S&P upgrades African Bank rating, affirms South African banking sector stability

S&P Global Ratings has upgraded African Bank's long-term global scale issuer credit rating to 'B+' from 'B, with a stable outlook, and affirmed the short-term global scale rating at 'B' - the only local bank to have its rating raised by the issuer, while the ratings of other banks were affirmed.

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S&P Global affirmed the ratings of Absa Bank, BNP Paribas Personal Finance South Africa, Capitec Bank, FirstRand Bank, Investec Bank, Nedbank, and the Development Bank of South Africa.

"In our view, the South African banking system is now in an expansion phase," S&P said on its website. On African Bank, S&P said the upgrade reflected the bank's more supportive economic environment, coupled with strong capitalisation that partially compensated for its weak asset quality indicators.

"We expect African Bank will continue to scale and diversify, particularly in retail... we do not expect a significant inflow of non-performing loans from the new production," the rating agency said.