Global credit rating company, Fitch Ratings has downgraded the credit ratings of First Bank of Nigeria Limited and United Bank of Africa (UBA), citing the recent downgrade of the nation’s sovereign credit rating. Fitch said that while the outlook for Nigerian banks remain stable, recent devaluation of the naira, sustained low crude oil pricing and rising non-performing loans remain major threats to the industry.

In a statement announcing the result of its latest ratings of Nigerian banks, the Company said, “Fitch Ratings has downgraded First Bank of Nigeria Ltd’s (FBN) and United Bank for Africa’s (UBA) Long-Term Foreign Currency Issuer Default Ratings (IDRs) to ‘B’ from ‘B+’. The Outlooks are Stable.

The agency has also downgraded the National Long-Term Rating of FBN Holdings Plc (FBNH), the parent holding company of FBN, to ‘BBB+(nga)’ from ‘A(nga)’.

“Fitch has at the same time affirmed the IDRs of eight other Nigerian commercial banks and affirmed the Viability Ratings (VR) of all the banks.

“The Outlook on the Long-Term Foreign Currency IDR of one of the banks, Guaranty Trust Bank (GTB), has been revised to Stable from Negative due to continuing strong earnings and stronger-than-expected liquidity. Our rating actions follow the downgrade of Nigeria’s sovereign ratings on 23 June 2016.

“The IDRs of UBA, Access Bank (Access) and Wema Bank (Wema) are driven by both their stand alone strengths, reflected in their VRs, and by the likelihood of sovereign support, reflected in their SRFs.” Their VRs and SRFs are at the same level. The IDRs of FBN, Diamond Bank (Diamond), Fidelity Bank (Fidelity), Union Bank (Union) and First City Monument Bank (FCMB) are driven by their SRFs.

“Fitch has revised the SRFs to ‘B’ from ‘B+’ for the systemically important banks, FBN, UBA, Zenith and GTB following the downgrade of Nigeria’s sovereign ratings. As a result, both FBN’s and UBA’s IDRs have been downgraded to ‘B’ from ‘B+’. The IDRs of both Zenith and GTB are affirmed at ‘B+’ and are now driven by their respective VRs of ‘b+’.

“The systemically important banks’ SRFs remain a notch below the sovereign rating, reflecting the sovereign’s weak foreign currency position,” the statement concluded.