Banking
Fitch Affirms First Bank’s B- Rating with Negative Outlook
By Modupe Gbadeyanka
Renowned rating agency, Fitch Ratings, has announced affirming the Long-Term Issuer Default Ratings (IDR) of FBN Holdings Plc (FBNH) and First Bank of Nigeria Ltd (FBN).
A statement issued yesterday said the banks’ Viability Ratings (VR) have been affirmed at ‘B-‘ and the Support Ratings at ‘5’, while the the Long-Term National Ratings have been affirmed at ‘BB+(nga)’ with the outlooks negative.
FBN Holdings is the non-operating holding company which owns FBN. Its ratings are aligned with those of FBN, its main operating subsidiary.
Fitch said FBN’s ratings are driven by its standalone creditworthiness. Reducing the group’s dependence on contributions from FBN is a medium-term target.
Currently, FBN generates around 90% of group revenues, but the objective is to increase contributions from other subsidiaries over time. FBN represents around 95% of consolidated group assets.
FBN is one of Nigeria’s largest banks, with shares of 14% and 17% of banking sector loans and deposits, respectively.
Fitch noted that FBNH has a strong franchise but its asset quality is troubled and capital levels are not commensurate with risk, in its view, reflecting high impaired loans. In the past, the group’s business model was reliant on large, often oil-related, corporate lending. Risk-control deficiencies are being addressed by new management.
Gross loans represent slightly below half of FBNH’s balance sheet. Around 40% of gross loans are extended to the oil and gas sectors, many of which have been restructured.
The rating agency views that restructuring efforts made to align debt servicing schedules with projected cash flows appear reasonable and the performance of restructured loans appears to be holding up well.
It added that loan loss reserve coverage reached 52% of impaired loans at end-September 2017, low compared with the average for large Nigerian banks peers (around 90%). Unreserved impaired loans represented 36% of Fitch Core Capital (FCC). FBNH’s capital ratios are low compared with peers and capital weakness has a high influence on the ratings.
FBNH’s margins are in line with peer averages and cost/income ratios are reasonable, considering the bank’s large branch network, it said, adding that FBN’s ability to generate revenues at pre-impairment operating level is strong, but high impairment charges have impacted earnings and profitability in 2016 and 2017.
The structure of FBNH’s funding base is credit positive. Stable customer deposits, largely held at FBN and demonstrating considerable stability, represent around two-thirds of FBNH’s total deposits. FBNH’s funding costs are lower than peers, reflecting FBN’s strong retail franchise. Local currency liquidity ratios are consistently well above minimum regulatory limits, the rating firm stated.
Foreign currency(FC)-denominated borrowings, which represent around 5% of total funding, mainly comprise two Eurobond issues, maturing in August 2020 and July 2021.
It said access to international capital markets can be unsteady for Nigerian banks, exposing them to refinancing risks, but international banks continued to lend to FBN throughout 2016 when several Nigerian banks experienced tight FC liquidity positions. This is an indication of market confidence in the group which we view positively.
The Negative Outlook reflects pressure on capital arising from a still large amount of unreserved impaired loans, the rating agency headquartered in New York said.
Commenting further, Fitch said FBNH’s and FBN’s National Ratings reflect their creditworthiness relative to the country’s best credit and relative to peers operating in Nigeria.
In its report, Fitch said it believes that sovereign support to Nigerian banks cannot be relied on given Nigeria’s (B+/Negative) weak ability to provide support, particularly in FC.
In addition, there are no clear messages from the authorities regarding their willingness to support the banking system. Therefore, the Support Rating Floor of all Nigerian banks is ‘No Floor’ and all Support Ratings are ‘5’.
“This reflects our view that senior creditors cannot rely on receiving full and timely extraordinary support from the Nigerian sovereign if any of the banks become non-viable,” it said.
The subordinated debt issued by FBN Finance B.V., a special purpose company established by the group for the purpose of debt issuance, is rated one notch below FBN’s VR. Recoveries on the notes in the event of default are considered to be below average, as evidenced by a Recovery Rating (RR) of ‘RR5’.
FBN’s and FBNH’s ratings are primarily sensitive to a change in the level of loan loss reserve cover. At present, unreserved impaired loans weigh on capital adequacy and this has a high influence on the ratings. Once asset quality trends demonstrate sustained improvement, loan loss reserves cover a larger proportion of impaired loans, and assuming the operating environment does not deteriorate, the Outlook on the ratings would no longer be Negative and upgrades could be envisaged. If key weaknesses are addressed, FBNH and FBN could achieve multi-notch upgrades because their ratings are well below their natural levels considering FBN’s size and position within Nigeria’s banking sector.
A downgrade could result from further weakness in already limited capital buffers, which could threaten FBN’s viability. Given the positive trends in asset quality improvement and capital retention, this is not our base case.
The SR is potentially sensitive to any change in assumptions around the propensity or ability of the sovereign to provide timely support to the bank.
Ratings assigned to the subordinated notes are on Rating Watch Positive (RWP). If modifiers are introduced to the ‘CCC’ IDR category, as proposed by Fitch’s exposure draft on Global Banking Criteria published on 12 December 2017, the subordinated notes would be rated ‘CCC+’, maintaining the one-notch differential with FBN’s VR.
By Modupe Gbadeyanka
The Nigeria Revenue Service (NRS) has denied reports that customers performing financial transactions would pay a Value Added Tax (VAT) of 7.5 per cent from January 19, 2026.
Information about this emanated from messages sent out to customers of a financial institution, informing them of the new development in compliance of Nigeria’s new tax laws, especially the Nigeria Tax Act 2025.
It was claimed that Nigerians, as part of efforts of the government to generate more funds from taxes, would begin to pay VAT for the use of banking services like USSD and others.
But reacting in a statement signed by its management on Thursday, January 15, 2026, the tax collecting agency emphasised that the VAT collection for such services was not new.
It stressed that customers have always paid taxes for electronic money transfers and others, as this is charged on the fee, not from the main amount of the transaction.
“The Nigeria Revenue Service wishes to address and correct misleading narratives circulating in sections of the media suggesting that Value Added Tax (VAT has been newly introduced on banking services, fees, commissions, or electronic money transfers. This claim is categorically incorrect.
“VAT has always applied to fees, commissions, and charges for services rendered by banks and other financial institutions under Nigeria’s long-established VAT regime. The Nigeria Tax Act did not introduce VAT on banking charges, nor (sic) did it impose new tax obligation on customers in this regard.
“The Nigeria Revenue Service urges members of the public and all stakeholders to disregard misinformation and to rely exclusively on official communications for accurate, authoritative, and up-to-date tax information,” the statement read.
Business Post reports that what this basically means is that if a customer sends N10,000 and the bank charges N50 for the service, a 7.5 per cent VAT on the N50, which is N3.75, would be paid by the sender, not N750, which is 7.5 per cent of N10,000.
By Adedapo Adesanya
Nigerian-born payments company, Paystack, has announced its entry into the banking sector with the launch of Paystack Microfinance Bank (Paystack MFB) after the acquisition of Ladder Microfinance Bank.
The bank continues Paystack’s push into consumer products and adds a banking layer to its business-focused payment product, coming ten years after the company was founded with the goal of simplifying payments for businesses using modern technology.
In Nigeria alone, the company says its systems process trillions of Naira every month, supporting more than 300,000 businesses and millions of customers. According to Paystack, this growth highlighted a broader need beyond payments, prompting the decision to build a more comprehensive financial offering.
Paystack MFB will begin lending to businesses before expanding to consumers. It will also offer banking-as-a-service (BaaS) products to companies building financial products and treasury management products.
The company explained that while payments are a critical part of the financial journey, businesses and individuals increasingly require a full financial operating system. This includes the ability to store money securely, move funds easily, gain clarity from financial data, and access tools that support long-term growth. Developers, Paystack added, also need reliable, secure, and compliant infrastructure to build new financial solutions efficiently.
To address these needs, Paystack said it has established Paystack Microfinance Bank as a separate and independent entity from Paystack Payments Limited.
The new microfinance bank operates with its own license, governance structure, and product roadmap, although it will work closely with its sister company.
“By adding Paystack MFB to our family of brands, we’re finding the right balance through combining the rapid innovation of a tech-first platform with the stability of traditional banking,” said Ms Amandine Lobelle, Paystack’s chief operating officer.
Last year, it launched its controversial consumer payments app Zap, and now it is taking a step further with the company securing regulatory backing to become a deposit-taking institution. According to a statement, the bank will be guided by the same principles that shaped Paystack’s early success, including reliability, simplicity, transparency, and trust.
Paystack MFB has begun operations with a small group of early members and plans a gradual rollout to more businesses and individuals. The company also announced the opening of a waitlist for interested users and confirmed it is recruiting a dedicated team to help build its long-term banking infrastructure.
By Modupe Gbadeyanka
The Economic and Financial Crimes Commission (EFCC) has helped First Bank of Nigeria to recover the sum of N802.4 million from a suspect, Mr Kingsley Eghosa Ojo, who unlawfully took possession of over N1.3 billion belonging to the bank.
The funds were handed over the financial institution by the Benin Zonal Directorate of the anti-money laundering agency on Monday, January 12, 2026, a statement on Tuesday confirmed.
First Bank approached the EFCC for the recovery of the money through a petition, claiming that the suspect received the money into his account after system glitches.
The commission in its investigation; discovered that the suspect, upon the receipt of the money, transferred a good measure of it to the bank accounts of his mother, Mrs Itohan Ojo and that of his sister, Ms Edith Okoro Osaretin, and committed part of the money to completion of his building project and the funding of a new flamboyant lifestyle.
With the recovery of the money from the identified bank accounts, the EFCC handed it over in drafts to First Bank.
While handing over the lender, the acting Director for the Directorate, Mr Sa’ad Hanafi Sa’ad, stressed his organisation would continue to discharge its mandate effectively in the overall interests of society.
“The EFCC Establishment Act empowers us to trace and recover proceeds of crime and restitute the victim. In this case, First Bank was the victim and that is exactly what we have done.
“We will continue to discharge our duties to ensure that fraudsters do not benefit from fraud and that economic and financial crimes are nipped in the bud,” he said.
In his response, the Business Manager for First Bank in Benin City, Mr Olalere Sunday Ajayi, who received the drafts on behalf of the bank, commended the EFCC for the swiftness and the professionalism it brought to bear in the handling of the matter and expressed the bank’s gratitude to the commission.
He described the EFCC as one of Nigeria’s most effective and reliable institutions.
Meanwhile, Mr Kingsley and all other suspects in the matter have been charged to court for stealing by the EFCC.
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