Depositors’ funds at risk as Wema Bank reports N1.13bn fraud amid weak system

Secrets Reporters

In its full-year 2023 financial statement released recently, Wema Bank disclosed that it recorded fraud in its system to the tune of N1.136 billion.

This has become worrisome to financial analysts and further showed that the bank’s security system may be either weak, poor, not up to industry standard or operated by unqualified personnel.

Assuredly, this development does not only affect depositors and create panic in the minds of customers of the bank, it also has ripple effects on the dividend payout to its shareholders.

In the audited 2023 financial statement, the bank recorded 1,195 fraud cases to the tune of a whopping N1.136 billion, out of which N685.595 million was lost.

The bank claimed 97 per cent of the fraud cases were executed by outsiders, adding that the cases valued at N860.395 million occurred through operations and others and N595.017 million was lost in the process.

Internet fraud was worth N203.724 million and N90.017 million was ferried away by fraudsters.

Fraudsters also attempted to steal N36.071 million via point-of-sale channels and N8.148 million through mobile banking but only succeeded in carting away N506, 000.

Scammers also attempted to steal N869,000 via automated teller machines and N27.39 million web frauds, but they were foiled.

“There is no fraud, whether or not material, that involves management or other employees who have a significant role in the bank’s internal control system,” the management of the bank stated.

A financial analyst, Bolu Oyedeji who spoke with THE WITNESS, noted that the bank’s high fraud cases 2023 leave much to be desired and exposed how vulnerable its system is. Oyedeji noted that the bank management must wake up and brace up its system, otherwise it will continue to lose investors’ confidence.

“Wema Bank needs to do something urgently to forestall this magnitude of fraud and assure its depositors that their funds are safe.

“The bank must adopt sophisticated cybersecurity measures to mitigate current cyber threats, engage professionals and educate customers on ways to avoid falling prey to fraudulent actors,” he noted.

Similarly, in the 2023 financial year, Wema Bank also incurred sanctions, paying penalties totaling N61.350 million, for contravention of cyber security framework law, section of bank and other financial institutions Act BOFIA, 2020, late rendition of returns; circulars on the CBN know your Customers among others.

On the cyber security framework, the apex bank asked the Wema Bank to pay N2 million while a total of N17.450 million and N20.00 million paid for contravention of the CBN circular on KYC and section 19 (3A) of the BOFIA 2020 respectively .

Wema Bank was made to pay a sum of N10 million, N8 million and N2 million for late rendition of the returns, breaches of Risk-Based Supervision (RBS) and regulatory breaches on CBN clearance respectively.

The bank also paid N1.9 million for late filing of 2022 audited financial statements with the Nigerian Exchange.

However, despite the fraud and security challenges, THE WITNESS reports that the bank during this period grew its revenue by 70.54 per cent to N226.91 billion on the back of interest income that went up by 71.83 per cent to N185.64 billion and fees and communications revenue that improved by 50.50 per cent to N24.96 billion.

The lender’s pre-tax profit rose by 195.6 per cent to N43.59 billion and post-tax profit leaped by 220.42 percent to N35.93 billion from N11.21 billion it recorded in 2022.

However, its net trading income dipped by 79.45 per cent to N822.49 million from N4 billion in 2022, underpinned by N1.15bn Treasury Bill loss it suffered in 2023.