Wema Bank Plc’s non-performing loans (NPLs) dropped to ₦48.20 billion in 2025 from ₦64.99 billion a year earlier.
The bank disclosed this in its unaudited financial statements for the year ended December 31, 2025.
An analysis of the bank’s loan book shows that its credit-impaired loans, classified as Stage 3 under IFRS 9, fell to ₦48.20 billion in 2025 from ₦64.99 billion in 2024.
This reduction came alongside a sharp contraction in loans, showing early signs of stress.
The bank’s Stage 2 loans, which represent facilities with a significant increase in credit risk but not yet impaired, dropped steeply from ₦42.48 billion in 2024 to ₦12.40 billion in 2025. As a result, the proportion of performing loans strengthened markedly.
Its Stage 1 loans rose to over 96 per cent of its total loan portfolio in 2025, up from 91 per cent in the previous year, underscoring a shift toward better-quality credits.
The improvement in loan performance occurred even as Wema Bank expanded its gross loan portfolio by more than 45 per cent, from ₦1.24 trillion in 2024 to ₦1.80 trillion in 2025.
Term loans accounted for the bulk of the growth, rising from ₦1.13 trillion to ₦1.59 trillion, while overdrafts nearly doubled to ₦187.91 billion, and finance leases increased to ₦20.66 billion.
Despite the decline in NPLs, the bank adopted a more conservative approach to provisioning.
Total expected credit loss (ECL) allowances rose sharply to ₦54.69 billion in 2025 from ₦35.81 billion a year earlier.
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Notably, Stage 1 ECL provisions surged more than fivefold to ₦24.47 billion, reflecting higher buffers against potential future defaults within the rapidly growing performing loan book.
Pinnacle Daily reports that the Central Bank of Nigeria (CBN) has warned against rising NPLs in the banking industry, stressing that it poses a growing threat to banks’ profitability, credit creation and overall risk-bearing capacity.
It gave the warning in its 2026 macroeconomic outlook for Nigeria, released recently, titled ‘Consolidating Macroeconomic Stability amid Global Uncertainty.’
“The Non-performing Loans ratio stood at an estimated 7.00 per cent relative to the prudential limit of 5.00 per cent. The level of NPLs reflected the withdrawal of the regulatory forbearance granted to banks during the COVID-19 pandemic,” the CBN stated.
Profits surged
The strengthening of asset quality coincided with strong earnings growth as Wema Bank’s profit for the year climbed to ₦193.19 billion in 2025 from ₦86.28 billion in 2024.
While its profit before tax rose to ₦222.07 billion from ₦102.52 billion, its net interest income more than doubled to ₦360.10 billion, driving the surge in earnings.
It seems that the reduction in Wema Bank’s non-performing loans and expansion in loan provisions suggest a cautious approach to credit risk management, even as the bank leverages higher yields in Nigeria’s interest-rate hike environment to boost profitability.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
