Finance
Agusto Upgrades Wema Bank To ‘A’ Rating
Agusto & Co. has upgraded the long-term rating of Wema Bank Plc to ‘A’ from ‘A-’, while affirming the lender’s short-term rating at ‘A1’ following improvements in profitability, liquidity and capital strength.
The rating upgrade was disclosed in the agency’s 2026 abridged entity rating report, which highlighted the bank’s successful capital raising exercise and stronger financial position.
According to Agusto & Co., the lender’s improved earnings performance and sustained shareholder backing contributed significantly to the latest rating action.
“The upward review of the bank’s ratings reflects stronger profitability levels, a healthy liquidity position and continued shareholder confidence demonstrated through the recent capital raising exercise,” the agency stated.
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The rating agency noted that the successful recapitalisation pushed Wema Bank’s capital base above the N200 billion regulatory requirement for commercial banks operating with national licences.
Despite the positive assessment, Agusto & Co. warned that rising impaired loans and persistent macroeconomic pressures remain potential downside risks to the lender’s future performance.
The agency, however, maintained a stable outlook for the bank, signalling confidence in management’s ability to sustain current financial performance levels.
Agusto & Co. also assigned the lender an Environmental, Social and Governance score of ‘2’, indicating that ESG-related factors currently pose limited risk to the bank’s overall credit profile.
The report showed that shareholders’ funds rose significantly by 141.9 per cent year-on-year to N620.5 billion as of December 31, 2025.
The increase was supported by a N193.5 billion capital injection raised during the financial year.
Paid-up share capital climbed to N260.7 billion from N67.1 billion, placing the lender comfortably above the minimum capital threshold stipulated by the Central Bank of Nigeria for national commercial banks.
The bank’s capital adequacy ratio also improved strongly to 28.1 per cent from 19.7 per cent recorded in 2024, remaining significantly above the regulatory benchmark of 10 per cent.
Agusto & Co. disclosed that the lender’s capital position remained resilient even after applying stress tests linked to impaired loans.
“We believe the bank’s current capital strength is adequate to support its existing risk exposure and short-term expansion objectives,” the report stated.
The rating agency further noted that the bank’s total assets and contingent liabilities expanded by 44.4 per cent to N5.7 trillion during the review period.
Wema Bank’s loan portfolio also grew by 45.2 per cent to N1.8 trillion, supported largely by fresh capital inflows and increased lending activities.
However, the report indicated that asset quality experienced pressure following the expiration of regulatory forbearance measures across the banking sector.
Stage 3 impaired loans increased by 35.5 per cent to N88.1 billion, mainly due to the downgrade of the lender’s largest exposure involving a dollar-denominated facility granted to an oil exploration and production company.
Although the bank recorded N2.3 billion in loan write-offs, the impaired loans ratio improved slightly to 4.9 per cent from 5.3 per cent due to expansion in the overall loan portfolio.
Agusto & Co. noted that without the effect of loan growth and write-offs, the non-performing loan ratio would have risen to 7.3 per cent.
The agency added that provision coverage remained strong at 108.5 per cent of impaired loans, exceeding its internal benchmark threshold of 80 per cent.
“Overall, the bank’s asset quality remains satisfactory, although projected loan growth into new sectors could place additional pressure on its credit risk management framework,” the agency stated.
