Fitch Ratings Agency has upgraded five South African banks Long-Term Ratings to AA+ with a stable outlook.
The five banks are Absa, Investec, Nedbank, Standard Bank and FNB.
This reflects an improvement in their creditworthiness relative to the best credits in the country.
Debt ratings (where applicable) have also been upgraded by one notch.
This follows Fitch's downgrade of South Africa's sovereign rating to 'BB-'/Negative from 'BB'/Negative on 20 November 2020 and the recalibration of the agency's South African National Ratings scale.
The upgrades reflect Fitch's view that the South African banks' creditworthiness has improved relative to the best credits in the country, including the sovereign and government-related entities. Aside of sovereign risks, Fitch believes the banks have significant headroom to withstand current pressures on the operating environment.
"The South African banks' company profiles, management and strategy, and risk appetite remain key strengths. Their capital ratios continue to display comfortable buffers over regulatory requirements and we expect them to remain broadly stable despite current pressures on asset quality and earnings. Furthermore, the banks' solid funding and liquidity profiles benefit from leading domestic franchises, underpinned by large customer-deposit funding bases and limited external funding reliance, "said Fitch in a statement.
The rating agency said the banks' ratings could be upgraded further if they continue with their strong performance.