Chamwe Kaira
S&P Global Ratings has upgraded eight South African banks after raising the country’s sovereign rating on 14 November. The agency lifted South Africa’s foreign-currency rating to BB from BB- and its local-currency rating to BB+ from BB, with a positive outlook. It said the move reflects better economic growth, a stronger fiscal path, and lower risks from state-owned enterprises as Eskom posts its first profit in decades.
On 18 November, S&P said the sovereign upgrade allowed higher ratings across major banks, noting that most institutions remain capped by the sovereign ceiling because government distress can affect domestic banks. All outlooks remain positive. S&P expects credit conditions to ease in 2026 as inflation slows and interest rates fall. It said the result will support household spending and improve loan performance.
Absa Bank Ltd’s long-term national scale rating rose to zaAAA from zaAA+, with the short-term rating kept at zaA-1+. S&P said Absa has a strong retail and business banking base and a growing regional footprint. BNP Paribas Personal Finance South Africa’s long-term national scale rating increased to zaAAA from zaAA, reflecting its importance to its French parent. Capitec’s global long-term rating increased to BB from BB-, and its national scale rating to zaAAA. S&P expects Capitec to keep strong profitability despite higher credit losses from unsecured lending.
FirstRand Bank’s global long-term rating moved to BB, with its national scale rating at zaAAA. S&P noted FirstRand’s leading market position and better asset quality. FirstRand Ltd’s long-term global rating rose to B+ from B, with national scale ratings lifted to zaA+/zaA-1. These remain below FirstRand Bank because of structural subordination. Investec’s long-term global rating increased to BB, and its national scale rating reached zaAAA. Nedbank’s global long-term rating went to BB, with its national scale rating at zaAAA. S&P said Nedbank’s diversified franchise and stable capital supported the upgrade. The Development Bank of Southern Africa’s global foreign-currency rating increased to BB, and its local-currency rating to BB+. S&P said government support for DBSA remains “almost certain”.
S&P said South Africa is on track for a third straight primary budget surplus in 2025. It said economic reforms, including stabilising Eskom, have lowered expected liabilities for state-owned enterprises. Private-sector electricity generation is also set to support growth. GDP growth is forecast to average 1.5% from 2026 to 2028, driven by lower interest rates, infrastructure investment and retirement system changes that allow partial withdrawals.
S&P expects credit conditions to improve. It projects lending growth of 7% to 8% in 2026 and non-performing loans of 4.1%. It said banks should maintain an average return on equity of 16%, supported by strong capital buffers and diverse income streams.
