By BusinessNG
Investor sentiment around Wema Bank Plc turned sour last week as the lender’s shares tumbled nearly 5 percent, wiping off a significant portion of its market value amid growing unease over its earnings outlook and shareholder dilution concerns.
The stock closed at N19 per share, representing a 4.7 percent decline, as investors aggressively rotated positions ahead of the bank’s Q3 2025 financial results. The selloff, which came on the back of heavy trading volumes, pushed the bank’s valuation down to N675.9 billion, a 24 percent discount from its 52-week high.
Market analysts say the sharp drop reflects waning investor confidence following Wema Bank’s recent N50 billion private placement, which increased its capital base beyond N200 billion but also triggered fears of equity dilution among existing shareholders.
According to data from the Nigerian Exchange (NGX), Wema Bank had recently listed additional shares to accommodate new investors from the capital raise. However, some market participants argue that the move could erode existing shareholders’ influence and depress short-term value.
“While the capital injection strengthens the bank’s balance sheet ahead of recapitalisation deadlines, investors appear cautious about potential earnings dilution and slower returns,” one analyst told BusinessNG.
The development has raised questions about whether the lender’s post-placement structure can deliver stronger profitability in the face of mounting sector pressures, including tighter liquidity and elevated interest rates.
With third-quarter results expected in the coming days, many investors have adopted a wait-and-see approach, fearing that the figures may not justify the bank’s expanded equity base.
“The market is reacting to uncertainty,” said another Lagos-based investment strategist. “Investors are rotating funds into more stable bank stocks as they anticipate weaker margins and modest income growth from Wema Bank.”
The sell pressure also mirrors broader sector anxiety, as Nigerian banks continue to grapple with rising funding costs, foreign exchange losses, and regulatory headwinds in the wake of the Central Bank’s recapitalisation directive
