S&P Global Ratings has identified crude oil prices and naira volatility as key risks to Nigerian bank asset quality in 2026. The warning comes in S&P’s Africa Banking Outlook 2026, titled “Favourable Conditions Support Loan Growth and Asset Quality.”
The global rating agency noted that government securities account for about 11 per cent of Nigerian banks’ total assets, reflecting years of constrained credit extension and a sustained tilt toward lower-risk sovereign instruments.
While S&P expects the broader African banking sector to benefit from stabilising asset quality supported by favourable economic conditions, Nigerian lenders face unique vulnerabilities due to the structure of their loan books, which make them highly sensitive to external market shocks, particularly fluctuations in energy prices and foreign exchange rates.
“The primary concern for Nigerian banks remains the heavy concentration of risk in specific sectors and currencies,” the report said. S&P added that although a rise in oil prices could benefit the economy, it also carries potential risks for financial system stability.
The outlook underscores the need for Nigerian banks to diversify their loan portfolios, strengthen risk management frameworks, and mitigate exposure to volatile commodity and currency markets as they navigate the uncertainties of 2026.
