeputy Managing Director
Wole AkinleyeExecutive Director
Abolanle Matel-OkohNon-Executive Director
Babatunde KasaliChairman
Adebode AdefioyeNon-Executive Director
Folake SanuExecutive Director
Samuel DurojayeNon-Executive Director
Ajimisinmi Oluwole Executive Director
Ibiye EkongIndependent Non-Executive
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• With effect from August 2020,
Tina Vukor Quashie
(TVQ) an independent Non-
Executive Director, resigned
from the services of the bank.
• Another Independent Non-
Executive Director, Mrs. Ibiye
Ekong was appointed.
• With effect from July 2020, Mr.
Oluwole Ajimisinmi was
appointed as an Executive
Director. Prior to the role, he
was the Company Secretary &
Legal Adviser of the bank for 9
years. He has over 25 years of
cognate experience with more
than 15 years at Senior to
Executive Management.
43P r e s e n t a t i o n t o I n v e s t o r s & A n a l y s t s – 2 0 2 0 F u l l Y e a r R e s u l t s
• This presentation contains or incorporates by reference “forward-looking statements” regarding the belief or currentexpectations of Wema Bank Plc, the Directors and other members of its senior management about the Bank’s businessesand 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 andassumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the controlof the Bank and are difficult to predict, that may cause actual results to differ materially from any future results ordevelopments expressed or implied from the forward-looking statements. Such risks and uncertainties include, but are notlimited 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 WemaBank should not be taken as a representation that such trends or activities will continue in the future. No statement in thispresentation is intended to be a profit forecast or to imply that the earnings of the Bank for the current year or future yearswill necessarily match or exceed the historical or published earnings of the Bank. Each forward-looking statement speaksonly as of the date of the particular statement. Wema Bank expressly disclaims any obligation or undertaking to releasepublicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Wema Bank’sexpectations with regard thereto or any change in events, conditions or circumstances on which any such statement isbased.
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Forward Looking Statements
Cautionary Note Regarding
After COVID - 19 What Next? 44
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Q & A
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