S&P Global Ratings anticipates a favorable year for the African banking sector in 2026.
Economic and financial conditions support loan growth and the improvement of asset quality in most countries covered by the agency. The agency expects more robust economic expansion in five key countries where 22 banks are rated: Egypt, Morocco, Nigeria, South Africa and Tunisia.
Economic growth and rising loans
Robust growth is taking shape in Egypt, Morocco and Nigeria, thanks to economic reforms, investments in infrastructure, and rising consumption. In South Africa, a modest rebound is emerging, while in Tunisia, the absence of notable reforms weighs on the outlook.
Banks offset declines in interest rates with aggregate loan volumes and reduced loan losses. Diversification of business models stabilizes profits, notably in South Africa. Customer deposits remain the primary source of funding, with profitability differences across countries: resilient in Morocco and South Africa, slightly down in Nigeria and Egypt, and stable in Tunisia despite structural inefficiencies.
Asset quality and ratings on the rise
Asset quality is stabilizing or improving slightly across the continent. Lower inflation and interest rates bolster households’ disposable income and their ability to service debt. In Nigeria, foreign currency loans and those exposed to hydrocarbons remain sensitive to energy and currency fluctuations.
About 50% of the 22 banks show a positive outlook, notably in Nigeria and South Africa. S&P has upgraded the ratings of ten institutions over the past year, with scores ranging from “BB” for large South African groups such as Nedbank and FirstRand to “CC” for a small Nigerian bank facing capitalization difficulties.
Tunisian banks see their credit growth limited to 3% per year, aligned with a GDP of 1.7%, with moderate profitability around 11% return on equity. Public debt and external shocks such as oil prices influence this fragile trajectory.
