The recent oil-price shock, currency risk, and legacy portfolio issues are the key threats for emerging EMEA banking sectors in 2016, according to Standard & Poor's Credit Analyst Natalia Yalovskaya.

“We also regard political and market uncertainties, among other factors, as latent threats. We believe banking environments will deteriorate further and therefore foresee risks increasing for banks in 2016,” she said.

Standard & Poor's Ratings Services believes this will be a testing year for emerging banking systems in Europe, the Middle East, and Africa (EMEA).

In Africa, the Nigerian banking sector faces two major hurdles in 2016: the collapse of oil prices and weakening of the local currency, the naira.

Sluggish economic growth will likely subdue new banking business and erode asset quality and margins for banks in Nigeria, according to S&P.

“The combination of low oil prices, slower economic growth, and tighter liquidity is likely to halt domestic loan growth and cause asset quality to deteriorate during the next two years, with banks' credit losses increasing by up to 2%,” said Yalovskaya.

“We expect profitability to be muted across the sector, but with large differences between the top-tier banks and the rest of the sector. Banks that can leverage low-cost funding and maintain adequate cost of risk, while controlling operating costs, will likely be the best performers,” she said.

In South Africa, banks' performance has been fairly resilient.

“Profitability has improved moderately, and we expect this will continue in 2016. In our view, a latent risk for banks stems from residential mortgage loans, which are exposed to a spike in interest rates,” she said.

Yalovskaya added that South African banks' dependence on external debt remains limited, protecting them from the effect of the rand's depreciation and risks related to changes in the Fed's monetary policy.

Overall, among the 27 EMEA banking sectors covered in the report titled “Negatives Tip The Scale For EMEA’s Emerging Banking Systems In 2016”, 13 face negative economic and/or industry risk trends, underlining S&P’s view of increasing pressure on banks' profiles in those countries.

"Generally, we expect that negative rating actions will outweigh positive ones in the region's emerging banking markets,” said Yalovskaya.