Standard Bank consolidated its position as the continent’s largest lender – a position it has held for more than 20 years as Banks in South Africa, Egypt and Nigeria continue to dominate top spots

LONDON, United Kingdom: While South African lenders continue to dominate the top African positions in The Banker’s Top 1000 World Banks ranking, domestic economic pressures, combined with the worst outbreak of Covid-19 on the continent, have hit the country’s lenders hard.

After posting gains across the board in 2019, just three of the country’s seven lenders in this year’s rankings saw an increase in their Tier 1 capital position in 2020, as higher impairments took their toll on balance sheets.

Standard Bank consolidated its position as the continent’s largest lender — a position it has held for more than 20 years — with a 5.8% gain in its Tier 1 capital base, the only one of the country’s big four to record such an increase. While impressive in the circumstances, Standard Bank slips five places in the overall Top 1000 to 157th place.

Standard Bank consolidated its position as the continent’s largest lender – a position it has held for more than 20 years

FirstRand and Absa Group remain in second and third place in the continent, their Tier 1 capital base dropping by 15.5% and 2.1%, respectively.

Lenders in Nigeria suffer a similar fate in this year’s rankings, as the continent’s largest economy briefly entered recession in late 2020 ahead of a recovery in oil revenues towards the end of that year.

Zenith Bank, the country’s largest lender, exits the continent’s top 10 for the first time, following a 5.4% decrease in its Tier 1 capital base. First Bank of Nigeria, the country’s fifth largest lender, was the only one of six Nigerian banks in this year’s Top 1000 to improve its Tier 1 capital position.

Despite such decreases, Nigerian banks continue to score highly for profitability and efficiency compared not only with their African peers but also the global competition. Guaranty Trust Bank, United Bank for Africa and Zenith Bank top the continent in terms of return on capital, coming in fourth, 16th and 22nd positions globally.

Egyptian lenders continue to account for the bulk of Tier 1 capital growth across the continent.

All seven Egyptian banks in this year’s Top 1000 registered an improvement in their Tier 1 capital base, and all climbed up in the overall rankings

National Bank of Egypt overtook South Africa’s Nedbank to become the continent’s fourth largest lender, and climbed 22 places to occupy 215th position in the Top 1000. Local rival Banque Misr records the continent’s best growth, with a staggering 84.2% rise in its Tier 1 position. This rise, a gain of 94 positions in this year’s Top 1000, makes it the sixth highest mover in this year’s overall rankings.

North African lenders make up eight of the continent’s highest movers, highlighting the region’s growth profile compared with sub-Saharan economies. Morocco’s Attijariwafa is the pick of the region’s non-Egyptian lenders, its Tier 1 capital position improving by 15.7% in 2020.

First Bank Nigeria bucks trend by increasing Tier 1 capital as Nigerian banks continue to score highly for profitability and efficiency

Nigerian lenders experienced difficulties on a number of fronts in 2020. The impact of the coronavirus pandemic, combined with a slump in oil revenues (which eased toward the end of the year), resulted in the country’s worst economic performance in more than 20 years. Its five largest lenders all posted significant falls in this year’s Top 1000 ranking, with only First Bank Nigeria registering an increase in its Tier 1 capital base during 2020.

Zenith Bank — the country’s largest lender by Tier 1 capital — fell 68 places to number 454 in the Top 1000 ranking, its Tier 1 capital position declining by 5.4% even as it recorded a 7.7% rise in total assets. Meanwhile, Nigeria’s second biggest lender, Guaranty Trust Bank, drops from 537 to 625 in this year’s main ranking.

When it comes to performance however, the position of the country’s top two lenders is reversed. Guaranty tops the performance tables for Nigeria for the second consecutive year, coming first in its scores for operational efficiency, liquidity, and leverage, with Zenith remaining in second position. Guaranty’s cost-to-income ratio remains far lower than its national peers, standing at 28.9% at the end of 2020, compared with 41.2% for Zenith and 56.1% for Access Bank.

Zenith scored highest for profitability and soundness in the 2021 performance tables. The lender’s return on equity stood at 20.6%, second only to Guaranty’s 24.7% at the end of 2020.

Guaranty also overtakes Access Bank in the main Top 1000 ranking to become Nigeria’s second largest lender, even as its Tier 1 capital base decreased 10.8% for the year.

Access Bank’s Tier 1 capital suffered a steeper fall of 18.1% for the year, putting it just behind Guaranty in the country rankings, and in 630th place in the overall Top 1000, compared with 508th spot last year. But Access remains the country’s largest lender by total assets, thanks in no small part to a series of acquisitions across the continent. After merging with local rival Diamond Bank and acquiring Kenya’s Transnational in 2019, Access announced the acquisition of Zambia’s Cavmont in 2020, and also acquired Mozambique’s African Banking Corporation earlier in 2021.

Access comes in in fourth position in 2021’s performance rankings, compared with fifth position last year. The bank topped the country for asset quality — its non-performing loan ratio dropping from 5.7% to 4.3% for the year — but ranked lowest in the country’s top five for soundness.

United Bank for Africa, the country’s fourth largest lender in the Top 1000, ranks third nationally for performance, with high scores for growth and return on risk offset by lower scores for leverage, soundness, asset quality and operational efficiency.

South Africa’ Investec has secured the crown of South Africa’s best-performing lender for the second year running

Despite being one of the country’s smaller lenders — its asset base base is around a fifth the size of the country’s largest lender Standard Bank — Investec took first position in four out of the eight measures tracked in the 2021 performance rankings.

The bank’s chart-topping performance in asset quality in particular stands out. After a tough year for South African lenders, Investec’s non-performing loan ratio stood at just 2.6% for the year ending March 2021, compared with 4.37% (as of December 2020) for FirstRand, the next best performer in the country.

Besides its strong showing in the performance category, Investec — which completed the demerger of its Ninety One asset management business in March 2020 — was the only one of South Africa’s top five lenders to boost its showing in the main Top 1000. It rose 63 places to number 400 in the main ranking, with its Tier 1 capital base growing by 40.8% to $3.05bn.

Comfortably retaining its position as the continent’s largest lender, Standard Bank comes second in South Africa’s performance rankings, up one place from 2020. The bank registered the country’s best score for liquidity, its loans to asset ratio dropping from 53.44% to 52.08% for 2020.

Standard Bank scored second best in terms of growth, asset quality and soundness, and was the only lender in the country’s top five other than Investec to record a growth in its total loan book for the year, rising 3.6% to $89.8bn.

Though Standard Bank’s Tier 1 capital base grew by 5.8% to $11.2bn, it slipped back five places in the main Top 1000 ranking, to 157th place.

FirstRand, Absa and Nedbank — which, together with Standard Bank, make up Africa’s ‘Big Four’ — also lost ground in the Top 1000, with each registering a drop in Tier 1 capital

FirstRand, which saw its Tier 1 capital position fall 15.5% year-on-year to the end of June 2020, dropped 31 places to 200th position. Absa and Nedbank, which registered single-digit declines, fell 15 places to 205 and 33 places to 265, respectively.

Despite trailing FirstRand and Absa in the main Top 1000 ranking, Nedbank is third in the country’s overall performance table, thanks largely to its stronger showing in the operational efficiency and liquidity metrics.

Its growth success was manifested in its deposit base, which grew by 2.32% to $64.1bn in 2020, compared with declines at both FirstRand and Absa. Nedbank ranks second in liquidity behind Standard Bank, its loan-to-deposit ratio decreasing from 69.64% to 66.74% for the year.

John Everington, Africa and Middle East Editor

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