Onome Amuge
Wema Bank Plc has reported a substantial increase in profitability for the first quarter ended March 31, 2025, with pre-tax profit leaping by 269 per cent year-on-year to N41.2 billion, a significant surge compared to the N11.3 billion recorded in the same period of 2024.
The Tier-2 bank’s bottom line was boosted by a 59 per cent rise in interest income, which reached N110.3 billion in Q1 2025, up from N69.4 billion in the corresponding period last year.Â
This growth was primarily driven by improved yields on assets, an expanded loan book, and favourable tailwinds from the high-interest rate environment in Nigeria. Interest income now accounts for nearly 79 per cent of the bank’s gross earnings, underscoring its strong reliance on lending activities.
However, the bank also experienced a 24 per cent increase in interest expenses, which rose to N53.7 billion, reflecting tighter funding costs and an aggressive strategy to attract deposits. Despite this rise, net interest income more than doubled to N56.6 billion, compared to N26.1 billion in the first quarter of 2024.
Prudent approach to credit risk management
Wema Bank noted that it adopted a cautious stance on credit risk, with net impairment losses on financial assets increasing to N1.82 billion from N1.1 billion in the same quarter last year. This slight increase in provisioning reflects ongoing macroeconomic uncertainties, including foreign exchange volatility and elevated default rates across key borrower segments. After accounting for these credit losses, net interest income after impairment stood at N54.8 billion, an increase from N25.1 billion reported in Q1 2024.
Diversification through non-interest income
The bank’s efforts to diversify its revenue streams continued to yield positive results, with non-interest income growing by a substantial 146 per cent to N29.3 billion, up from N11.9 billion in Q1 2024.Â
This growth was primarily driven by an increase in fee and commission income to N25.1 billion (from N10.9 billion in Q1 2024), reflecting stronger transactional volumes and increased adoption of its digital banking platforms.Â
In addition, net trading income rose to N1.5 billion, and fair value gains on financial instruments contributed N2.2 billion, reversing marginal losses from the previous year.
Operating costs rise amid expansion
While operating income rose to N84.1 billion from N36.8 billion, Wema Bank also faced rising operating costs. Personnel expenses increased by 30.6 per cent to N13.0 billion due to wage adjustments and an expanding workforce. Other operating expenses more than doubled to N27.4 billion, largely driven by inflationary pressures on IT infrastructure, regulatory compliance, and energy costs.Â
Depreciation and amortisation expenses also rose by 38 per cent, reflecting ongoing investments in digital platforms and physical infrastructure. Despite these cost pressures, the bank’s strong revenue growth resulted in a pre-tax profit of N41.2 billion.
Strong earnings and profitability metrics
According to Wema Bank’s financials, after tax deductions of N5.36 billion, profit after tax reached N35.85 billion, a 269 per cent year-on-year increase. Earnings per share (EPS) also saw an increase to 803 kobo, compared to 305 kobo in Q1 2024.
Outlook and challenges ahead
Wema Bank’s first-quarter performance in 2025 indicates a robust earnings strategy, with improvements across both interest and non-interest income segments. However, the rising operating costs and the continued need for prudent provisioning will remain key areas of focus.Â
According to analysts, the bank’s ability to sustain its above-market growth trajectory will depend on maintaining asset quality, further advancing its digital transformation initiatives, and effectively managing costs in a volatile economic environment. Nevertheless, with its annualised pre-tax profit based on Q1 results already exceeding N160 billion, Wema Bank is currently demonstrating strong performance relative to many of its mid-tier competitors in Nigeria’s banking sector.
