Nigeria’s top bank by Tier 1 ranking is FBN Holdings (First Bank of Nigeria), ranked at 15 (down one place), with a capital of $1.9billion, according to Africa’s Top 100 Banks 2024. It was closely followed by Access Bank (16th) and Zenith Bank (17th, down from last year’s ranking as Nigeria’s top bank at 12th).
According to the report, African banks are taking a lead in drawing together the continent’s economies, and increasingly operate across borders.
Nigerian banks rank highly when it comes to Return on Equity (ROE), a key measure for investors. The top-ranked bank by this measure is Rawbank of the Democratic Republic of the Congo (DRC), a returning entrant at 88th in the table with net profit of $179million on Tier 1 capital of $286million, for a dramatic 62 percent ROE. HSBC Bank Egypt is close behind, with ROE of 61 percent for net profit of $397million on Tier 1 capital of $649million.
Nigeria’s giant Guaranty Trust achieved a very strong 57 percent ROE on Tier 1 capital of $1.1billion. Four Egyptian banks are among the continent’s best yielding for investors: Housing and Development Bank (ROE 57 percent), Credit Agricole Egypt (55 percent), Commercial International Bank (CIB) (49 percent), and Abu Dhabi Islamic Bank – Egypt (48 percent).
Nigerian bank United Bank of Africa (UBA) achieved ROE of 42 percent, slightly ahead of compatriots Zenith Bank (41 percent), Stanbic IBTC in Nigeria (38 percent), and Access Bank (38 percent).
The biggest banks continue to be the winners, both at working across different jurisdictions and at adopting new technology and adapting to it, and their healthy finances and global networks ensure they are likely to feature in Africa’s Top 100 Banks 2024.
Dramatic declines in the Naira compared to the US dollar (USD) affected the rankings in this year’s table, since banks report their figures in domestic currencies and the research team compiling the rankings convert into USD either at the date of the results or another date.
The assets of banks are generally measured as “Tier 1 capital”, which is a measure of the primary funding source of the bank and the capital which it can use for daily operations; and Tier 2 capital, which is supplementary capital and held in reserve.
The Top 100 Banks survey ranks the banks according to the Tier 1 capital, converted into US dollars. Tier 1 capital is made up of shareholders’ equity and retained earnings: capital + reserves + retained earnings + minority interests. The data is from Bankers’ Almanac and from the in-house research of African Business, publishers of African Banker and industry reports and market intelligence on Africa.
The figures are based on the latest financial results (capital, assets and profits) at the time of doing the research, which the banks publish in local currencies. The research team converts the results into US dollars ($) using the exchange rates at the date of the results (or on December 31).
In the past 12 months there have been some major changes in some currencies compared to the US dollar, including big falls in the exchange rates of the Nigerian naira and the Ethiopian birr, and a rise in the Kenyan shilling. Foreign exchange changes could affect the year-on-year comparisons and lead to changes in the ranking.
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The rise of North African banks has been the main change. South Africa’s banking giant Standard Bank Group has been Africa’s standalone Top Bank every year, while the National Bank of Egypt has been second for the last four years. The gap between them has been closing a little, but Standard Bank, with Tier 1 capital of $12.5billion, is still more than two-thirds bigger than its rival, whose Tier 1 capital is $7.5billion.
Morocco’s Attijariwafa Bank has climbed three places to third after its Tier 1 capital – the main measure of the annual ranking– climbed by a strong 12 percent to $6billion. South Africa’s Absa Bank, which fell back in the rankings last year, is back up to claim its number 4 spot, despite a 1 percent retreat in its Tier 1 capital, a sign of how core operating capital has retreated at some of Africa’s other banking giants compared to the 2023 ranking.
Banque Centrale Populaire, another Moroccan bank, has climbed to fifth place. Egypt’s Banque Misr fell back 30 percent on Tier 1 capital and ranks sixth (down from third). South Africa’s Firstrand, Africa’s biggest bank by market capitalisation (the total value of its shares listed on the Johannesburg Stock Exchange), has seen a 13 percent decline in its Tier 1 capital and is down to seventh (from fifth), while fellow South African group Nedbank has seen capital down 23 percent and is eighth, down from fourth in the list.
There was little change in the next three on the ranking: Banque Exterieure d’Algerie stays at ninth despite a 3 percent slide in Tier 1 capital; Morocco’s Bank of Africa – BMCE Group is up one place to tenth and displaces Banque Nationale d’Algerie to 11th.
Standard Bank also dominates when it comes to net profit or loss, with a strong rise to $2.7billion profit, up 18 percent on the year before. The bank has more than recovered from a dramatic fall in net profits in the year to December 2021. Its African operations in 19 countries (see below) are performing better than the group as a whole, as measured by compound annual growth rate in revenue, cost-to-income ratio, and return on equity (ROE).
FirstRand’s net profits are down to $1.4billion, down 13 percent on the year before, and in the year to June 2023, 11 percent of earnings came from “Broader Africa”. Banque Misr has profit of $1billion, down 30 percent on 2023.
The total ROE across Africa’s 100 Top Banks has more than recovered from the lingering effects of the Covid-19 pandemic and other problems. It is 20 percent for the current ranking, up from 17 percent in 2023 and 14 percent in 2022. The ROE was down to 12 percent in 2021, after falling from 19 percent in the 2020 ranking.
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By comparison, the average ROE for US banks for the first quarter of 2024 was reported to be 10.3 percent and any ROE greater than 10 percent is considered good by many analysts. The ROE for 2023 for global banks has not been reported but is expected to be 13 percent.
Usually, higher interest rates in the domestic market boost the profits that banks earn from net interest margins, the difference between the cost banks pay when they borrow (from depositors and the market) and the income they receive from loans (interest).
Only two banks in this year’s ranking were loss-making: Absa Bank (Ghana) with its December 2022 results; and Angola’s Banco de Poupanca e Credito (see Southern Africa below). This is down from three loss-making banks in the 2023 ranking.
The continent’s economies are still recovering from shocks African economies continue to feel the shocks of the last few years, including volatile global food and energy prices after Russia’s invasion of Ukraine shook global markets and interrupted some food supplies.
Adverse effects from climate change also affect economies. Inflation in many countries has been high, affecting the poorest the hardest, and many African central banks have pushed up interest rates, boosting profits at banks, as highlighted above.
The continent’s banks aim to leapfrog several stages of banking development, including cheques, debit cards and credit cards. Each involves building and rolling out costly infrastructure. In many African countries, credit and debit cards are hardly used yet; so banks aim to move their customers from cash and mobile money directly to digital.
Ecobank Transnational Incorporated, headquartered in Togo, is down to 22nd on the Top 100 ranking. It operates in 33 countries and the leading subsidiary in the ranking is Ecobank Nigeria (42nd). Ecobank Ghana ranked 74th last year but is not in this year’s ranking.
Banks in Nigeria, Kenya, Egypt, Morocco and Mauritius have also been expanding across Africa, including seizing opportunities as some European banks withdraw or cut back in order to focus on other regions. Local banks have also stepped in where links are loosened between French banks and some West African countries.
Nigeria demands its banks hold more capital by mid-2024 Nigeria’s banks were loading their capital war-chests after the Central Bank of Nigeria called for increased capital.
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