Agusto & Co. has upgraded the long-term rating of Wema Bank Plc to ‘A’ from ‘A-’, while affirming its short-term rating at ‘A1’.
The rating upgrade was disclosed in the agency’s 2026 abridged entity rating report and reflects the bank’s stronger profitability, improved liquidity position, and robust shareholder support.
According to Agusto & Co., the successful completion of Wema Bank’s capital raising exercise played a major role in the upgrade, pushing the bank’s capital base above the N200 billion regulatory requirement for commercial banks with national authorization.
“Agusto & Co. upgrades the ratings assigned to Wema Bank Plc from ‘A-’ to ‘A’ (long term) and ‘A1’ (short term). The ratings upgrade is anchored on the improved profitability, good liquidity profile and strong shareholders’ support as reflected in the successful capital raising exercise,” the agency stated.
Despite the positive rating action, the agency warned that rising impaired loans and continued macroeconomic pressures remain downside risks to the bank’s performance. However, it assigned a stable outlook to the lender.
Agusto & Co. also assigned Wema Bank an Environmental, Social, and Governance score of ‘2’, indicating that ESG factors currently have minimal impact on the bank’s credit profile.
The report highlighted a major improvement in the bank’s capital position during the 2025 financial year.
Shareholders’ funds rose by 141.9 per cent year-on-year to N620.5 billion as of December 31, 2025, supported by a N193.5 billion capital injection.
Paid-up share capital also increased significantly to N260.7 billion from N67.1 billion, exceeding the Central Bank of Nigeria minimum requirement of N200 billion for national commercial banks.
The bank’s capital adequacy ratio strengthened to 28.1 per cent from 19.7 per cent in 2024, remaining well above the regulatory benchmark of 10 per cent.
Agusto & Co. noted that the capital adequacy ratio remained resilient at 23.2 per cent even after stress-testing for impaired loans.
“We consider Wema Bank’s capital decent for current business risks and near-term growth plans,” the report stated.
The agency added that the bank’s total assets and contingents expanded by 44.4 per cent to N5.7 trillion, while its loan portfolio grew by 45.2 per cent to N1.8 trillion, driven by the fresh capital injection.
However, the report noted that asset quality came under pressure following the expiration of regulatory forbearance measures.
Stage 3 impaired loans increased by 35.5 per cent to N88.1 billion, mainly due to the downgrade of the bank’s largest exposure, a dollar-denominated facility to an oil exploration and production company.
Although the bank recorded N2.3 billion in write-offs, the impaired loans ratio improved slightly to 4.9 per cent from 5.3 per cent, supported by the expansion of the loan book.
Agusto & Co. stated that without the impact of loan growth and write-offs, the non-performing loan ratio would have reached 7.3 per cent.
Provision coverage remained strong at 108.5 per cent of impaired loans, above the agency’s benchmark of 80 per cent.
“Overall, we consider Wema Bank’s asset quality satisfactory,” the agency said.
The report also warned that the bank’s projected 21.2 per cent loan growth into new sectors could place additional pressure on its credit risk management framework.
Meanwhile, Wema Bank reported a profit before tax of N221.8 billion in its audited 2025 financial statements, representing a 116.4 per cent increase from N102.5 billion recorded in 2024.
The bank’s strong earnings performance was largely driven by growth in interest income, which rose to N576 billion from N354.6 billion.
Loans and advances contributed 60.4 per cent of interest income, while investment securities accounted for 35.5 per cent, with the remaining income generated from cash and cash equivalents.
