By 
By Osasome, C.O
Fitch Affirms Wema Bank’s Stability Despite Sector Consolidation Pressures
As the Central Bank of Nigeria intensifies banking sector reforms, including deposit consolidation and stronger capital requirements, Wema Bank is emerging as one of the more resilient mid-tier lenders, buoyed by a stable outlook and a technology-led growth strategy.
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Global credit rating agency Fitch Ratings has upgraded Wema Bank’s National Long-Term Rating to ‘A(nga)’ from ‘A-(nga)’, while maintaining a stable outlook, citing improved capital buffers, stronger profitability, and a healthier deposit mix driven largely by digital innovation.
Capital Strength Supports Confidence in a Consolidating Banking Sector
Fitch noted that Wema Bank’s improved ratings reflect stronger capitalisation following a major capital raise in 2025. The agency also cited improved profitability, which positions the bank to absorb the impact of rapid asset growth.
Key highlights include:
- Strengthened Capital Buffers: Fitch expects Wema’s capital buffers to continue expanding, supported by internal capital generation and successful capital raisings.
- Robust Capital Ratios: The bank’s Fitch Core Capital (FCC) ratio rose to 30% in Q1 2026, up from 28% in 2025 and 18.7% in 2024, driven by a NGN200 billion rights issue.
- Comfortable Regulatory Headroom: Wema’s Capital Adequacy Ratio (CAR) stood at 24.7% at end-Q1 2026, well above the 10% regulatory minimum.
These indicators are particularly significant given the Central Bank of Nigeria’s current tightening stance.
That policy is pushing banks across the country to consolidate deposits and reinforce their balance sheets.
Digital Banking Edge Reduces Funding Pressure
A major differentiator for Wema Bank remains its extensive digital banking ecosystem, anchored by ALAT, Africa’s first fully digital bank.
Fitch highlighted that sustained investments in digital technology have:
- Expanded Wema’s customer base rapidly
- Reduced operational bottlenecks
- Lowered dependence on costly term deposits
The bank’s reliance on expensive term deposits fell sharply to 12% of total deposits by Q1 2026, from 46% in 2022.
Deposit concentration also improved significantly, with the top 20 depositors accounting for just 19% of total deposits at end-2025, down from 52% three years earlier.
Profitability Gains Offset Nigeria’s Macroeconomic Risks
Despite operating in a challenging macroeconomic environment marked by high inflation and regulatory pressures, Fitch said Wema Bank has delivered strong earnings momentum:
- Operating profit/Risk-Weighted Assets rose to 11.2% in 2025 from 8.3% in 2024
- Net interest margin improved sharply to 12.3% in 2025, up from 8.8% in 2024
- Operating profit/average total assets increased to 5.3%, comparing favourably with larger peers
Fitch attributed the gains to stronger net interest income, which more than doubled since 2024.
Asset Quality and Risk Profile Remain Manageable
Wema Bank, CEO, Moruf Oseni
Wema Bank’s impaired loans (Stage 3 under IFRS 9) declined to 4.2% in Q1 2026, from 4.9% at end-2025, supported by a N7 billion reduction in impaired loans and modest loan growth. Stage 2 loans rose slightly to 1.5% but remain below the sector average.
The bank’s exposure to oil and gas loans stood at 18.8% of total loans, low by domestic standards, while its overall risk profile remains closely tied to Nigeria’s sovereign environment.
Outlook: Stability Anchored on Digital-Led Resilience
While Fitch acknowledged challenges such as Nigeria’s high inflation, increased impaired loans following the expiry of regulatory forbearance, and Wema’s relatively small market share (about 3% of system assets), it concluded that these risks are balanced by:
- Sound profitability
- Improved funding structure
- Strong capitalisation
- A leading position in digital banking
In an era of heightened regulation and deposit consolidation, Wema Bank’s stable outlook underscores how technology-driven banking models can provide resilience and competitive advantage within Nigeria’s evolving financial landscape.
