Fitch Ratings has revised the outlooks on nine Nigerian banks and two bank holding companies to Positive from Stable, following a similar action on Nigeria’s sovereign rating, as improving macroeconomic conditions and stronger capital positions support the sector’s prospects.
The affected institutions include Access Bank, Zenith Bank, First HoldCo, First Bank of Nigeria, United Bank for Africa, Guaranty Trust Holding Company, Guaranty Trust Bank, Fidelity Bank, First City Monument Bank, and Wema Bank. Bank of Industry (BOI) was also listed among the institutions whose outlooks were revised.
The rating agency affirmed the affected institutions’ long-term issuer default ratings at ‘B’, indicating that the outlook change signals the potential for future rating improvements rather than an immediate upgrade.
The decision follows Fitch’s October 9 revision of Nigeria’s sovereign outlook to Positive from Stable, reflecting its increased confidence in the sustainability of economic reforms and the country’s improved external financial position.
Fitch said the sovereign outlook revision reflects its assessment that Nigeria’s credit profile and operating environment could become less of a constraint on the standalone creditworthiness of the affected commercial banks and holding companies.
The outlook revision for First HoldCo and First Bank of Nigeria also reflects their restoration of compliance with the total capital adequacy ratio requirement, while the improved outlook for Bank of Industry reflects the agency’s view that the government’s capacity to support the policy bank may strengthen.
Stronger operating environment
Fitch identified improving economic conditions, a stronger naira, and easing inflation as factors supporting the banking sector’s outlook.
The naira appreciated by about 7 percent in the first nine months of 2026, while the Central Bank of Nigeria continued to build foreign exchange reserves.
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Inflation, which rose at the onset of the Iran conflict, eased to 14.63 percent in September, supporting the prospect of further monetary policy easing. Fitch forecasts Nigeria’s real gross domestic product growth at 4.3 percent in 2026.
Improved macroeconomic stability could support banks through more predictable business conditions, better borrower repayment capacity, and stronger demand for credit. However, the extent of these benefits will depend on whether inflation continues to moderate and economic growth translates into stronger household and business incomes.
The rating agency also acknowledged the sector’s resilience despite regulatory pressures, particularly the Central Bank of Nigeria’s 45 percent cash reserve requirement for commercial banks.
The requirement compels lenders to keep a substantial portion of eligible deposit liabilities with the central bank, limiting the funds available for lending and other income-generating activities.
Fitch said the banking sector had demonstrated resilience despite these constraints.
Capital raising provides room for growth
The outlook revision comes after Nigerian banks raised capital to meet the new minimum paid-in capital requirements that took effect at the end of the first quarter of 2026.
According to Fitch, the significant capital raises have provided lenders with additional capacity to absorb risks and pursue loan and business growth.
However, the withdrawal of longstanding regulatory forbearance, particularly around the classification of problem loans, resulted in higher impaired-loan ratios at the end of 2025.
The development highlights the balance banks must strike between expanding lending and managing credit risks as regulatory oversight becomes stricter.
Fitch said the affected institutions’ national ratings and the Government Support Ratings of the eight commercial banks and two bank holding companies were unchanged.
The latest action therefore represents an improvement in the agency’s assessment of the institutions’ prospects, rather than a broad reassessment of their existing credit ratings.
For Nigerian lenders, sustaining the positive outlook will depend partly on continued macroeconomic reforms, stronger operating conditions and their ability to maintain adequate capital buffers while managing asset quality risks.
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Ayomide Odunlami is a Tax Reporter at BusinessDay, covering Nigeria’s tax reforms, compliance trends, and government revenue strategies. She reports on how evolving tax policies affect businesses, investors, and the broader economy, providing clarity on complex regulatory issues through data-driven journalism.
