The national scale long rating of Wema Bank Plc has been upgraded by GCR Ratings to BBB+(NG) from BBB(NG) as its short-term issuer rating was also moved higher to A2(NG) from A3(NG).
In a statement obtained by Business Post, the rating firm also disclosed that it has raised the national scale long-term issue rating on Wema Funding SPV’s N17.675 billion Series 2 Fixed Rate Unsubordinated Bonds to BBB(NG) from BBB-(NG).
It was stated that the lender, which retained a stable outlook, achieved this rating upliftment because of its “strengthened capitalisation driven by equity injection, and improved earnings generation and retention.”
“The ratings also balance the bank’s stable funding structure, sound liquidity, modest competitive position, and weakening asset quality metrics, exacerbated by the macroeconomic challenges,” it added.
GCR noted that it kept the bank’s outlook stable due to expectations that the core capital ratio should range above 20 per cent over the next 12-18 months, underpinned by the successful capital injection.
“We expect the bank’s asset quality metrics to be contained within the regulatory minimum and industry average. The bank’s funding structure and liquidity profile is expected to remain strong,” a part of the statement said.
However, it was emphasised that Wema Bank’s risk position remains pressured by the macroeconomic challenges, potentially increasing credit and market risks.
“Positively, we note that the bank has implemented loan recovery efforts, remedial actions, and a cautious lending strategy,” it stated.
Wema Bank’s competitive position is largely enhanced by its strong digital presence, which continues to support a growing customer base of over 5 million and increased transaction volumes.
With a balance sheet size of N3.6 trillion as of December 31, 2024, the financial institution accounted for about 2.0 per cent of the Nigerian banking industry’s total assets, customer deposits, and gross loans.
Operating revenue grew by 48 per cent to N255.8 billion last year, with the relatively stable net-interest income contributing a sizeable 69.2 per cent of the total operating revenue.
“Looking ahead, Wema Bank’s expansion drive, increased deployment of technology, and strategic partnerships could support its operational scale and earnings generation capacity over the next 12-18 months,” GCR stated.