Fitch Affirms Zenith Bank Plc’s Viability Rating at ‘b’, Corrects Error
Fitch Ratings has affirmed Zenith Bank Plc’s Viability Rating (VR) at ‘b’, Long-Term Issuer Default Rating (IDR) at ‘B’ and National Long-Term Rating at ‘AA(nga)’. Fitch’s outlook on the Long-Term IDR and the National Long-Term Rating is stable.
The rating actions correct an error: Fitch previously affirmed Zenith Bank’s VR at ‘b’, below the implied VR of ‘b+’, without providing negative adjustment reasoning in the rating action commentary published on 22 May 2025.
Fitch said it negatively adjusts the bank’s implied VR of ‘b+’ due to operating environment/sovereign rating constraint (negative). It said this adjustment reflects Zenith Bank’s high sovereign exposure relative to capital and the concentration of its operations in Nigeria.
The bank’s Government Support Rating, Short-Term IDR and National Short-Term Rating are unaffected, Fitch said in the latest update. Fitch said Zenith Bank Plc’s IDRs are driven by its standalone creditworthiness, as expressed by its ‘b’ VR.
The VR is constrained by Nigeria’s Long-Term IDRs of ‘B’ due to the bank’s high sovereign exposure relative to capital and the concentration of its operations in Nigeria.
It also added that the VR is one notch below the ‘b+’ implied VR, reflecting operating environment and sovereign rating constraints.
Zenith Bank’s National Long-Term Rating is at the higher end of the scale due to its comparatively strong domestic franchise and financial profile.
The Nigerian naira exchange rate stabilised in 2025, the banking sector’s profitability and foreign-currency liquidity have been improving and capital raisings have boosted capitalisation.
However, inflation remains high, regulatory intervention is burdensome and the expiry of forbearance on oil and gas loans has led to an increase in sector impaired loans ratios (Stage 3 loans under IFRS 9) and prudential provisions.
Zenith Bank is Nigeria’s second-largest banking group, representing around 14% of domestic banking system assets at end-2025. It has a strong corporate-banking franchise and a retail strategy that leverages its digital channels.
Zenith Bank’s risk profile is conditioned by its high exposure to Nigerian sovereign through securities and the Central Bank of Nigeria cash reserve placements relative to Fitch Core Capital of 240% in 2025. Lending is focused on large domestic corporate borrowers, although single-borrower concentrations are moderate.
Zenith Bank’s Stage 2 loans significantly reduced in 2025 as the bank exited the long-standing regulatory forbearance on classification of problematic loans. The impaired loans ratio printed at 3.8% in 2025, increased only modestly from 3.1% in 2024.
The bank’s profitability has remained strong, as indicated by operating profit on risk-weighted assets averaging 7.2% over 2022-2025. The ratio declined slightly to 7.3% in 2025 from 8.9% in 2024, driven by large impairment charges (equal to 37% of pre-impairment operating profit) and lower FX revaluation gains due to a more stable exchange rate in 2025.
Zenith Bank’s FCC ratio was 28% at end-2025, supported by relatively low balance-sheet leverage. Strong pre-impairment operating profit provides a substantial buffer to absorb loan impairment charges without materially affecting capital.
Zenith Bank is fully compliant with the NGN500 billion minimum paid-in capital requirement for internationally licensed banks, effective from 1 April 2026. The bank-solo total capital adequacy ratio was 25.8% at end-2025, comfortably above the 15% minimum regulatory requirement.
Funding is mainly through a stable, inexpensive customer deposit base, comprising a high share of current and savings accounts, with large volumes sourced from individuals and SMEs.
Single-depositor concentration is low, with the top 20 deposits accounting for only 5% of customer deposits at the end of 2025. Liquidity coverage in local and foreign currencies is comfortable.
