S&P Upgrades Seven Nigerian Banks as Dangote Refinery Eyes September IPO

The ratings agency raised the long-term global scale ratings of 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 from ‘B-’ to ‘B’, assigning stable outlooks to the lenders.

S&P also revised the outlooks of Fidelity Bank Plc and First City Monument Bank Plc to positive from stable while affirming their existing ratings.

The development followed S&P’s recent upgrade of Nigeria’s sovereign credit rating from ‘B-’ to ‘B’ with a stable outlook, reflecting what the agency described as sustained structural reforms under the federal government and improved macroeconomic conditions.

According to the agency, the liberalisation of Nigeria’s foreign exchange market has improved access to foreign currency, strengthened investor confidence and supported growth in the non-oil economy. It added that reforms in taxation and increased centralisation of petroleum revenues were helping to strengthen government earnings and reduce fiscal pressures over time.

S&P noted that Nigeria’s economy expanded by four per cent in 2025, driven largely by an 8.5 per cent rise in crude oil production and a 3.9 per cent increase in non-oil economic activities.

Although the agency projected a slight moderation in growth in 2026 due to inflationary pressures linked to the Middle East crisis, it maintained that increased government capital spending and ongoing reforms by the Central Bank of Nigeria would help sustain economic resilience.

The ratings firm said Nigeria remained relatively insulated from the broader impact of the Middle East tensions because of its position as a net oil exporter and emerging refined petroleum producer.

S&P projected that Nigerian banks would remain profitable despite persistent inflation and rising provisioning requirements, forecasting average return on equity of between 20 and 23 per cent in 2026, compared with an estimated 25 per cent in 2025.

The agency said profitability in the banking sector would continue to be supported by high interest margins, rising net interest income and lower provisioning costs.

It also disclosed that most Nigerian lenders had already complied with the CBN’s new minimum capital requirements after successful capital raises over the past two years. The apex bank had increased the minimum paid-up capital requirement to N500 billion for banks with international licences and N200 billion for national banks.

S&P further projected nominal lending growth of about 25 per cent in 2026, driven mainly by lending to the oil and gas, agriculture and manufacturing sectors.

However, the agency warned that asset quality pressures would persist following the withdrawal of regulatory forbearance measures, high inflation and elevated interest rates.

According to the report, non-performing loans in the banking industry are expected to stabilise between six and seven per cent in 2026, while credit losses would remain elevated at between two and 2.5 per cent.

Despite the improved outlook, S&P cautioned that inflation, poverty and weak consumer purchasing power remained major challenges confronting the Nigerian economy.

The agency disclosed that inflation averaged 18.6 per cent over the past decade, although it expects the figure to decline to 17.7 per cent in 2026 and fall below 10 per cent by 2028.

It also revealed that poverty levels in Nigeria had risen to 50 per cent of the population from 30 per cent before 2020, while about 31 million Nigerians currently face food insecurity.

Meanwhile, the President of Dangote Group, Aliko Dangote, announced that the Dangote Refinery was targeting a September launch for its Initial Public Offering following what he described as overwhelming investor demand worth billions of dollars.

Dangote disclosed this during a visit by the management of First Bank of Nigeria to the refinery complex in Lagos, where discussions focused on investment opportunities and the refinery’s future expansion plans.

He said preparations for the IPO were already in advanced stages, adding that investor appetite under the ongoing private placement arrangement had continued to rise significantly.

Dangote described the refinery as one of Africa’s most strategic industrial investments, noting that the 650,000 barrels-per-day facility had reached full operational capacity and was projected to account for nearly 10 per cent of America’s refining capacity.

Chairman of First HoldCo, Olufemi Otedola, praised Dangote’s industrial vision and pledged to personally acquire $100 million worth of shares in the refinery ahead of the public offering.

The planned IPO is expected to widen ownership of the refinery among Nigerians and institutional investors as the company positions itself as a dominant player in Africa’s refining industry and one of the continent’s largest revenue-generating businesses.