PRESENT SENTATION ION TO ANALYSTS & INVES ESTOR TORS 2016 F 20 6 FUL ULL L Y YEA EAR R R RES ESUL ULT APRIL 2017 VALUE-DRIVEN RELATIONSHIP BANKING Since nce 1945 45 2016 Full Year Result – April 2017 Presentation to Analysts & Investors Slide No. 1
Pre rese sent ntation tion Outl tline ne 1 Business & Operating 04 2016 FY Highlights 05 Overview of Operating Environment Highlights 06 Updates on 2016 Commitments 07 Income Statement Highlights 2 2016FY Financial Financial Highlights 09 Improving Financial Trend 10 Performance Efficiency Metrics 11 Margin Analysis 12 Profitability 13 Deposit & Funding 14 Loan Growth & Analysis 15 Asset Quality 16 Capital & Liquidity 17 Balance Sheet Summary 18 Managing Risk 19 Key Performance Metrics 20 3 22 Outlook & 2017 Outlook 23 Wema’s Strategic Objective Strategy 24 Guidance 26 Appendix 2016 Full Year Result – April 2017 Presentation to Analysts & Investors Slide No. 2
Business & Operating Highlights Section 1 2016 FY Highlig hlight hts 04 04 Over erview view of Ope perat ating ing Envir ironm nment ent 05 05 06 06 Upd pdat ates es on 2016 Commitme mmitment nts 07 07 Incom ome e Stat atem emen ent t High ghligh lights ts 2016 Full Year Result – April 2017 Presentation to Analysts & Investors Slide No. 3
2016FY 6FY Highlights hlights Continued improvements recorded in the retail space N54.25b 25bn EARNINGS 18.48% ALAT CREDIT REDIT BBB BBB-(SHORT TERM RATING) No 1. bank to offer a full digital banking experience A3 (LONG TERM RATING) DIGITAL BANK RATINGS INGS 1.7m 7mn BBB-(NATIONAL LONGTERM RATING) BBB F3 (LONG TERM RATING) CUSTOMER BASE ATMs 270 270 IMPROVED VED ALTERN ERNATE TE POS 5,508 SERVICE CHANN NNEL ELS Branches es 142 142 RATING BRANCH NCH GRO ROWTH TH NATIONAL ISMS ISO certifi fied ed LICENSE 2016 Full Year Result – April 2017 Presentation to Analysts & Investors Slide No. 4
Over ervi view ew of Ope perati ating ng Envir ironm onment ent The following changes in the operating environment impacted performance in 2016 • The global economy was dominated with headlines of the growing populist movement which saw the exit of Britain from A new world d order er in t the form m of an anti -esta tabl blishme ment t the EU and the emergence of Donald Trump as the President moveme ement t of U.S. • Oil price recovers after an agreement to cut 1.8mbd by OPEC and non-OPEC members. Illiquidity continues to characterize Oil Price e & Outpu put t and Exchange ge rate stability ty the Nigerian FX market. • Low oil price, incessant disruption of oil production, delay in Impl plem ementa entati tion of Fiscal policies es have and impacted ted budget passage and implementation moved the country into a money y suppl ply y economi mic growth th recession. The Government able was to implement 59% of budget (Sept’ 2016) while GDP growth rate estimated was reported at -1.5% . Reg egulato tory ry policies es and impact on industry ry growth th Monetary and Fiscal policy was divergent. The CBN continued • to use supply side management to conserve foreign reserves. Disposable income was severely impacted due to inflation Red educed ed dispo posa sabl ble e income me and slowing g consumer mer • dema mand d which rose to 18.6% at year end. Wages on its part remained sticky. 2016 Full Year Result – April 2017 Presentation to Analysts & Investors Slide No. 5
Upd pdate tes s on 2016 6 Comm ommitm tments ents Objecti ctive ves Tasks sks Status atus Grow the • Grow Depos osit volumes es within Retai ail segm gment of market et through ugh campus us storms ms, , prep epaid accounts, , partner nershi hip with telcos cos on agen ency cy and mobile e banking ng Franchise o (Retail Deposit increased 18.92% (Y-o-Y) from ₦ 89.74 billion (2015) to ₦ 106.71 billion in 2016. However, there was a 0.58% decline in customer deposits (N283.33 billion) in comparison to ₦ 284.98 billion in Dec. 2015. • Expand nd branc nch h network ork in new market ets and additiona nal branches ches in existing ng commer ercial hubs o Opened new branches in Lagos, Port Harcourt, Abuja, Minna and Lokoja. Enhance Asset • Improve oved capital and funding ng o Fully repaid 7 – year loan on maturity Quality & Capital o Successfully raised Tier 2 capital of N6.25 billion Improving • Improvi oving ng oper erational al efficienc ency through ugh better use e of tech chno nology ogy o OPEX increased by 5.62% in 2016 below 2016 year end inflation rate of 18.6% Efficiency o Cost to income ratio at 88.32%; still above target of c. 75%-80%. However, this grew slower than inflation. o Net Interest Margins at c. 5.93%. Improve • Improvi oving ng ser ervice ce rating ng acros oss the Bank by implem ement enting ng the Purple e Rules es (ser ervice ce deliver ery) ) Charter er. o Industry rating improved from 19th to 13 th (KPMG). The Bank is expected to attain top-10 next year Organizational Capacity Deployment • Continue ue dep eployme ment nt of alter ernati ative e channels els – POS, ATMs and mobile e applica cations ns o ATM deployment increased by 17.14%; of Alternative o POS increased by 17.78%; Channels o Number of active cards increased by 26% o Alliance with Etisalat with the introduction of Wema Easy Savers Account 2016 Full Year Result – April 2017 Presentation to Analysts & Investors Slide No. 6
Incom ome e St State temen ent t Highli hligh ght Gross Earnings (N ’ bn) PBT (N ’ bn) PAT (N ’ bn) GROW ROWTH TH INCREAS ASE INCREAS ASE 2016 16 54.25 .25 2016 16 3.28 28 2016 16 2.59 59 18.48 48% 7.54% 4% 11.16% 6% 45.79 .79 3.05 05 2015 15 2015 15 2.33 33 2015 15 Operating Income N ’bn Operating Expenses (N ’bn) Interest Expenses (N ’ bn) GROW ROWTH TH INCREAS ASE INCREAS ASE 2016 16 24.79 .79 2016 16 25.77 .77 2016 16 28.07 .07 6.09% 9% 5.62% 2% 32.77% 7% 23.47 .47 19.41 .41 26.46 .46 2015 15 2015 15 2015 15 Non-interest Income (N ’bn) Interest Income (N ’ bn) DECLINE NE GRO ROWTH TH GRO ROWTH TH 2016 16 9.80 80 2016 16 44.45 .45 153.8 3.85% 5% 13.16% 6% 19.7 .71% 1% 8.66 66 37.13 .13 2015 15 2015 15 2016 Full Year Result – April 2017 Presentation to Analysts & Investors Slide No. 7
2016FY Financial Performance Section 2 Finan ancia cial l Highl ghlig ight hts 09 09 Impr proving ving Financi ncial al Trend nd 10 10 Efficien ciency cy 11 11 Margin in Analy alysis is 12 12 Prof ofit itab ability ility 13 13 Depo posit sit 14 14 Asse set t Quality lity 15 15 NPL L s by by Sector or 16 16 Capit pital al & Liqu quid idity ity 17 17 Balan ance ce Shee eet Summ mmar ary 18 18 Managi aging ng Risk sk 19 19 Key Ke y Pe Perfor orman ance ce Metr trics ics 20 20 2016 Full Year Result – April 2017 Presentation to Analysts & Investors Slide No. 8
Financi ancial al Highlig lights ts 2016FY 2015FY Gross earnings ngs N54.25bn N45.79bn Earnings, Profit, Capital PBT N3.28bn N2.99bn PAT PAT N2.59bn N2.27bn CAR 11.07% 15.10% 2016FY 2015FY Depos osits (customer omer) N283.33bn N284.98bn Revenue Generation Loans (net) N227.01bn N185.6bn Inter erest income N44.45bn N37.1bn Non-inte nteres est income N9.80bn N8.7bn 2016FY 2016FY 2015FY 2015FY Cost-to to-inc ncome ome 88.32% 88.49% Operating Efficiency Yield on Asset ets 15.65% 14.50% Oper erati ating ng expens nses es N24.79bn N23.47bn Net inter eres est margi gin 6.56% 6.92% ROAE (annualised) 5.48% 5.18% ROAA (annual alised) 0.63% 0.60% Margin & Asset Quality NPL (%) 5.07% 2.67% Loan to dep epos osits 70.77% 65.13% Cover erage age ratio (%) 100.00 133.61 Liquidity ratio 30.30% 33.57% 2016 Full Year Result – April 2017 Presentation to Analysts & Investors Slide No. 9
Impr proving ng earnings rnings tr trend end Gross Earni rning ngs Income come Mix x (2016) 6) Income come Mix x (2016) 6) 2016 FY 2015 FY Non interest Non interest income income 18.20% 18.92% Intere rest Incom ome Interest income 50 Interest N'bn 81.08% income 5.14 44.04 40 81.80% 5.75 37.13 30 12.35 35.45 10.19 8.23 20 38.29 25.06 25.54 30.29 21.64 10 16.53 Non-Int Intere rest t Income come Mix x (2016) Non-Int Intere rest t Income come (2016) 6) 15.52 1.83 0 1.31 1.46 1.09 0.61 2012 2013 2014 2015 2016 2016 FY 2015 FY Cash & cash equivalent Loans & advances Investment securities Other Non-int interest t Income come income Other income 14% 15% Net trading Net trading income income 21% Fees & Comm Fees & Comm 22% 63% 65% 2016 Full Year Result – April 2017 Presentation to Analysts & Investors Slide No. 10 10
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