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Wema Bank AFS 2025 · Green Ticker Tales

• 0:00
  all right so let's look at women bank numbers now i was going to do a combo episode which i will still do but i decided to pick out women bank numbers because i i saw a lot of a lot of investors aren't too happy with what they see as a small dividend but i don't think that's a big issue and i'll justify why but let's look at what's the proposed uh dividend that we've seen here a proposed dividend of one naira uh 25 cobo
• 0:27
  Now, earnings per share is 7.12. So, you do 1.25 Naira divided by 7.12. It gives you a payout ratio of 17.5%. Now, the part that has people not so happy, which I think is odd, is they calculate the dividend yield and say, look, the dividend yield is small. And I agree. If you have a 1.25 couple, I beg your pardon, 1.25 couple.
• 0:57
  Dividend divided by Weimar Bank's price of 26.2 at the moment. That's a 4.87% dividend yield. That's barely, just roughly, slightly higher than what a basic savings account would do. But here is where people miss it. And I'm doing the numbers, so pardon me. Let's go to Weimar Bank and let's see what it has done in the last one year. Let's see what it has done in the last one year. Let's do some technical analysis as well.
• 1:26
  at what it has done in the last one year let's see what we have uh when my bank great so in in the last one year the stock price has uh you you would not be wrong if you say in the last one year that the stock has moved in a parabolic um manner let's look at what it has done in the last one year the last one year is done 138.1 percent i mean so
• 1:56
  if you held the stock for the last one year then you've done good by dividend by capital acquisition capital acquisition of over 138 has beat inflation has been the all-sharing debt i suspect probably has been banking index as well so all the indexes you would use to measure all the criteria you would use to measure it has beaten one year t bill has probably beat a 10-year government bond so
• 2:23
  i know that for a lot of people dividends are key cash rules everything around me cash rules i mean cream cream is very key cash is important cash is king you know but sometimes you have to look at one capital appreciation has done amazingly well you might have some people tell you that look i'm not really interested in uh dividend yields can i have my capital appreciation so if you've done 100 on the stock and he's doing what a 4.7 dividend yield i don't think that's too bad
• 2:51
  but the area i'm quite excited about this stock is the growth that they have now whether they can sustain that growth that's a question um i'm looking at uh cross earnings let's look at the bottom line because crossing is the top what what we want is the bottom line you see uh profit after tax moving from it's 6.2 billion in 2024
• 3:19
  so 194.4 billion 225 if you do the the maths i mean that sees what that's a 125 increase in profit after tax so if you have and my my view has always been this if you have a company with such huge growth you want to retain as much earnings as possible and reinvest back in the business in any case if you go through
• 3:48
  The banks, barring GTCO, which probably, what I think about it, GTCO has probably done, what, 12.76 or so, let's say 12.76 in earnings, in dividends, and look at its earnings. So GTCO has probably paid around 50-something percent of its earnings out, which is fine anyway. But averagely, you see most banks will do somewhere between 20% to 30% demand-payout ratio, and then they invest most of the money.
• 4:17
  so i don't think that's a problem if you have a bank that is doing what over 100 increase in profit year on year you want to retain those earnings um but let's go look at the balance sheet which is where you should kind of start off um with with a bank right let's go look at the balance sheet and we'll do some other numbers as well uh you had a big jump in assets right 5.0 trillion in assets um
• 4:47
  for 2025 last year it was 3.5 and where is the growth in these assets yeah okay you have had a growth in uh decent growth in loan book that went up almost uh almost 50 percent growth in loans 1.2 trillion 2024 to 1.7 trillion 2025 uh you had the investment securities decent growth as well um
• 5:14
  investment security is held through amortized cost or held at amortized cost almost up by 50 something percent as well so you have a growth in assets right which is what you want to see um deposit growth is strong as well massive growth in deposits went from 2.5 trillion to 3.2 trillion so you're probably looking at 40 something percent growth in deposit which is huge but for me the number you need to look at
• 5:43
  is the roa and roe of this firm now let's go look at the roe return on equity and it's how do you calculate return on equity return on equity is a profit divided by equity you have what profit of um 194.4 and you divide that by 620. of course the figures are in billions but for simplicity's sake
• 6:11
  uh you don't need to mention billion billion billion billion all the time so the figures are in billions or trillions as the case may be return on equity on 31 31 in simple terms it means that for every hundred naira equity invested you get a return of 30 naira now if this remains constant and even if you want to model this you can assume that look i'm going to have roe coming at um stay at cd 20 25 rate
• 6:41
  it means that if you put 100 in equity and you're getting 20 to 35 25 now every year in four years time you've gotten back your capital and then you can look beyond that you probably start to look at those returns which is stellar stellar numbers so i think people need to look beyond dividends and look at the call on the line performance of this stock i'm happy to see this stock decline fundamental investors also understand numbers are happy to see the stock decline but everything shouldn't always be about dividends so r o e
• 7:11
  of 31.3 percent solid numbers and if you can maintain the mid-20s imagine if you hold this stock for five six years you know what that means um now let's go look at return on them assets now this there was a big jump in assets so clearly you should be surprised if it's smaller so to get return on assets what you have uh 194.4 billion that's the profit after tax divided by the
• 7:39
  five trillion in assets if you do 194.4 i divided by 5072 gives you return of asset of 3.8 now i must agree you might say well it's it's pretty pretty solid numbers right uh let's compare it to last year so last year 86.2 divided by 3593 so it also grew as well what i'm seeing is also grew
• 8:08
  arrow a i went from 2.3 percent in 2024 to about three point something percent in um 2025 i i don't think that's a poor performance in any way shape or form now my only worry is can they how far can they push this uh roe can it hit five six percent uh that is the
• 8:39
  question to ask i need five six percent um i think six percent will be stretched but if they can even maintain a three percent uh r or a return on assets and just in case you're wondering return asset this three percent return asset so for every 109 assets you're getting a return of about 3.8 now that was what you got for 2025 i might say that's low why aren't you doing 10 or 20 ideally
• 9:06
  the the ideal range for roa is you want to see somewhere around maybe five five percent five to ten percent but i'm not sure i don't think there are many banks in this country for any that has the 10 percent roa you're probably looking at five six seven which is good so i think that these numbers are good obviously they've raised a chunk of capital because when i look at the um i look at the capital uh it
• 9:35
  check out share share premium not share premium you've raised a bunch of capital let me just fish out where the capital is um clearly you can see equities of as well so there's a huge huge increase um in retained earnings huge increase in premium so especially equity is gonna buy 400 billion i mean when you have that increase in equity obviously
• 10:05
  you would need some time to deploy it let me just reach out these numbers i know my bank uh did a bunch of fundraising so let's say when my bank um writes issue i know they raised some money and this brings me back to uh my angst with the cbm because we had a lot of companies raise money so when my bank completed the 150 billion rights issue last year um
• 10:37
  I know they had other raises as well. So you have to have some patience. But let's look at book value and compare it to equity at the moment. So let's see where we are. Equity of 620.4 billion. And let's try to work out the price to book value or the book value per share. Market cap is 1.05.
• 11:09
  trillion so price to book value gives me 1051 divided by 620. so the stock is trading about 1.6 times uh book value or if you want to calculate the book value per share gives me 620 divided by 40.1 so book value is 15.4 the stock is traded at 26.2 so it's a bit expensive but you can argue that look
• 11:39
  for a company that is um trading has a return on equity of um 30 percent or so roughly 30 percent even if they can maintain a 25 return on equity paying paying nearly two times um our equity isn't so bad because it means i mean if you're paying 1.6 times equity which is where the stock is trading at an roe
• 12:09
  it's 30 three four years four years time you've probably gotten your capital back and you made some more money on it so is it pricey yeah but i think justify abuse so um but in any case i've always been a fan of buying things below book value where they are available but for those who decide to buy here understandable let's round up let's round up with some technical analysis on this stock uh we
• 12:39
  doing technical analysis unfortunately i'm not showing you my screen so it's a bit hard for you to see but i'll try uh try to do that um last one year the stock is up on 38 a percent last one month is down 6.43 but let's see what the technicals uh tell us about this stock daily is neutral why is that the case we are at a pivot point so i understand that's why it's neutral
• 13:05
  pivot point for this stock is 26.33 the stock is trading at 26.3 so essentially you are in between resistance which is r support which is s and so that's why the daily is neutral moving average is seven by cell five rsi is neutral stock nine six is oversold so the daily is neutral and weekly has the stock as a strong um buy so
• 13:32
  I think that the stock being neutral at this point, you want to wait to when it flips red. That's always a good time to buy. I mean, it depends on how you play the game. If you're someone, if you're not a technical trader, then you work out what you think is a fair value. Now, for those who trade, you can say, look, I'm neutral. I want to wait for this stock to be red and I get it. Or I want to wait for this stock to be green and I get it. But when I look at the numbers, what I have here.
• 14:02
  The 52-week high for this stock is 28 Naira. 52-week low is 10.45. There's no way it's going back to 10.45. So in my view, you want to kind of wait to maybe 20, 22 to get in. Because at 28 Naira, the question is you are going to have to wait for momentum to push this stock from 26.2 to maybe 30. Now, what would that momentum be? I don't see it right now in the market. The earliest trigger would be when...
• 14:31
  q1 numbers are out but q1 numbers are probably out late april so ideally you just if a trader you kind of want to wait till there's momentum maybe later in the month stock is neutral at the moment it's not it's close it's just about um it's what probably five percent or so no ten percent of 26 is uh at 2.6 so it's just around under 10 percent
• 15:01
  away from his 52 week high that's not a good price point to buy you want to wait for a further pullback uh i think maybe a 20 22 at that point you're in a good zone to buy and even if you buy this stock at 1.5 times earnings i think that gives you margin of safety or 1.5 times book value so if the book value is 14 point something 1.5 that will give you about 21 22 which is still within my zone as well
• 15:31
  So I hope you found this useful and I hope you look beyond the dividend yield. Thank you for listening. See you later in the day.