Standard Bank named top bank in Africa

BUSINESS REPORTER

Africa’s biggest bank by assets, Standard Bank Group, has retained its seat at the top of the banking pack in Africa on the back of massive growth in its Tier 1 capital of 24% to $13.8bn in December 2020,  a new report has shown.

This was revealed in a 2021 annual survey pitting the top 100 banks in Africa conducted by global publication Group, IC Publications, through its leading publication, African Business.

IC Publications has over 50 years’ experience in publishing magazines, newsletters, country supplements, industry reports and market intelligence on Africa.

The survey ranks Africa’s banks according to their Tier 1 capital which consists of capital + reserves + retained earnings + minority interests. These are published in local currencies and then converted into US$ at the exchange rates at the year-end date in the results (or on 31 December 2020).

Standard Bank Group retained pole position for the second time in a row on the back of massive growth in its Tier 1 capital of 24% to $13.8bn in December 2020.

The group, which wholly owns Stanbic Bank Zimbabwe, shrugged off competition from other leading banks in Africa despite the fact that the South African economy was hit the hardest by Covid-19 due to existing weaknesses and strict nationwide lockdowns.

A statement from African Business said other countries were not as badly affected by Covid-19 as initially feared, buoyed by government support programmes including credit, loan-guarantee schemes and delaying repayments.

The statement noted that Standard Bank’s retail and corporate banking clients received a total of R154bn ($10bn) in pandemic crisis relief. All the big South African banks implemented a government-backed credit extension programme for small to medium-sized enterprises.

“Banks adapted fast to new means of working and working from home, and now have many opportunities to restrain their operating costs and to invest carefully in IT. Reserves were also boosted after banking regulators in many economies told banks not to pay their usual generous dividends so they would have the cash to support clients through the pandemic,” said the statement.

The large reserves that many banks built up may be an arsenal of investment firepower to spend on new opportunities.

“Our view is post-pandemic there are going to be vast opportunities to grow,” said Standard Bank’s CEO Sim Tshabalala in March 2021 when he announced the December 2020 results. The dividend was slashed to R2.40, from the previous year’s R9.94. Tshabalala said new opportunities included accelerating digitisation, investing in non-banking activities and adding new businesses.

National Bank of Egypt climbed two places to second with 26% growth in capital pushing it to $6.7bn. Africa Business noted that the bank still has a long way to go to challenge the top spot in banking.

South Africa’s Absa Bank slipped back to third position with its capital only up 6% to $6.3bn, partly dragged back as the South African rand slipped back 4.6% against the US dollar in the year to December 2020.

Nedbank edged higher from 5th to 4th, with capital also up 6% to $5.5bn.

“North African banks with their emphasis on strong growth, are starting to challenge the continental dominance of South Africa’s big four. Morocco has two banks in the top 10: Attijariwafa Bank climbs one spot to 5th with Tier 1 capital of $6bn, while Banque Centrale Populaire (BCP) stands at number 7 with $4.7bn,” said the statement.

The Moroccans sandwiched South Africa’s FirstRand, down from 3rd  to 6th with Tier 1 capital down 9% to $5bn (half of this is due to FX).

FirstRand is still the most profitable in the top 10 measured by return on equity (ROE) with a very strong 17% (down from a massive 30% in last year’s ranking), tying with Banque Extérieure d’Algérie. Banque Misr is another ROE star at 15%.

Egypt’s Banque Misr (capital unchanged at $3.4bn in the June 2019 results), climbed from 11th to 8th while Algeria’s Banque Nationale d’Algérie ($3.4bn) and Banque Extérieure d’Algérie ($3.2bn) fell from 8th and 9th to 9th and 10th respectively.

“North Africa now has 45 banks in Africa’s top 100, up from 42 last year and Egypt and Tunisia each have two more high-flying banks. Southern Africa’s share falls back from 25 to 22, with South Africa and Namibia each losing banks from the top ranking, although this could partly be due to currency fluctuations,” said the Africa Business statement.

South Africa has 28% of the total banking Tier 1 capital, ahead of Egypt’s 20%, Morocco’s 13.5% and Nigeria’s 10.6%. However, by region North Africa is ahead, with 45% of the total capital (up from 44% last year), compared to 34% in Southern Africa (down from nearly 36%). There are still 12 Nigerian banks in the top 100.

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