Fitch Upgrades Wema Bank to ‘B’ With Stable Outlook
Fitch Ratings has upgraded Wema Bank PLC’s Long-Term Issuer Default Rating (IDR) to ‘B’ from ‘B-‘ and its Viability Rating (VR) to ‘b’ from ‘b-‘. With stable outlooks, Fitch also upgraded Wema’s National Long-Term Rating to ‘A(nga)’ from ‘A-‘(nga)’.
The rating agency said the upgrade reflects the bank’s stronger capitalisation following a capital raise in 2025 and improved profitability, which should help absorb the impact of strong asset growth on capitalisation.
Wema’s issuer default ratings are driven by its standalone creditworthiness, as reflected in its ‘b’ VR, which takes into account its concentration of operations in Nigeria, its small but growing franchise and balance sheet, and high credit concentrations.
According to Fitch, this is balanced by reasonable asset quality and capitalisation, sound profitability, and an improved deposit structure.
The rating note acknowledged that the Nigerian naira has stabilised, the banking sector’s underlying profitability and foreign-currency (FC) liquidity have improved, and capital raisings have boosted Nigerian banks’ capitalisation.
However, inflation remains high, regulatory intervention is burdensome, and the expiry of forbearance has increased impaired loans (Stage 3 loans under IFRS 9) ratios and prudential provisions.
Fitch said Wema Bank has a small market share, representing 3% of domestic banking system assets at the end of 2025, which constrains revenue generation. However, its leading position in digital banking has reduced its reliance on term deposits.
The bank’s single obligor concentration remains high relative to Fitch Core Capital (FCC), despite a notable reduction from 2024, the rating note stated. At the end of 2025, the top 20 funded exposures were 31% of gross loans.
Positively, Wema’s oil and gas exposure, which settled at 18.8% of total loans, is low by domestic standards. The bank’s risk profile is highly correlated with the sovereign’s.
The bank’s exposure to the Nigerian sovereign through securities and the Central Bank of Nigeria (CBN) cash reserves was very high at the end of Q1 2026, Fitch said.
Wema’s impaired loans (Stage 3 loans under IFRS 9) ratio was reduced to 4.2% at the end of Q1 2026 from 4.9% at year-end 2025, driven by an N7 billion decline in Stage 3 loans and 7% loan growth.
The Stage 2 loans ratio increased to 1.5% in Q1 2026 but remains well below the sector average. Specific coverage of Stage 3 loans is low, reflecting a reliance on collateral and their sound recovery prospects.
The bank’s operating profit/risk-weighted assets (RWAs), increased to a solid 11.2% in 2025 (2024: 8.3%), driven by stronger net interest income, which has more than doubled since 2024.
Its net interest margin was 12.3% in 2025, up from 8.8% in 2024, comparing well with that of some larger peers. The operating profit/average total assets jumped to 5.3% in 2025 from 3.5% in 2024, also comparing favourably with peers.
The bank’s FCC ratio was a high 30% at end-1Q26 from 28% in 2025; and 18.7% in 2024. Fitch said the increase from 2024 was due to a NGN200 billion rights issue, including NGN150 billion raise completed in September 2025.
“We expect the bank’s FCC ratio to decline to 25%-28% at end-2026, due to strong loan growth, but this still remains commensurate with the bank’s risk profile”.
The regulatory capital adequacy ratio (CAR) was 24.7% at the end of Q1 2026, according to Fitch, well above the regulatory minimum requirement of 10%. Wema’s reliance on expensive term deposits declined sharply to only 12% of total deposits at end-1Q26, from 46% at end-2022.
Deposit concentration has also declined, with the 20 largest deposits representing 19% of total customer deposits at end-2025 (end-2022: 52%). Liquidity coverage in FC is healthy, with FC liquid assets covering 86% of FC customer deposits at end-2025. Federal Workers Reject N100,000 Minimum Wage Proposal
