LAGOS, Sept 18 – The sharp depreciation of the Nigerian naira between 2023 and 2024 significantly increased the contribution of foreign subsidiaries to the earnings and asset bases of the country’s major banking groups, according to Fitch Ratings.
In a report titled “African Banking Groups’ Cross-Border Expansion to Continue”, published on September 14, Fitch examined 14 African banking groups operating in at least five African countries, with combined consolidated assets of more than $15 billion at the end of 2025.
Four Nigerian lenders were included in the assessment: Access Bank Plc, United Bank for Africa (UBA) Plc, Zenith Bank Plc and First HoldCo Plc.
Fitch said foreign subsidiaries have become increasingly important to African banking groups over the past decade, with the trend strengthening after the COVID-19 pandemic as lenders pursued acquisitions, geographic diversification and new sources of growth.
“The contribution of African banking groups’ foreign subsidiaries has generally increased over the past decade. This increase has accelerated since the coronavirus pandemic, propelled by acquisitions and, in the case of Nigerian banking groups, the 70% devaluation of the Nigerian naira in 2023–2024.”
UBA’s Foreign Operations Account for 77% of Net Income
The shift is particularly pronounced at UBA, where foreign subsidiaries accounted for 77% of group net income in 2025, compared with 44% in 2024.
Fitch said the increase was partly influenced by weaker domestic performance during 2025. Foreign operations also accounted for 52% of UBA’s total assets at the end of the year.
“Nigeria-based United Bank for Africa Plc (UBA) represented 77% of net income in 2025 (inflated by weak domestic performance in 2025; 2024: 44%) and 52% of total assets at end-2025.”
Access Bank has also significantly expanded the contribution of its international operations. Foreign subsidiaries generated 48% of group net income in 2025, compared with 30% in 2021.
Their share of total group assets reached 51% at the end of 2025, up from 23% four years earlier.
Fitch identified Access Bank as the African lender with the fastest cross-border expansion in recent years, driven by acquisitions designed to establish a broad network of subsidiaries across sub-Saharan Africa.
The acquisition of Mauritius-based AfrAsia Bank Limited, completed in July 2025, was highlighted as the bank’s most significant transaction. AfrAsia had a balance sheet of approximately $6.9 billion at the end of 2025, equivalent to an estimated 19% of Access Bank’s consolidated assets.
“Access Bank Plc (B/Stable) has had the fastest cross-border growth in recent years, reflecting a series of acquisitions intended to build a network of subsidiaries across SSA capable of capturing significant trade and financial flows.”
Fitch also noted that Access Bank recently breached a regulatory limit restricting investments in foreign subsidiaries to 10% of shareholders’ funds, affecting dividend payments. The agency expects the bank to restore compliance partly by reducing its ownership in some overseas subsidiaries.
Nigerian Banks Prepare for Further African Expansion
Fitch also pointed to Zenith Bank’s acquisition of Kenya’s Paramount Bank in April 2026 as part of the wider expansion of Nigerian and South African banking groups into East Africa.
The agency said Nigerian banks raised substantial capital over the past two years to comply with higher paid-in capital requirements that took effect at the end of the first quarter of 2026.
While some of the new capital was used to absorb losses associated with the withdrawal of regulatory forbearance on loan classification, Fitch said many Nigerian lenders continue to maintain capital adequacy ratios above 20%.
Part of the additional capital could be directed toward strengthening existing foreign subsidiaries and funding further expansion across African markets.
Fitch specifically highlighted Fidelity Bank Plc and First City Monument Bank (FCMB), which raised substantial capital relative to their balance sheets to retain international banking licences despite having comparatively small operations in the United Kingdom.
The rating agency expects both institutions to use part of the additional capital to expand their presence in other African markets.
Geographic Diversification Does Not Eliminate Sovereign Risk
Despite the growing contribution of foreign subsidiaries, Fitch said the credit profiles of African banking groups remain closely connected to the creditworthiness of their home countries.
None of the African banking groups covered by Fitch currently has a Viability Rating or Long-Term Issuer Default Rating above its domestic sovereign rating, including the Nigerian institutions assessed in the report.
Nigerian banks remain particularly exposed to domestic sovereign risk because of the significant cash reserves they maintain with the Central Bank of Nigeria (CBN), which Fitch said are not fully captured by conventional measures of sovereign exposure.
However, continued geographic diversification could gradually reduce the sensitivity of Nigerian banking groups to domestic economic conditions and sovereign risk over the medium term, as a larger share of earnings and assets becomes distributed across multiple African markets.
