In 2017, banks operating in sub-Saharan Africa will record lower profits than last year as a result of a difficult economic situation in the region. This was revealed by Fitch Ratings in a report it published on February 7.

“SSA banks are facing severe macro challenges, including slow GDP growth, foreign-currency scarcity and external risks,” Fitch said in the report.

“In this difficult environment, we expect slower loan growth in 2017, as well as greater caution from the banks. This will inevitably lead to lower earnings and profitability, despite a potential boost to margins from rate rises,” the ratings agency added.

Fitch added that the rapid increase of provisions that are meant to cover non-performing loans is an additional factor that puts pressure on the lenders’ profits in the sub-Saharan region.

Moreover, sovereign downgrades of many nations in the region, paired with governments’ inability to back lenders when needed, should result in downgrading of banks’ ratings.

Fitch’s average rating for lenders operating in SSA is “B”. This indicates a highly speculative credit quality and a relatively high default risk as well. The only investment-grade banks in the region are in South Africa and Mauritius.