Wema Bank Plc said its net interest income was N9.06bn, down from N9.71bn in the first half of last year, while profit before tax stood at N1.17bn, down from N1.70bn in H1 2014.
Its gross earnings were N20.87bn, up from N20.82bn in H1 2014, while other operating expenses dropped to N4.98bn from N5.04bn in the same period last year.
The lender, in a statement on Tuesday announcing its unaudited financial results for the first half of 2015, said its loans and advances were N134.57bn, down from N149.29bn as of December 2014, while deposits from customers stood at N234.10bn, down from N258.96bn as of December 2014.
It put its non-performing loan ratio at 2.9 per cent, compared to 2.5 per cent recorded in the first half of last year.
The bank said the harmonisation of the Cash Reserve Requirements on public and private sector deposits reduced liquidity with significant impact on margins from money market investments.
The Monetary Policy Committee of the Central Bank of Nigeria had in May harmonised the CRR on public and private sector deposits at 31 per cent, from 75 per cent and 20 per cent, respectively.
The Managing Director and Chief Executive Officer, Wema Bank, Mr. Segun Oloketuyi, was quoted in the statement as saying, “Given the tough operating environment in the first half of 2015 attributable to economic headwinds, regulatory restrictions and political uncertainty, the bank has been able to sustain its financial performance, albeit, on a lower level compared to the same period in 2014.
He noted that the first quarter of the year was characterised by election-related activities and political maneuvering with limited emphasis on economic matters, while the second quarter was largely characterised by the continued pressure on the currency, the tight monetary policy conditions and the low level supply of petroleum products.
Oloketuyi said, “All these issues affected consumer discretionary spending and indeed the growth in our retail volumes,” adding that due to the lack of economic policy clarity so far in 2015, investment decisions had been tentative.
“In addition, the CRR harmonisation has reduced liquidity with significant impact on margins from money market investments. We are confident that as the new administration settles into office, its policy thrust will become clearer, hence, enabling us to continue to make well-informed lending decisions, mitigate risk exposures and further expand our customer base.
“Despite the economic challenges, we have made appreciable progress in our transformation project. On May 2, 2015, Wema Bank unveiled a new corporate identity to reflect our new direction and strategic focus.”
The bank’s Chief Finance Officer, Tunde Mabawonku, said operationally, the bank had continued to efficiently deploy its assets.
He said, “Our loans to deposits ratio have moderated to 57.1 per cent, compared to 57.6 per cent as of December 2014, through a cautious approach to our lending, pending policy clarity from the new administration.
“The liquidity squeeze and tight monetary policy conditions affected our yields from money market investments. Technically, banks can only lend 39 per cent of available resources, as the CRR is 31 per cent and liquidity remains 30 per cent.
“We therefore used the first few months of the financial year to streamline our mix of deposits and funding sources. This has resulted in slightly smaller deposit liability volumes but a better cost of funds.”
Mabawonku foresees an improvement in economic activity and systemic liquidity once the “bail-out” talks are concluded and there is more clarity on the economic policy of the new administration, according to the statement.
He said, “Our expectation is that economic activities will pick up from August/September this year and the momentum will be sustained throughout the remaining months of the year.”
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