Despite the growth and development of its financial sector, Africa remains a minor player in global banking terms.
In 2019, the continent’s banking industry accounted for less than 1% of global Tier 1 capital making it the smallest regional player, behind Latin America with (just over 2%), and the Middle East (4%) and way behind the giants of Asia, Europe and North America.
Nonetheless, the performance in capital terms of the top five African countries – South Africa, Egypt, Morocco, Nigeria and Kenya – is impressive, with South Africa, in particular, leading the way.
"The performance in capital terms of the top five African countries – South Africa, Egypt, Morocco, Nigeria and Kenya – is impressive"
In the table of top African countries by Tier 1 capital, 2000-2019, by rank, South Africa has held first place consistently while other countries have jostled for position beneath it.
Nigeria, for example, was in fourth place up until 2006, it then moved up to second for a 10-year period until 2016 but has since fallen back to fourth, reflecting the fluctuating fortunes of the country’s banking sector.
Egypt placed second in 2000, then fell to fourth after 2008, but has since recovered its second spot. Morocco and Kenya, meanwhile, have been more consistent with the former mostly coming in third place and the latter placing continuously at fifth.
Click on the scores button of the same table and see a story of rising aggregate Tier 1 capital values throughout most of the period with only Nigeria not recovering its pre-2009 high and now posting slightly less than $8bn of capital, ahead of Kenya’s almost $3bn, but some way behind Egypt’s $13bn and Morocco’s $11bn, massively behind South Africa’s $34bn.
South Africa’s banking sector towers over the rest of the continent’s and is roughly equivalent to the other four countries added together. Despite the fact that Nigeria’s $495bn gross domestic product is about one-third larger than South Africa’s $370bn, according to the latest International Monetary Fund figures.
"South Africa’s banking sector towers over the rest of the continent’s and is roughly equivalent to the other four countries added together"
The table of top African banks by Tier 1 capital tells a similar story of South African dominance over the past 20 years with Standard Bank consistently in the number one spot, despite – as shown in the score table – its Tier 1 not showing the spectacular rises that we see for many banks, especially Asian banks, during the period under review.
In fact, Standard Bank which placed 149th in the 2019 Top 1000 World Banks ranking, with $9.7bn of Tier 1, has reduced its absolute capital in the past few years with a 3.72% drop from 2018 to 2019, reflecting the economic troubles in its home country.
The same is true of the other major South African banks but this has not undermined their grip on the table with First Rand in second place, Absa third, Nedbank fourth and Investec eighth. The strongest Nigerian player is Zenith Bank in ninth place (415th in the 2019 Top 1000 ranking).
National Bank of Egypt was third in 2000, fell as low as eighth, but has since recovered to fifth; while the Moroccan banks – Groupe Banques Populaire and Attijariwafa – have mostly occupied the middle positions and now stand at sixth and seventh, respectively.
"Standard Bank is consistently in the number one spot, despite its Tier 1 not showing the spectacular rises that we see for many banks"
Top 1000 World Banks:
Africa's growing potential
The Banker's managing editor Joy Macknight talks to Middle East and Africa editor John Everington about the key developments within African banking in the past decades and the outlook for the Africa African Continental Free Trade Area.
African lenders on the rise across the continent.
While South Africa’s banks remain top of the pile in Africa, it’s lenders at the opposite end of the continent that have seen the biggest gains in The Banker’s Top 1000 World Banks rankings.
After seeing their Tier 1 positions slip back the previous year, South Africa’s big four all saw growth in 2019, even as economic problems in their home market continued to grow. Standard Bank Group continues to top the pile, its Tier 1 capital rising by 8.16% to $10.5bn in 2019, even as its position in the overall Top 1000 fell to 152nd place from 149th last year.
Second-placed Nedbank fared a little better, adding 12.2% to its Tier 1 capital and climbing four places in the overall ranking to 169th position. Absa Group and Nedbank both improved eight places in the Top 1000 ranking, coming in at 190th and 232nd positions, respectively.
But Egyptian lenders have once again been the big African growth stars in this year’s rankings, as economic growth in the country hit a 10-year high. Egyptian lenders accounted for five out of the 10 of Africa’s highest movers, with the three of them among the highest movers in the overall rankings.
Banque du Caire, the second highest mover in 2019’s regional rankings, went one better this year, recording a 76% increase in Tier 1 capital. CIB Egypt came in close behind, with a 74.8% growth rate, with Faisal Islamic Bank of Egypt rounding out the top three with a 68.2% improvement in its Tier 1 position.
In addition to its position as the continent’s best growth (and the 12th best growth worldwide), Banque du Caire ranks in fifth position in Africa in terms of return on capital (ROC), with 28%. Banco Angolano de Investimentos of Angola tops the list with 40.2%, followed by Nigeria’s Guaranty Bank (36.5%) and last year’s number one, Banco de Fomento Angola (35.0%). In fourth place comes Investec South Africa, its ROC boosted by the divestment of its asset management business in March 2020.
While Egypt continues to dominate in terms of sheer growth on the continent, also noteworthy has been the growth story of its north African peers. Banque Nationale Agricole of Tunisia and Morocco’s Credit Agricole du Maroc were also among the continent’s top 10 gainers, with Tier 1 capital increases of 34.2% and 18.3% respectively. Credit Immobilier et Hotelier (CIH) of Morocco was Africa’s sole new entrant in the Top 1000 World Banks 2020 ranking, joining the exclusive club in 990th spot.
Top 1000 World Banks 2020 Africa
South African banks maintained their dominance of the continent, bouncing back after a rocky performance the year before. Egyptian lenders meteoric growth continues, with Moroccan lenders not far behind. John Everington traces the main African developments in the 2020 ranking