1.3bn Fraud Rock WEMA Bank, Depositors Fund’s At Risk Amidst System Failure

Depositors and stakeholders of Wema Bank Plc, under the leadership of Moruf Oseni, are expressing profound concern over the safety of their investments and the stability of the institution amidst a surge in fraudulent activities reported during the financial year of 2023.

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

Financial analysts are deeply troubled by this disclosure, as it highlights potential vulnerabilities in the bank’s security infrastructure, suggesting that the bank’s security system may be either weak, substandard, or operated by unqualified personnel.

The disclosed amount of fraud not only undermines depositor confidence but also raises serious questions about the effectiveness of the bank’s risk management protocols and the competency 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 significant challenges in fulfilling dividend payouts to its shareholders.

In its audited 2023 financial statement, the bank recorded a staggering 1,195 fraud cases totaling 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 substantial financial implications underscore the urgent need for Wema Bank to fortify its security measures and rebuild trust among its clientele.

Internet fraud accounted for N203.724 million, with N90.017 million being stolen by fraudsters.

Additionally, fraudsters attempted to steal N36.071 million through point-of-sale channels and N8.148 million through mobile banking, but only succeeded in making away with N506,000.

Scammers also attempted to steal N869,000 through automated teller machines and N27.39 million through web frauds, but their attempts were thwarted.

“There is no fraud, whether material or not, 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, who spoke with Daily Global News, noted that the high number of fraud cases in 2023 leaves much to be desired and exposes how vulnerable the bank’s system is. Oyedeji emphasized that the bank management must urgently enhance its system; otherwise, it will continue to lose investors’ confidence.

“Wema Bank needs to take immediate action to prevent this level of fraud and assure its depositors that their funds are secure.

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

In the 2023 financial year, Wema Bank also incurred sanctions, paying penalties totaling N61.350 million for contravention of cybersecurity framework law, sections of the Bank and Other Financial Institutions Act (BOFIA) 2020, late rendition of returns, and circulars on the CBN know your customers, among others.

Despite these fraud and security challenges, Daily Global News reports that the bank grew its revenue by 70.54 percent to N226.91 billion, driven by interest income that increased by 71.83 percent to N185.64 billion and fees and communications revenue that improved by 50.50 percent to N24.96 billion.

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

However, its net trading income declined by 79.45 percent to N822.49 million from N4 billion in 2022, primarily due to the N1.15 billion Treasury Bill loss it suffered in 2023.