Wema Bank Plc’s profit after tax climbed 72.6 percent to N219.84 billion in the nine months ended September 30, 2026, exceeding its entire 2025 earnings by 13.1 percent, as aggressive lending, stronger trading income and improved operating efficiency offset declining asset yields.
The lender’s unaudited financial statements showed pretax profit rising 76.6 percent to N258.64 billion from N146.36 billion a year earlier, underscoring the strength of its earnings momentum despite mounting pressure on lending margins.
Third-quarter profit after tax reached N88.47 billion, approximately 30 percent higher than the second quarter, indicating that the bank’s earnings trajectory remained strong towards the end of the reporting period.
The performance places Wema among Nigeria’s fastest-growing lenders by earnings, although the quality and sustainability of its profit expansion are increasingly important as credit risks build and monetary policy potentially shifts towards lower interest rates.
Gross earnings rose 45.7 percent to N673.24 billion, while interest income increased 37.2 percent to N543.56 billion, reflecting the contribution of an expanding loan portfolio to the bank’s top-line growth.
The lending expansion has helped offset declining yields on earning assets. Meristem Securities, in an earnings flash, said asset yields fell 405 basis points to 8.88 percent, highlighting the pressure on banks’ ability to sustain interest income growth through pricing alone.
Wema’s loans to customers expanded 44.5 percent this year to N2.51 trillion, while customer deposits grew 17.4 percent to N3.86 trillion.
Net interest income rose 38.3 percent to N325.88 billion, demonstrating that balance-sheet expansion continued to generate substantial returns despite weaker asset yields.
The bank’s non-interest income provided an additional earnings boost, nearly doubling to N129.68 billion as net trading income more than quadrupled to N46.08 billion.
Foreign exchange transaction income also swung to a gain of N6.17 billion from a loss of N8.68 billion in the corresponding period, reflecting a significant improvement in trading-related contributions.
Operating income climbed 52.7 percent to N437.02 billion, comfortably outpacing the 27.7 percent increase in operating expenses to N178.38 billion.
The stronger income growth improved Wema’s cost-to-income ratio to 40.8 percent from 48.8 percent, according to MoneyCentral calculations, signalling greater operating leverage and improved cost efficiency.
The bank’s ability to grow earnings faster than expenses has been a central feature of its performance, allowing it to translate revenue expansion into disproportionately higher profitability.
However, the earnings increase has not translated into higher earnings per share for shareholders.
Earnings per share declined 1.1 percent to N7.31, reflecting the increase in the weighted average share count to 40.12 billion following the bank’s recapitalisation.
The capital-raising exercise included a rights issue of 14.29 billion shares at N10.45 each, expanding the equity base and diluting the contribution of existing earnings on a per-share basis.
Despite the dilution, Wema’s annualised return on average equity stood at approximately 41.6 percent, according to MoneyCentral calculations, while shareholders’ equity increased 27.3 percent to N790.13 billion.
The combination of strong profitability and a larger capital base strengthens the bank’s capacity to support further lending and absorb potential credit losses, although investors are likely to focus increasingly on how efficiently the expanded equity translates into shareholder returns.
There are also emerging signs that the rapid balance-sheet expansion could carry higher credit costs.
Third-quarter impairment charges of N13.50 billion accounted for approximately 73 percent of the total nine-month impairment charge, suggesting that credit costs are becoming more concentrated towards the end of the reporting period.
The development raises questions about asset quality as the bank’s rapidly expanding loan portfolio matures, particularly in an environment where borrowers remain exposed to elevated financing costs and broader economic pressures.
The pace of lending growth, which is more than twice that of deposits, also raises funding considerations as the bank seeks to maintain its expansion without substantially increasing its dependence on more expensive funding sources.
Monetary policy represents another potential headwind.
A further rate cut at the Monetary Policy Committee meeting scheduled for November 23–24 could accelerate the decline in asset yields, potentially squeezing interest margins if funding costs adjust more slowly.
Meristem’s figures showed Wema’s cost of funds declining by only 38 basis points to 5.44 percent, compared with the 405-basis-point reduction in asset yields.
The imbalance suggests that the bank could face further margin compression if lending rates reprice faster than deposit costs, particularly as monetary easing reduces returns on loans and other interest-earning assets.
Investors will therefore be watching whether Wema can sustain its earnings momentum through continued loan growth, stronger fee income and improved operating efficiency rather than relying predominantly on favourable interest-rate conditions.
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