By Aduragbemi Omiyale
An improvement in the capitalisation metrics of Wema Bank Plc after a capital injection of about N21 billion in 2023 has spurred GCR ratings to upgrade the lender’s national scale long-term issuer ratings to BBB(NG) from BBB-(NG).
In a statement seen by Business Post, the rating agency noted that it has also affirmed the company’s short-term issuer rating of A3(NG), with the Outlook revised to Stable from Rating See Positive.
GCR noted that it expects the bank’s core capital ratio to register between 17 per cent and 18 per cent by December 31, 2024, from 14.1 per cent in the first quarter of 2024 after it closed at 15.5 per cent on December 31, 2023.
Recall that this month, the financial institution obtained approval from the Central Bank of Nigeria (CBN) on its N40 billion right issue, with the allotment of the shares finalised by the Securities and Exchange Commission (SEC).
The organisation plans to raise an additional N150 billion over the next 12 to 18 months to meet the new minimum capital requirement for a commercial bank with national authorisation.
When this is done, the GCR core capital ratio of Wema Bank is expected to be further strengthened.
Wema Bank plans to leverage technology and strategic partnerships with fintechs to further drive growth in the near future, specifically in the public sector given the sizeable opportunities with increasing revenue generation and collection by the government.
The bank’s revenue base remains largely stable, dominated by stable earnings from net-interest and non-interest income, though it only accounts for about 2.0 per cent of the Nigerian banking sector’s total assets, customer deposits and gross loans, respectively in 2023.
Its competitive position is supported by its strong digital banking presence, reflected in its increasing customer base and transaction volumes over the years, translating to better earnings. The firm has a customer base of over 5.0 million, served through 149 physical branches and cash centres as well as a strong digital platform.