Ratings agency Agusto & Co. has upgraded Wema Bank Funding SPV Plc’s (‘’the Issuer’’ or ‘’the SVP’’)
Series II Bond (‘‘the Issue’’ or ‘’the Bond’’) to ‘Bbb+’, with a stable outlook, from the previous
‘Bbb’ score. The Issuer is a Special Purpose Vehicle (SPV) set up by Wema Bank Plc (‘’the Bank’’ or ‘‘the
Sponsor’’) for the issuance of debt securities.
Agusto in its latest rating assessment released on Tuesday said it upgraded the rating of Wema Bank
Funding SPV Plc’s Series II ₦17.7 billion seven-year fixed rate bond to ‘Bbb+’ as a result of significant
improvement on key metrics of assessment.
‘‘The rating assigned to the bond is hinged on the Sponsor’s upgraded rating of ‘Bbb’ and is a notch
higher given that 45% of the bond proceeds was invested in a 13.53%, 7-year Federal Government of
Nigeria (FGN) bond and held in the custody of the Joint Trustees,’’ Agusto & Co. stated in the report.
It further noted that ‘Bbb+’ assigned Wema Bank affirmed the leading financial institution’s improved
profitability, satisfactory asset quality and liquidity profile.
‘‘In the unlikely event of a default, this provides some recovery prospects. The upgrade in the rating
assigned to Wema Bank reflects its improving profitability metrics, satisfactory asset quality and liquidity
profile,’’ the report added.
Commenting on the report, Wema Bank’s Managing Director/Chief Executive Officer, Mr. Ademola
Adebise, stated: ‘‘Wema Bank welcomes with excitement this latest positive assessment. This important
rating adds to the series of positive outlooks that credible independent global ratings agencies have
given to our bank which affirms the resilience of our bank as a stable financial institution. We are
buoyed by these positive affirmations to recommit delivering innovative banking and financial solutions
that foster inclusive growth for individuals and businesses, and more importantly pushing further Wema
Bank’s frontiers as a major enabler of national economic growth.’’
Agusto & Co. explained that the rating validity for the bank subsists up until 10 September 2023, but
noted, however, that constraining these positive factors are the elevated operating cost profile, the
harsh regulatory environment and prevailing macroeconomic headwinds.
Wema Bank’s fascinating upward trajectory was acknowledged recently when it emerged as the best
performing bank in the first half of year 2022 financial year with a weighted average score of 2.83 points
ahead of 12 other banks. The Nigerian banking performance HY 2022 prepared by Nairametrics showed
that Wema Bank surpassed others on several key metrics including total asset growth, loan book
growth, profit growth, cost-to-income ratio movement, and return on average equity.
In similar vein, global rating agency Fitch affirmed Wema Bank’s Long-Term Issuer Default Rating (IDR) at
‘B-‘ with a Stable Outlook, Viability Rating (VR) at ‘b-‘ and National Long-Term Rating at ‘BBB (nga)’, in
July 2022. Amongst the key rating drivers (KRDs), Fitch stated that Wema’s IDRs were driven by its
standalone creditworthiness, as expressed by its VR. The VR reflects Wema’s small franchise, high credit
concentrations, aggressive loan and balance-sheet growth and funding weaknesses. It also reflected
good asset quality and expectation of a significant improvement in capitalisation and leverage, due to a
material rights issue due to be concluded by end-2022.
