Fitch Ratings has revised the outlooks of nine Nigerian banks and two bank holding companies to Positive from Stable, citing improvements in the country’s foreign exchange (FX) reserves, economic policy framework and operating environment.
The global credit rating agency, however, maintained the affected institutions’ Long-Term Issuer Default Ratings (IDRs) at ‘B’, meaning the latest action signals improved prospects for their credit profiles rather than an immediate upgrade of their ratings.
The institutions are Access Bank Plc, Zenith Bank Plc, First HoldCo Plc, First Bank of Nigeria Ltd, United Bank for Africa Plc, Guaranty Trust Holding Company Plc, Guaranty Trust Bank Limited, Fidelity Bank Plc, First City Monument Bank Limited, Wema Bank Plc and Bank of Industry Limited.
The decision follows Fitch’s revision of Nigeria’s sovereign credit outlook to Positive on October 9, 2026, while affirming the country’s ‘B’ rating.
Fitch said the outlook change reflected progress in economic reforms and stronger external financial conditions, alongside its expectation that the current policy direction would continue despite the approaching election cycle.
For the commercial banks and holding companies, the revised outlook suggests that improvements in Nigeria’s economic conditions could gradually reduce some of the constraints the operating environment places on their creditworthiness.
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Stronger naira, reserves support outlook
Fitch identified the naira’s appreciation and the accumulation of foreign exchange reserves by the Central Bank of Nigeria as signs of improvement in the country’s external position.
The naira appreciated by about 7 per cent between January and September 2026, while inflation moderated and the prospect of further monetary policy easing improved.
The agency forecast Nigeria’s real gross domestic product growth at 4.3 per cent in 2026, compared with 4 per cent in 2025.
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Fitch said inflation had risen at the beginning of the Iran conflict but eased slightly to 15.4 per cent in August from 15.9 per cent in June. It expects inflation to decline further, potentially allowing monetary policy to become less restrictive.
The agency also noted that the withdrawal of regulatory forbearance, particularly in the classification of problem loans, had pushed up impaired-loan ratios at the end of 2025.
However, capital raised by banks to meet new minimum capital requirements, which took effect at the end of the first quarter of 2026, had helped cushion the impact and provided capacity for further lending.
The banking sector has also continued to operate under demanding regulatory conditions, including the 45 per cent cash reserve ratio applicable to commercial banks.
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Government exposure remains a credit risk
Despite the improved outlooks, Fitch said the credit profiles of Nigerian banks remain closely tied to the sovereign because of their substantial holdings of government securities and cash reserves with the CBN.
At the end of 2025, net loans accounted for between 18 per cent and 41 per cent of the affected banks’ total assets, while central bank cash reserves and Nigerian sovereign fixed-income securities represented between 23 per cent and 45 per cent.
These exposures mean that deterioration in the government’s creditworthiness could affect banks through their sovereign investments, liquidity conditions and wider operating environment.
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Fitch placed the Viability Ratings of Zenith Bank, GTCO and GTB one notch below their implied levels, citing constraints associated with Nigeria’s operating environment and sovereign rating.
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Access Bank’s viability assessment was also one notch below its implied level because of capitalisation and leverage considerations.
The agency said the ratings of First HoldCo and GTCO remained aligned with those of their respective banking groups, reflecting the absence of common-equity double leverage and the high transferability of capital and liquidity within the groups.
First Bank restores capital adequacy ratio
Fitch said First Bank of Nigeria fell below its minimum bank-level capital adequacy requirement of 15 percent at the end of 2025 following a sharp increase in impaired loans.
The bank subsequently restored compliance, with its capital adequacy ratio reaching 16.7 percent at the end of June 2026, supported by strong profitability and a small capital raising.
Access Bank, meanwhile, remained above its minimum capital requirement but faced regulatory concerns over investments in foreign subsidiaries.
Fitch said the bank’s capital adequacy ratio stood at 17.4 percent at the end of the first quarter of 2026, providing only a moderate buffer above the 15 per cent minimum requirement.
The bank had also breached a regulatory limit restricting investments in foreign subsidiaries to 10 per cent of shareholders’ funds.
According to Fitch, Access Bank is expected to recall capital from and sell some small shareholdings in selected subsidiaries to restore compliance and strengthen its capital position by the end of the first quarter of 2027.
BOI outlook hinges on government support
Unlike the commercial banks, Bank of Industry (BOI)’s rating is primarily driven by the likelihood of financial support from the Federal Government.
Fitch cited the government’s 99.9 percent ownership of the development finance institution, its policy role and its access to government-guaranteed funding as factors supporting the expectation of continued assistance.
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However, the agency said the government’s ability to provide support remained constrained by Nigeria’s ‘B’ sovereign rating.
What could trigger upgrades or downgrades?
Fitch warned that a downgrade of Nigeria’s sovereign ratings could lead to lower Long-Term IDRs and Viability Ratings for the affected commercial banks and holding companies.
Even without a sovereign downgrade, deterioration in asset quality, weaker capital buffers or a severe tightening of foreign currency liquidity could put pressure on their ratings.
For First HoldCo and GTCO, sustained common-equity double leverage above 120 percent could also lead to a weaker relationship between their holding-company ratings and the credit profiles of their banking groups.
BOI could face a downgrade if government willingness to support it weakened, including through a change in its policy role or a significant reduction in state ownership.
An upgrade for Access Bank, Zenith Bank, First HoldCo, First Bank, UBA, GTCO and GTB would require an upgrade of Nigeria’s sovereign rating alongside stable financial profiles.
Fidelity Bank and FCMB would also need an improvement in Fitch’s assessment of Nigeria’s operating environment. Wema Bank would need to meet those conditions and strengthen its business profile.
For BOI, an upgrade would depend on an improvement in Nigeria’s sovereign ratings.
The outlook revisions therefore offer a more positive assessment of the direction of Nigeria’s banking environment, but the banks’ future ratings remain dependent on sustained economic improvements, stronger balance sheets and the country’s sovereign credit standing.
