Investment analysts have ascribed the steady growth in revenue, capital appreciation and dividend yield of Wema Bank to the company’s strong fundamentals and prospects for sustainable shareholder value.
The analysts also lauded the organic growth recorded by the Bank in the last few years as a reflection of sound management, which has yielded good returns to shareholders.
An Equity Analyst with Global Asset Management, Adeshina Olatunji, explained that Wema Bank had shown consistent revenue growth over the past five years, with a significant increase in 2023 by 64.37%. The revenue growth rates for the previous years were also strong, with 31.58% in 2022 and 34.84% in 2021.
According to him, the bank was the best-performing stock in the banking sector, gaining 62.50% in capital appreciation on the Nigerian Exchange Limited (NGX) in 2024 and has consistently posted an increase in its dividend yield.
For instance, between 2018 and 2023, the bank’s dividend yield has increased from 4.10 % to 5.70%, indicating a strong commitment to shareholder value.
“Wema Bank’s competitive price-to-earnings (P/E) and Price-to-Book (P/B) ratios suggest its stock is still undervalued, making it attractive for investors seeking growth potential. Wema Bank currently shows aggressive momentum in growth metrics such as loan expansion and revenue CAGR. Its undervalued stock and strategic focus on growth make the Bank an attractive investment.
The Bank’s growth trajectory, manifesting in the consistent growth in total assets and net assets, reflects strong operational expansion and financial health, while profitability, marked by improvement in Earning Per Share (EPS) and Return on Equity (ROE), underscores significant profit growth and shareholder value creation. Its efficiency, marked by higher Return on s (ROA) and Return on Invested Capital (ROIC), points to more efficient management of resources.”, Adeshina added.
Corroborating him, the Managing Director and Chief Executive Officer of Global Assets Management, Babatunde Shobamowo, noted that Wema Bank had consistently demonstrated earnings growth and solid return on equity. saying: ‘’is a growth stock avid investors will buy to hold for the long-term. Investors looking for capital appreciation should not look too far as Wema Bank’s shares are available. My recommendation to investors is to either buy or hold the existing ones.”
The Group Managing Director of the Lancelot Group, Pastor Adebayo Adeleke, also explained that Wema Bank was the only indigenous bank to have weathered the economic storm for over eight decades: “It’s a testament to both its resilience and adaptability. It is both old and new. It has reconnected with the younger generation by deploying ICT solutions in its services. Shareholders are always ready to support the bank by buying more of its shares.”, stressed Aseleke.
In her appraisal, the Co-ordinator of the Pragmatic Shareholders Association of Nigeria, Bisi Bakare, described Wema Bank as investors’ toast.
According to her, the bank is the only surviving indigenous Bank in Nigeria. “The Bank has been doing great under the new Management led by Mr. Oseni Moruf. I have a good impression about the bank, hence, the bank’s Right Issue shall be oversubscribed. There is improvement in the bank’s year-on-year performance for two consecutive years. Investors shall enjoy good returns on their investment if they key in into the forthcoming right offer”.
Wema Bank is also strengthening its position through a capital raise of N200b Right Issue and Private Placement to play big post-recapitalization. The Managing Director of Wema Bank, Mr Moruf Oseni, has affirmed that his team will continue to provide optimum value for every shareholder and stakeholder while assuring that the Bank would soon become a Systematically Important Bank and re-attain Tier-1 status.
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