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 agency cites improved profitability, stronger liquidity, and robust shareholder support for its upgrade.
The upgrade was disclosed in the agency’s 2026 abridged entity rating report and follows the bank’s successful capital raise, which pushed its capital base above the N200 billion regulatory threshold for commercial banks with national authorization.
According to Agusto & Co., the rating action reflects the bank’s stronger earnings performance, sound liquidity position, and enhanced capitalisation.
Despite the positive rating action, Agusto & Co. noted that rising impaired loans and persistent macroeconomic pressures remain key downside risks. The agency, however, assigned a stable outlook to the bank.
The report also gave the lender an ESG score of ‘2’, indicating that environmental, social, and governance factors currently have minimal impact on the bank’s credit profile.
The rating upgrade comes amid a significant improvement in the bank’s capital position.
Shareholders’ funds rose by 141.9% year-on-year to N620.5 billion as of December 31, 2025, supported by a N193.5 billion capital injection during the year.
Paid-up share capital increased to N260.7 billion from N67.1 billion, exceeding the Central Bank of Nigeria’s N200 billion minimum requirement for national commercial banks.
The bank’s capital adequacy ratio (CAR) also strengthened to 28.1% from 19.7% in 2024, remaining comfortably above the 10% regulatory benchmark.
Agusto & Co. added that the CAR remained resilient at 23.2% even after stress-testing for impaired loans.
Agusto & Co. noted that the bank’s total assets and contingents expanded by 44.4% to N5.7 trillion, while its loan book grew by 45.2% to N1.8 trillion, supported by the fresh capital injection.
However, the agency said asset quality came under pressure following the expiration of regulatory forbearance measures.
Stage 3 impaired loans increased by 35.5% to N88.1 billion, largely 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 marginally to 4.9% from 5.3%, aided by the expansion of the loan portfolio. Agusto & Co. noted that without the impact of loan growth and write-offs, the non-performing loan ratio would have stood at 7.3%.
Provision coverage remained strong at 108.5% of impaired loans, above the agency’s benchmark of 80%.
Meanwhile, Wema Bank Plc reported a profit before tax of N221.8 billion in its audited 2025 financial statements, representing a 116.4% increase from N102.5 billion recorded in 2024.
The strong earnings performance was largely driven by growth in interest income, which rose to N576 billion from N354.6 billion.
Loans and advances accounted for 60.4% of interest income, while investment securities contributed 35.5%, with the balance generated from cash and cash equivalents.
