Wema bank announces N150 billion capital raise amid strong first half of 2024 performance

Wema Bank has revealed plans to raise N150 billion through a combination of rights issuance, public offer, and private placement.

This Wema Bank capital raise was disclosed during the bank’s first half of 2024 investor and analyst conference call, where Executive Director Tunde Mabawonku detailed the strategy.

“We have obtained shareholder approval to raise N150 billion in qualifying capital,” Mabawonku stated, highlighting that the process is expected to begin by the end of the year and conclude by Q1 2025, aligning with regulatory timelines.

Currently, Wema Bank’s shareholders’ funds stand at N200 billion, with qualifying capital at N67 billion. The bank aims to meet its licensing requirements as a commercial bank with national authorization by raising the needed capital.

Discussing potential mergers, Mabawonku clarified that such discussions are premature, emphasising the bank’s current focus on capitalisation and regulatory compliance.

Wema Bank recently reported a remarkable 100.5% increase in gross earnings, reaching N178.63 billion for the first half of 2024, up from N89.09 billion in the same period of 2023. This growth is attributed to a 91% rise in interest income and a 155% surge in non-interest income.

The bank also recorded a significant 153.5% jump in profit before tax (PBT), which increased to N30.56 billion, surpassing its 5-year compound annual growth rate of 45%. This strong performance is underpinned by improvements in key financial ratios, including a Net Interest Margin (NIM) of 7.43%, up from 6.12% in 2023, indicating efficient management of interest-earning assets.

Additionally, Wema Bank’s Return on Average Equity (ROAE) remains strong at 36.16%, although slightly down from 39.28% in 2023. This continues to demonstrate the bank’s ability to generate substantial returns on shareholders’ equity.

Furthermore, the bank has improved its Non-Performing Loan (NPL) ratio to 3.69%, with the NPL coverage ratio increasing to 100%, reflecting enhanced loan portfolio quality.

Despite a broader decline in the banking sector, Wema Bank’s share price has gained 12.50% Year-to-Date, offering investors reasons for optimism. However, they must weigh the potential rewards against the risks associated with the upcoming capital raise.