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Wema Bank, a leading financial services provider with partial ownership by Nigerian gambling magnate Kessington Adebutu, reported over half a million dollars in fraud losses for 2023. This highlights the persistent challenge of fraud in Nigeria’s financial sector and its impact on the Lagos-based lender.
The bank’s annual report revealed N685.59 million ($593,000) in fraud losses during the year. These losses originated from the bank’s digital channels, collection & payment systems, and third-party integrations within its platform.
Breaking down the figures, Wema Bank lost N90.07 million ($78,000) to internet fraud, with a steeper N595.017 million ($515,000) stemming from operational and other channels. The bank reported a total of 1,195 fraud and forgery cases in 2023, amounting to N1.136 billion ($985,000). Notably, Wema Bank classified only 3 percent of the perpetrators as internal, with the remaining 97 percent classified as external threats.
Wema Bank’s profits surge in 2023
Despite the fraud losses, Wema Bank achieved remarkable financial success in 2023. Profits surged more than $30 million, driven by growth in interest and fee income, coupled with significant foreign exchange revaluation gains. This performance solidified the bank’s position as a major player in the Nigerian banking sector.
The group’s recently released financial results showed a 217-percent increase in profits, leaping from N11.35 billion ($9.84 million) in 2022 to N35.99 billion ($31.2 million) in 2023. A substantial rise in interest income, from N108.04 billion ($93.7 million) in 2022 to N185.64 billion ($161.01 million) in 2023, was a key driver of this surge.
Fee and commission income also witnessed a sharp uptick, rising from N16.59 billion ($14.4 million) in 2022 to N24.96 billion ($21.6 million). The group’s earnings were further bolstered by significant gains from foreign exchange revaluation, totaling N13.6 billion ($11.8 million) compared to N1.59 billion ($1.38 million) the prior year.
Wema Bank bolsters defenses against fraud
In response to the fraud losses, the tier-2 Nigerian lender, also one of the country’s oldest financial institutions, is implementing several measures to strengthen its defenses. These include fortifying fraud monitoring systems, expanding its digital compliance team, and potentially revising its Know Your Customer (KYC) protocols.
Wema Bank’s experience underscores the ongoing challenge of financial crime within Nigeria’s banking sector. The Central Bank of Nigeria (CBN) has recently implemented stricter regulations to combat this issue, including increased capital requirements for banks and a renewed focus on KYC compliance. These measures are expected to play a key role in mitigating fraud risks across the Nigerian banking system.
Adebutu’s backing and Wema Bank’s financial growth
Wema Bank, recognized as one of Nigeria’s leading indigenous banks, has been at the forefront of financial sector innovation. The bank pioneered Africa’s first fully digital bank, ALAT. With decades of experience and resilience, Wema Bank remains a cornerstone of Nigeria’s financial landscape.
Nigerian gambling magnate, Kessington Adebutu, founder and CEO of Premier Lotto Limited, the country’s oldest gaming company, owns a 28.09-percent stake in Wema Bank through Neemtree Limited, a special purpose vehicle (SPV) incorporated in 2013 for targeted acquisitions. His daughter, Abolanle Matel-Okoh, also holds a 4.54 percent stake in the bank.
Wema Bank’s robust 2023 financial performance propelled its assets to N2.25 trillion ($1.95 billion) by Dec. 31, 2023, from N1.44 trillion ($1.25 billion) on Dec. 31, 2022. Retained earnings surged to N36.59 billion ($31.68 million) from N11.45 billion ($9.91 million), solidifying its position as one of Nigeria’s most profitable financial institutions.
