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

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

Depositors and stakeholders of Wema Bank Plc, led by Moruf Oseni, express deep concern over the safety of their investments and the stability of the institution amidst a surge in fraudulent activities reported in the financial year of 2023.


The disclosure of N1.136 billion in fraud cases within Wema Bank’s financial statement has heightened apprehension among investors and industry observers.


Financial analysts are deeply troubled by this revelation, as it indicates potential vulnerabilities in the bank’s security infrastructure, that is,the bank’s security system may be either weak, poor, not up to industry standard or operated by unqualified personnel.

The disclosed amount of fraud not only undermines depositor confidence but also raises questions about the efficacy of the bank’s risk management protocols and the qualifications of its personnel.


Furthermore, the impact of these fraudulent activities extends beyond immediate financial losses. With 1,195 recorded fraud cases, amounting to N1.136 billion, the bank faces challenges in fulfilling dividend payouts 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.


Despite claims that 97 percent of the fraud cases were perpetrated by external parties, the significant financial implications underscore the urgent need for Wema Bank to bolster its security measures and restore trust among its clientele.


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.


SEE ALSO: Moruf Oseni’s Wema Bank Incurs Over N9 Billion In Court Cases, As Recapitalisation Looms


“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.


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


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.


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