Fitch Ratings has revised the outlook on Fidelity Bank PLC’s Long-Term Issuer Default Rating (IDR) to Positive from Stable, while affirming the rating at ‘B-‘. This update reflects the credit rating agency’s confidence in the bank’s near-term capitalisation prospects.

In its statement released on Friday, Fitch noted that the outlook revision is based on expectations that Fidelity Bank’s capitalisation will strengthen due to core capital issuances. These issuances are aimed at meeting the new N500 billion paid-in capital requirement for banks with an international licence, effective by the end of the first quarter of 2026.

Fitch explained, “Fidelity’s IDRs are driven by its standalone creditworthiness, as expressed by its Viability Rating (VR) of ‘b-‘. The VR balances the concentration of operations in Nigeria’s challenging operating environment, very high credit concentration, and high Stage 2 loans against a growing franchise, sound profitability metrics, good capital buffers, and reasonable foreign-currency (FC) liquidity coverage.”

Furthermore, Fitch has affirmed Fidelity Bank’s National Long-Term Rating at ‘A(nga)’ with a Stable Outlook, emphasizing that this rating is also driven by the bank’s standalone creditworthiness. The statement highlighted the balance of a growing franchise and good capital buffers against weaker profitability compared to higher-rated peers.

Fidelity Bank is recognized as Nigeria’s sixth-largest bank, accounting for 5% of the domestic banking system assets at the end of 2023. The bank’s strong balance-sheet growth in recent years has increased its market share, which is expected to grow further, albeit remaining below those of the five largest banking groups in the country.

Fitch also outlined factors that could lead to a negative rating action or downgrade, stating, “A sovereign downgrade could result in a downgrade of Fidelity’s VR and Long-Term IDR if Fitch believes that the direct and indirect effects of a sovereign default would likely have a sufficiently large effect on capitalisation and foreign-currency liquidity to undermine the bank’s viability. However, this is unlikely considering the Positive Outlook on Nigeria’s Long-Term IDRs.”

This positive revision in Fidelity Bank’s rating outlook underscores Fitch’s confidence in the bank’s strategic direction and financial stability amidst Nigeria’s challenging economic landscape.