S&P Upgrades 7 Banks’ Ratings on Improved Macroeconomic Outlook

The improved macroeconomic outlook for Nigeria has continued to bolster investor confidence as S&P Global Ratings raised the long-term global scale ratings of seven Nigerian banks to ‘B’ from ‘B-’, following its recent upgrade of Nigeria’s sovereign credit rating.

The rating agency assigned Access Bank Plc, Bank of Industry, Guaranty Trust Bank Ltd., Stanbic IBTC Bank Plc, Standard Chartered Bank Nigeria Ltd., United Bank for Africa Plc and Zenith Bank Plc stable outlooks.

In addition, S&P revised the outlooks on Fidelity Bank Plc and First City Monument Bank Plc to positive from stable, while affirming their global scale ratings at ‘B-/B’. The agency also upgraded the national scale ratings of nine financial institutions, including Guaranty Trust Holding Company Plc, which retained its ‘B-/B’ global scale issuer credit ratings with a stable outlook.

According to S&P, the rating actions followed its May 15, 2026 decision to upgrade Nigeria’s long-term foreign and local currency sovereign ratings to ‘B’ from ‘B-’, citing significant improvements in the country’s macroeconomic fundamentals after three years of sustained reforms.

S&P stated that exchange rate liberalisation has improved access to foreign currency and created a more market-driven foreign exchange system, helping to restore investor and consumer confidence while supporting non-oil economic growth.

“The upgrade reflects that ongoing reforms have improved Nigeria’s macroeconomic profile, which should help to gradually strengthen its growth prospects,” the rating agency said.

The agency noted that Nigeria’s real gross domestic product expanded by 4.0 per cent in 2025, driven by higher crude oil production and stronger non-oil sector performance. It projected a slight moderation in growth in 2026 as renewed inflationary pressures, linked partly to the Middle East conflict, weigh on consumer purchasing power.

However, S&P said Nigeria remains less vulnerable to the spillover effects of the crisis due to its status as a net oil exporter and the commencement of large-scale domestic refining at Dangote Refinery, which has ramped up to its full 650,000 barrels-per-day capacity.

The rating agency expects inflation to average 17.7 per cent in 2026 before declining to below 10 per cent by 2028, supported by continued reforms and the Central Bank of Nigeria’s efforts toward inflation targeting.

S&P further projected that the Nigerian banking sector would remain resilient and profitable, with average return on equity expected to moderate to between 20 and 23 per cent in 2026 from an estimated 25 per cent in 2025.

It said profitability would continue to be supported by high interest margins, rising net interest income and slightly lower provisioning costs.

The agency also acknowledged the successful recapitalisation efforts undertaken by most banks in response to the CBN’s new paid-up capital requirements, which mandate a minimum capital base of N500 billion for banks with international licences and N200 billion for those operating with national licences.

“We expect the Nigerian financial sector will remain profitable and continue to perform well in coming quarters,” S&P stated. On asset quality, the agency forecast that non-performing loans would stabilise at between six and seven per cent in 2026, while credit losses are expected to remain elevated at 2.0 to 2.5 per cent due to lingering inflationary and interest rate pressures.

Among the banks, S&P highlighted the strong franchises and improving capital positions of major lenders. It said Access Bank, UBA and Zenith Bank benefited from geographical diversification and successful capital raises, while GTBank’s ratings reflected stronger capitalisation and proactive resolution of forbearance exposures.

The positive outlooks assigned to Fidelity Bank and FCMB, according to S&P, reflect expectations that improving macroeconomic conditions could enhance earnings, asset quality and capitalisation over the next 12 months.

S&P maintained that Nigeria’s banking sector remains in the highest-risk ‘group 10’ category under its Banking Industry Country Risk Assessment, but noted that the economic risk trend has turned positive due to greater foreign exchange stability and improving macroeconomic conditions.

The latest rating actions are expected to strengthen the international standing of Nigerian banks and could support their access to foreign funding as confidence in the country’s reform agenda continues to improve.