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Wema Bank Enjoys CBN Salary Bailout Despite 239% Rise In Profits - Business - Nairaland

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Wema Bank Enjoys CBN Salary Bailout Despite 239% Rise In Profits by Shehuyinka: 12:30pm On Oct 13, 2023
WEMA Bank has enjoyed the Central Bank of Nigeria (CBN)’s staff salary bailout in the last 14 years despite growing profits by more than 239 percent over the period, Economy Post has exclusively gathered.

In October 2009, the CBN granted more than N87 billion in convertible loan to Wema Bank to support staff wages and other related activities of the bank.

The loan has a moratorium of 20 years at an interest rate of 9 percent. Based on the arrangement between the CBN and Wema Bank, repayment of the principal would be by bullet (payment of the outstanding lump sum) at the expiration of the moratorium.

Even though the interest rate on the amount was 9 percent, the apex bank reduced that to 5 percent in 2020 due to COVID-19 but restored it to 9 percent in September 2022.

However, findings have shown that the facility was granted to Wema Bank when it was struggling to pay the wages of staff members. In 2009 full financial year, Wema Bank incurred a loss of N7.53 billion due to a financial crisis facing the bank at that time.

“The Group’s consolidated accounts show a loss after tax of N7.53 billion largely attributable to the absorption of significant write-downs and trading losses from legacy
positions impacted by the financial crisis in our subsidiaries,” Wema Bank Chairman, Mr Samuel Olaniyi Bolarinde, said in 2009.

“In absorbing these losses, your bank has disseminated its corporate governance ethos to its subsidiaries and proven that the new management team did more with less, by delivering substantial profitability with a significantly lower inherited balance sheet,” he noted.

Lamido Sanusi Lamido was the CBN governor when this loan was granted.

Fortunes now better

However, things have looked up since then as the bank has long emerged a profit-making financial institution. In fact, the bank’s fortunes changed the following year when its profit after tax rose by more than 300 percent.

“The Group Gross Earning grew by 14.7% increasing to N21.79 billion in the reporting period from N18.99 billion of the 9-month period to December 2009, Group’s Profit After Tax also grew from loss position of N7.53 billion to N17.46 billion
translating to growth of 331.7% within the same period,” Mr Bolarinde said while unveiling the 2010 full financial year results.

READ MORE HERE: https://www.economypost.ng/featured/wema-bank-enjoys-cbns-salary-bailout-despite-239-rise-in-profits/2023/10/12/

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