Fitch affirms Absa Bank at ‘BB’; outlook stable
According to the UK-based firm, the drivers of the ratings are ABL standalone creditworthiness, as expressed by their 'bb' VRs.
Fitch Ratings has reaffirmed Absa Group Limited’s and Absa Bank Limited’s long-term and viability ratings at 'BB' and 'bb', respectively. The agency has also upheld the National Long-Term Ratings at 'AAA (zaf)'. The outlooks for these ratings are currently stable. The driving factors behind these ratings are Absa Bank’s strong creditworthiness, as evidenced by its viability ratings, which reflect a large franchise, diversified revenue streams, healthy profitability, good capital reserves, and a stable funding profile.
However, these ratings are constrained by the bank's heavy concentration in South Africa and its high exposure to sovereign-related risks relative to its capital. The stable outlooks echo the broader outlook for South Africa's economy. The National Ratings, the highest available in South Africa's system, indicate the banks' creditworthiness in local currency compared to other South African issuers.
These ratings align with those of all other banks in the country. Fitch notes that the viability rating for Absa Group Limited, a non-operating bank holding company, is linked to the group's overall rating due to its low common equity double leverage and high capital and liquidity effectiveness. Similarly, Absa Bank Limited's rating is tied to the group rating as it represents the main operating entity.
Fitch recently lowered its forecast for South Africa's real Gross Domestic Product growth to 1.1% in 2026, citing weaker-than-anticipated performance in the second half of 2026 due to higher imports, lower investment, and despite reforms in the electricity and logistics sectors. Despite this, Absa Bank Group boasts a robust domestic franchise through Absa Bank, which accounted for 20% of South Africa's banking system assets at the end of the second half of 2026.
The bank also has subsidiaries in nine other sub-Saharan African countries, contributing 18% of total assets at the same period, providing a degree of geographical diversification. The bank's revenue diversification is also strong.
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