GCR Affirms Fidelity Bank Plc’s A/A1 Ratings, Outlook Stable
GCR Ratings has affirmed Fidelity Bank Plc’s national scale long-term and short-term Issuer ratings of A (NG) and A1 (NG), respectively, with a stable outlook
In its rating note, GCR also said the ratings affirmation was underpinned by Fidelity Bank’s stable financial profile and domestic market position.
However, these strengths were partly offset by a decline in the regulatory capital adequacy ratio as of 30 June 2025, stemming from the expiration of the regulatory forbearance, the ratings analysts added.
GCR acknowledged that Fidelity Bank has a strong domestic franchise, being the sixth largest banking group in Nigeria, with an estimated market share of 8.0% of the industry’s gross loans and advances.
Ratings analysts noted that that Fidelity Bank aims to deepen regional diversification by expanding into three to five African countries over the medium to long term while also growing the United Kingdom (UK) subsidiary.
The bank’s operating revenue remains strong and better than those of its peers, particularly given its strong reliance on low-cost deposits, which support strong net-interest margins and profitability.
Going forward, strong traction in the UK subsidiary as well as further geographical expansion could support Fidelity Bank’s competitive positioning and revenue generation over the rating horizon.
Following the expiration of regulatory forbearance on certain loans within the banking sector, Fidelity Bank’s regulatory tier 1 capital adequacy ratio declined to 10.9% as of 30 June 2025 from 19.5% as of 31 December 2024.
The resulting total capital adequacy ratio of 15.0% places the bank at the brink of a regulatory breach. However, capital raising efforts to shore up the capital position and meet the March 2026 deadline are ongoing.
To sustain its current licence, ratings analysts said Fidelity Bank needs to raise additional N200.0 billion before the end of March 2026, although management expects to finalise the capital raise by the end of 2025.
“A successful capital raise could see regulatory tier 1 capital ratio rise to 15.4% by year end, otherwise, capital adequacy pressures may negatively impact the ratings going forward”, GCR said.
Fidelity Bank’s risk profile is characterised by sustained high concentration risks – obligor and foreign currency – high stage 2 loans and high exposures to the oil and gas sector.
The bulk of these loans historically benefitted from regulatory forbearance and the bank has made full provision as regulatory forbearance gradually phases out.
The bank’s twenty largest obligors accounted for 56.0% of gross loans as of 30 June 2025 from 55.4% at the end of 2024 one of which is in breach of regulatory single obligor limit (SOL) of 20% of shareholder’s funds.
Foreign currency loans to gross loans remains high at 54.7% in June 2025 from 57.0% in Dec.2024; the bulk of which represents stage 2 oil and gas exposures.
The subsisting SOL breach could be remedied by an additional equity injection; however, general obligor and currency concentration as well as high exposure to the volatile oil and gas sector could constrain the bank’s risk profile over the outlook period.
Additionally, GCR said it will monitor the potential impact of the ongoing court case between Fidelity Bank and Sagecom Concepts Limited on the bank’s financial and risk profile.
Although Fidelity Bank’s indicated that the impact may not be material, the bank has strengthened its buffer, increasing provision for litigation to NGN37.3 billion in June 2025 from NGN3.8 billion in 2024 year end, to reflect the potential liability.
Nonetheless, other assets quality metrics including non-performing loans ratio (NPL) and credit losses ratio are expected to continue track below peers.
Funding and liquidity assessment is positive to the rating, because of a relatively stable funding and sufficiently liquid balance sheet.
Fidelity Bank is largely funded by customer deposits, and 92.9% of these deposits are relatively inexpensive current and savings accounts (CASA); thus, supporting a modest cost of funds of 6.4%.
GCR liquid assets coverage of customer deposits and wholesale funding registered at 41.2% and 3.7x, respectively, as of 30 June 2025.
Ratings analysts said going forward, GCR expects the bank’s liquidity ratio to remain within the regulatory threshold predicated on effective liquidity management and customer deposit mobilisation strategy.
“The stable outlook is premised on expectations that Fidelity Bank’s financial profile would remain strong, and the planned capital raise would support stronger capital adequacy (over 15.0%) over the outlook period.
“We expect NPL and credit losses ratios to be well contained over the rating horizon while funding and liquidity metrics remain stable,” GCR said. Fidelity Bank Posts N212 Billion as Profit in Q3
