Rating agency Fitch Ratings forecast a negative outlook for banks in sub Saharan Africa for 2016, as various risks put pressure on the sovereigns of the States of this region.

“Falling commodity prices, faltering GDP growth, weaker currencies, greater political risks and external factors are to varying degrees putting increasing pressure on SSA sovereigns and therefore bank risk profiles,” stated Fitch in a report dated January 15.

The London-based agency also said that banks operating in sub Saharan Africa will be facing various challenges including a slow growth, weaker earnings, worsening asset quality and tighter liquidity. It however believes that the drawback SSA’s banking sector will experience would not result in more degradation of its sovereigns which generally fall in the “B” range (speculative). Only South African and Mauritian banks have “investment-grade ratings”.

Fitch also forecast a rise in non-performing loans by banks which are active in the Southern Sahara, due to falling performances of the oil and gas, mining, trading and manufacturing sectors.

Bank assets are also expected to deteriorate as a result of weakening African currencies which will also lead to a rise in cost for refinancing foreign currencies.

The rating agenc highlights that a major regional banking crisis is unlikely to occur in the sub Saharan Africa region.