After a brief respite in 2021, African banks endured another difficult year in 2022. Rising interest rates and the strength of the US dollar curtailed economic growth across the continent, while South Africa, Nigeria and Egypt – home to 14 of the 25 largest African lenders in The Banker’s Top 1000 World Banks 2023 ranking – all face mounting economic challenges.
Local currency weakness acted as a brake on growth and profits for banks across the continent. While this year’s 25 largest African lenders have registered a 5.6% rise in their pre-tax profits, their aggregate Tier 1 capital has contracted by the same amount.
South Africa’s big four held firm in 2022, reporting largely unchanged Tier 1 capital positions even as the rand slipped lower throughout the year and gross domestic product growth slowed to 2% amid increased problems with the country’s electricity network. Standard Bank, which remains the continent’s largest lender by Tier 1 capital and assets, recorded the best pre-tax profit gain among its larger peers, with second-placed FirstRand leading the way in terms of return on assets.
Egyptian lenders, the continent’s main engine of Tier 1 capital growth for the previous five years, suffered a sharp reverse in 2022, with an acute economic crisis prompting the Egyptian pound to lose more than a third of its value during the year, with the currency weakening further into 2023.
While CIB Egypt, the country’s largest private lender, recorded a slight increase in Tier 1 capital in local currency terms in 2022, when converted to dollars it decreased by 36.2%, one of the biggest falls in 2023’s overall rankings. National Bank of Egypt and Banque Misr, the country’s largest banks, had yet to publish or provide end-of-year data for 2022 at time of writing, and are therefore not included in this year’s Top 1000 ranking, having changed their reporting cycle from end of June to end of December.
Lenders in Morocco were also affected by a 12% fall in the value of the dirham during 2022. Attijariwafa, the country’s largest bank, saw its Tier 1 capital and asset base drop by 5.8%, but posted a 6.7% rise in profits in 2022.
Africa’s biggest winner in this year’s ranking is development finance lender Afreximbank, whose Tier 1 capital base grew by 26.9% in 2022, seeing it rise 78 positions to 297th place in the overall rankings. The Cairo-based bank announced a capital raising programme in late 2021, which had generated $1.3bn of new capital by the end of 2022.
Nigerian lenders had a mixed year in 2022; the country’s two largest, Zenith Bank and Access Bank, both saw their Tier 1 capital positions drop by around 8% and their pre-tax profits in dollar terms fall 9.2% and 13.8%, respectively. Fourth-placed United Bank for Africa was the best performer of the country’s largest banks in this year’s rankings, recording a 13.4% rise in Tier 1 capital and a 17.3% rise in pre-tax profits.
Angolan lenders, meanwhile, caught a break in 2022, as the kwanza strengthened against the dollar thanks to higher oil exports, resulting in the country’s three largest banks moving into the continent’s top 25. Third-largest lender Banco de Fomento Angola is the country’s biggest success story, rising 76 places to 875th in the overall rankings, second only to Afreximbank for percentage growth in Tier 1 capital on the continent.
