“The ratings are all in the 'B' range, indicating highly speculative fundamental credit quality, and factor in Fitch's expectation of increasingly challenging economic conditions and market volatility in Nigeria,” said the ratings agency in a statement.
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“The operating environment is affected by persistently low oil prices, continuing pressure on the domestic currency naira, likely further monetary policy and regulatory actions and increased political uncertainty.”
Fitch added that the ratings were underpinned by continued strong underlying economic growth in Nigeria, particularly in non-oil sectors.
The agency expects non-oil GDP growth of 5.5 per cent in 2015 compared to 7.5 per cent in 2014, driven by continued economic reforms and limited impact from public sector austerity.
The banks include: Zenith Bank Plc (Zenith), FBN Holdings Plc (FBNH), First Bank of Nigeria Ltd (FBN), United Bank for Africa Plc (UBA), Guaranty Trust Bank Plc (GTB), Access Bank Plc (Access), Diamond Bank Plc (Diamond), Fidelity Bank Plc (Fidelity), Union Bank Plc (Union) and First City Monument Bank Limited (FCMB).
Fitch has also affirmed the National Ratings of Stanbic IBTC Bank Plc (SIBTC) and Stanbic IBTC Holdings Plc (SIBTCH).
In assessing the probability of sovereign support, Fitch considers the authorities' willingness to support the Nigerian banks to be high as demonstrated in the past, but its ability to do so may be constrained by Nigeria's 'BB-' sovereign rating.
Fitch assigns Support Rating Floors (SRFs) based on each bank's systemic importance. The most systemically important banks in Fitch's view are FBN, Zenith and UBA, which are assigned SRFs of 'B+'. The other banks have SRFs of 'B'.
The ratings and outlooks are sensitive to a prolonged and severe recession that would affect the ability or willingness of the Nigerian authorities to provide support. However, a one-notch downgrade of the sovereign would not necessarily lead to a downgrade of the SRFs.
The highly challenging and volatile operating environment in Nigeria constrain the VRs and the other key rating factors, particularly the banks' financial profiles.
“The recent oil price shock and subsequent currency pressure has weakened the Nigerian operating environment and is likely to result in lower GDP growth in 2015,” added Fitch.
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“In turn, the banks are likely to report weaker profitability, asset quality and capital ratios. These pressures are to an extent captured in Fitch's ratings, and partly explain the Stable Outlooks.”
The agency said, should the operating environment deteriorate faster than expected, particularly should it significantly impact the banks' capital and asset quality, VR downgrades cannot be ruled out.