Sterling Bank, 7 others among top quality rated banks globally –Lafferty

A new report which scored 100 banks globally for quality have eight Nigerian banks, including Sterling with the highest four star rating, in the top category. The rest of the banks which earned a three star rating are Access Bank, Diamond Bank, Fidelity Bank, First Bank of Nigeria, Guarantee Trust Bank, United Bank for Africa, and Zenith Bank.

The Lafferty Bank Quality Ratings Journal which is in its inaugural issue, based its findings “entirely on banks’ annual reports – both the financial statements and everything else, including CEOs’ and chairmen’s statements.”

According to Michael Lafferty, Chairman, Lafferty Group, “We focus on the annual report because of its unique status as the primary vehicle for management of a bank to communicate and account to shareholders. Furthermore, it is available in a broadly standardized format from every bank worldwide – and is the first (and often the only) document that an international investor will look at in making an investment decision between hundreds and possibly thousands of banks.

“It is here that one can reasonably expect to find reliable accounts, clear exposition of strategy and how the bank proposes to achieve its aims – and also where an investor should gain valuable insights into the culture of the organisation, how it treats customers and the experience and qualifications of the management team. In carrying out their work, our analysts have no contact with the banks they are rating,”

The results according to the report are very striking because majority of banks with the highest 4 – and 5 – star ratings are based in emerging markets such as South Africa (Barclays Africa Capitec Bank), India (HDFC), Malaysia (OCBC, Hong Leon Bank and Public Bank), Nigeria (Sterling Bank), UAE (ADIB), Indonesia (BCA), Kuwait (National Bank of Kuwait), and Saudi Arabia (Arab National Bank). Capitec in South Africa is the only five star rated bank of the 100 banks.

Results also showed that there are no perfect formulas for attaining success in the banking sector, instead majority of the banks adopted different models that proved successful. These models took into accounts local and regional sensibilities and cultures.

Furthermore, size is not everything. “If anything, size is a negative factor in bank quality – and this is particularly evident when it comes to too-big-to-fail universal banks.

“Quality also means sustainability – and this is perfectly demonstrated in the words of Gerrie Fourie, CEO of Capitec in South Africa, the only five-star bank in the group: “We are a young bank, and everything we have done we done from a conservative approach because we want to build a bank to last for one hundred years,”” said Lafferty.

 

FRANK ELEANYA