Wema Bank Plc has secured a major vote of confidence from the Nigerian financial market after Agusto & Co. upgraded the lender’s long-term credit rating to ‘A’ from ‘A-’, citing stronger profitability, improved liquidity, and enhanced capitalisation following the bank’s successful recapitalisation exercise.
The upgrade marks a significant milestone for the tier-two lender as competition intensifies within Nigeria’s banking industry ahead of stricter capital requirements and a rapidly evolving macroeconomic environment.
In its 2026 abridged entity rating report, Agusto & Co. affirmed Wema Bank’s short-term rating at ‘A1’ while assigning the institution a stable outlook, indicating expectations that the bank will maintain its current financial strength despite prevailing economic uncertainties.
According to the rating agency, the upward revision reflects substantial improvements in the bank’s earnings profile, liquidity position, and shareholder support, particularly following a successful capital raise that pushed the lender above the Central Bank of Nigeria’s N200 billion minimum capital requirement for nationally licensed commercial banks.
“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.
The development positions Wema Bank among the financial institutions that have strengthened their balance sheets ahead of anticipated industry consolidation pressures linked to ongoing banking sector recapitalisation reforms.
The rating action comes amid an expansion in the bank’s capital base and profitability during the 2025 financial year.
According to the report, shareholders’ funds rose 141.9 percent year-on-year to N620.5 billion as of December 31, 2025, supported largely by a N193.5 billion capital injection completed during the year.
Paid-up share capital also rose significantly to N260.7 billion from N67.1 billion, comfortably exceeding the regulatory threshold required for national commercial banking operations in Nigeria.
The stronger capital position further improved the bank’s capital adequacy ratio, which rose to 28.1 percent from 19.7 percent recorded in 2024, remaining well above the regulatory minimum benchmark of 10 percent.
Agusto & Co. noted that even under stress-testing scenarios involving impaired loans, the bank’s capital adequacy ratio remained resilient at 23.2 percent.
“We consider Wema Bank’s capital decent for current business risks and near-term growth plans,” the report stated.
The improved ratings also reflect the bank’s strong earnings momentum at a time when many Nigerian lenders are benefiting from higher interest rates, repricing of risk assets, and increased yields on investment securities.
Wema Bank reported a profit before tax of N221.8 billion in its audited 2025 financial statements, representing a 116.4 percent increase from the N102.5 billion recorded in 2024.
Interest income rose to N576 billion from N354.6 billion in the previous year, driven primarily by growth in loans and advances as well as increased returns on investment securities.
According to the bank’s financial statements, loans and advances accounted for 60.4 percent of interest income, while investment securities contributed 35.5 percent, with the remaining portion generated from cash and cash equivalents.
The bank’s asset base also expanded during the year.
Agusto & Co. disclosed that Wema Bank’s total assets and contingents increased by 44.4 percent to N5.7 trillion, while its loan portfolio rose by 45.2 percent to N1.8 trillion, supported by the fresh capital injection and broader business expansion strategy.
However, despite the strong financial performance, the rating agency warned that rising impaired loans and macroeconomic headwinds remain key downside risks to the bank’s outlook.
According to the report, Stage 3 impaired loans increased by 35.5 percent to N88.1 billion following the expiration of regulatory forbearance measures introduced during earlier economic disruptions.
The increase was largely linked to the downgrade of the bank’s largest exposure — a dollar-denominated facility granted to an oil exploration and production company.
Although Wema Bank recorded N2.3 billion in loan write-offs during the period, the impaired loans ratio improved marginally to 4.9 percent from 5.3 percent, largely due to the expansion of the overall loan portfolio.
Agusto & Co. noted that without the impact of loan growth and write-offs, the bank’s non-performing loan ratio would have risen to 7.3 percent.
Still, the agency maintained that the bank’s provisioning levels remain sufficiently strong to absorb potential credit losses.
Provision coverage stood at 108.5 percent of impaired loans, comfortably above Agusto & Co.’s benchmark threshold of 80 percent.
“Overall, we consider Wema Bank’s asset quality satisfactory,” the report stated.
Nonetheless, the agency cautioned that the bank’s projected loan growth of 21.2 percent into newer sectors of the economy could place additional pressure on its credit risk management framework if macroeconomic conditions deteriorate further.
