Banking
GCR Affirms Wema Bank BBB-(NG) Rating
By Dipo Olowookere
Global Credit Ratings has affirmed the national scale ratings assigned to Wema Bank Plc of BBB-(NG) and A3(NG) in the long-term and short-term respectively; with the outlook accorded as Stable.
A statement issued by the local rating agency explained that it affirmed the rating because the mid-sized bank has recorded some improvements lately.
It said Wema Bank was presently focusing on deepening its market share particularly within the retail banking segment through increased presence and digitisation.
The lender’s risk-weighted capital adequacy ratio (CAR) improved to 14.3 percent at FY17 (FY16:11.1 percent), supported by a reduction in risk weighted assets (particularly contraction in loans and advances book). Cognisance is taken of the capital reorganisation scheme carried out by the bank during the year, which involved writing off negative retained earnings as well as a portion of impaired assets against the share premium account.
Consequently, the bank expects a more efficient balance sheet. Going forward, the bank plans to raise additional Tier 2 capital before the end of 2Q FY18. This is expected to further strengthen capitalisation and enhance operation.
The bank’s gross non-performing loan (NPL) ratio improved slightly to 4.9 percent at FY17 (FY16: 5.1 percent) and further strengthened to 4 percent at end-1Q FY18, following the declassification of a major component of the reported NPL at FY17. Consequently, specific provision coverage of gross NPLs improved to 21 percent at FY17 (FY16:18.3 percent), albeit remained low.
Wema Bank witnessed liquidity pressure during the year, with the regulatory liquidity ratio falling below the regulatory minimum requirement at some points during FY17 (recording lowest ratio of 17.8 percent in September 2017 and later improved to 26.3 percent at end-FY17).
Management ascribed this to the crowding out effect created by the high yields on government securities during the period.
However, the bank issued commercial paper in 4Q FY17 (raising a total of N17 billion) to cushion its liquidity challenges.
Subsequently, the bank’s liquidity position has since normalised with the liquidity ratio maintained at above 30% throughout 1Q FY18.
Despite an improvement in total operating income during the year, Wema Bank recorded a decline in pre-tax profit to N3 billion in FY17 (FY16: N3.2 billion), impacted by higher funding cost, rise in impairment charges and operating expenses.
Accordingly, return on average equity (ROaE) declined to 4.6 percent (FY16: 5.4 percent), while return on average assets (ROaA) remained flat at 0.6 percent.
Note is taken of management’s operating efficiency strategy aimed at curtailing the relatively high cost-to-income ratio which stood at 83.8 percent, well above the peer average at FY17.
GCR noted that upward rating movement could result from a significant enhancement of market position, and an improved funding mix that could strengthen the bank’s liquidity profile as well as profitability metrics.
However, a rating downgrade could follow from a weakening in competitive positioning, and sustained pressure on earnings, asset quality, and liquidity metrics.
By Modupe Gbadeyanka
About N3.6 trillion has been repaid to the Central Bank of Nigeria (CBN) by the Asset Management Corporation of Nigeria (AMCON) since its inception in 2010.
This information was revealed by the chief executive of AMCON, Mr Gbenga Alade, during a media parley to update the press on the activities of the agency.
Mr Alade said at the moment, the organisation still owes the central bank about N3 trillion for toxic assets of banks in the country.
He praised the organisation for its asset recovery drive, stressing that when compared with others across the world, Nigeria has done well.
“It is important to stress that the corporation has done tremendously well, especially when compared to other notable government-owned Asset Management Corporations around the world.
“Based on the balance at purchase, AMCON outperformed other Asset Management Corporations all over the world by achieving over 87 per cent in recoveries despite the unique challenges associated with debt recovery in Nigeria.
“The Malaysian Danaharta, which is adjudged one of the best performing Asset Management Corporation’s, only achieved 58 per cent. The Chinese Asset Management Corporation, despite its stricter laws, achieved just 33 per cent.
“Only the Korean Asset Management Corporation (KAMCO), South Korea, has achieved more recoveries than AMCON, with about 100 per cent. This was due to their brute force with which they chased the obligors.
“Despite KAMCO’s recovery records, the agency is still operational to date with slight realignments in its mandate.
“Other noted Asset Management Corporations that have transitioned into a perpetual institution of the various governments include, China Asset Management Company, Federal Deposit Insurance Corporation (FDIC) USA, and KFW Germany.
“So, gentlemen, without sounding immodest, AMCON has done well, and we will not relent until all the outstanding debts are fully realized,” Mr Alade stated.
On the financial performance of AMCON, he said last year, the firm posted a revenue of N156.25 billion and operating expenses of N29.04 billion, while for the 2025 fiscal year should be a revenue of N215.15 billion and operating expenses of N29.06 billion.
By Modupe Gbadeyanka
One of the non-interest banks in Nigeria, The Alternative Bank (AltBank), has opened a new branch in Effurun, Delta State.
The new office will serve the Edo-Delta region and provide purposeful banking and real financial empowerment for individuals, entrepreneurs, and businesses, a statement from the firm stated.
The lender disclosed that the Effurun branch is a bold move in its mission to reshape banking in Nigeria.
The launch was graced by key dignitaries, including the Ovie of Uvwie Kingdom, Emmanuel Ekemejewa Sideso Abe I; the Chairman of Uvwie Local Government, Anthony O. Ofoni, represented his vice, Andrew Agagbo; and the Special Adviser to the Governor of Delta State on Community Development, Mr Ernest Airoboyi; amongst others.
The Divisional Head for South at The Alternative Bank, Mr Chukwuemeka Agada, emphasised the institution’s commitment to Warri and its surrounding communities.
“By establishing a presence here, we are initiating a transformation in the way banking serves the people of Delta. Our purpose-driven approach ensures that customers’ financial goals are not just met but exceeded,” he stated.
“This branch represents our pledge to empower Warri’s dynamic businesses and families, providing them with the tools to grow without compromise,” Mr Agada added.
“We understand the heartbeat of this community, and we are excited to integrate our bank into the fabric of this dynamic region,” he stated further.
On his part, the representative of the Ovie, Mr Samuel Eshenake, challenged the bank to facilitate development and employment within the Effurun community.
The Regional Head for Edo/Delta at The Alternative Bank, Mr Akanni Owolabi, embraced this challenge, pledging that the bank will work sustainably to drive local commerce.
“At The Alternative Bank, we are committed to being an active partner in the development of Effurun. We see this branch as a catalyst for creating opportunities, driving employment, and supporting the growth of local businesses.
“Our mission is to empower this community, ensuring that every step forward is one of progress, prosperity, and shared success.”
By Aduragbemi Omiyale
A partnership aimed to enable seamless, real-time and secure transactions for cardholders across Africa and the rest of the world has been entered into by Payattitude and PAPSSCARD, the card scheme initiative of the Pan-African Payment & Settlement System (PAPSS).
The collaboration will allow Payattitude cards issued by banks and other deposit-taking institutions to be co-branded with PAPSSCARD, Discover, Diners and Pulse for acceptance across their networks in Nigeria, Africa and worldwide.
As an initiative of the African Export-Import Bank (Afreximbank) and a key financial infrastructure supporting the African Continental Free Trade Area (AfCFTA), the PAPSSCARD scheme will facilitate instant cross-border payments in local currencies.
“This partnership reflects our commitment to cross-enterprise alliances and enabling inclusive, efficient, and borderless payments across Africa and the world
“With Payattitude, Nigerian cardholders and financial institutions can now enjoy the benefits of a Nigerian card that can be used worldwide,” a director at Payattitude, Dr Agada Apochi, said.
The acting chief executive of PAPSSCARD, Mr John Bosco Sebabi, said the aim is “to connect African payment ecosystems, reduce the cost and inefficiencies of cross-border payments, and strengthen African sovereignty over payments infrastructure.
“Collaborating with Payattitude, a key innovator in Nigeria’s payment space, represents a significant step towards a more unified African payment landscape.”
The chief executive of PAPSS, Mr Mike Ogbalu, said, “By bringing together PAPSSCARD’s robust cross-border payment capabilities with Payattitude’s leadership in the Nigerian digital payments, we are taking tangible steps toward building a single African market where individuals and businesses can transact easily and securely, both within and beyond Africa.”
Payattitude is the first-in-kind Nigerian Payment Scheme to pioneer multibank App and USSD Code *569#.
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