African banks have grown substantially in the past few years. Those from South Africa are still the biggest, but they are far from being the most profitable.
African banks have grown rapidly in the past few years. Based on 2010 results, 19 of them have Tier 1 capital of more than $1bn, a level that roughly marks the cut-off point for the world’s biggest 500 banks.
This is an impressive rise for Africa, which had only 10 banks with $1bn of Tier 1 capital or more at the end of 2007. Moreover, 31 lenders on the continent now have capital strength of $500m or more, compared with just 13 in 2007.
The latest rankings suggest that it will not be long before African banks – only 30 of which made it into The Banker’s 2011 Top 1000 – collectively become a significant part of the global banking system.
North African, South African and Nigerian banks still dominate their peers. Of the top 20, only one lender, Togo-based Ecobank, comes from outside of those places.
South African banks maintain their grip at the top, and are the only ones with more than $5bn of Tier 1 capital. Standard Bank is the continent’s largest lender, with $12bn of such funds. Absa, FirstRand and Nedbank make up the rest of the top four.
The biggest bank outside South Africa is Morocco’s Attijariwafa. Thanks to quick growth outside of its home market – into countries such as Burkina Faso, Côte d’Ivoire, Mali, Mauritania, Tunisia and Senegal – it is now the biggest lender in west Africa and the Maghreb.
East Africa was the most profitable region for banking. The four lenders in the rankings from Uganda made huge aggregate returns on assets (ROAs) of 4.6%, the 17 from Kenya 4.4% and Rwanda’s 3.5%. These figures will likely fall when 2011 results are published, however, due to the steep inflation and currency depreciation experienced in Kenya and Uganda last year, which slowed their economic expansion.
Other highly profitable countries for banking were oil-rich Angola and Ethiopia, whose economy grew about 10% last year. Angola’s lenders made ROAs of 3.3%, while those in Ethiopia made returns of 4.4%. These profits are far higher than those in the two countries with the largest number of bank assets – South Africa, whose banks made ROAs of 1.5% and Egypt, where lenders made returns of 1.6% on their assets.
On the rise
What will change in next year’s rankings? South African banks’ dominance will continue. North African lenders will also retain high rankings, despite the political convulsions in the region in 2011.
More of Nigeria’s lenders – who have finally shaken off their crisis of 2009 – will rise to the top. The agreed merger of Access Bank and Intercontinental, two of the country’s biggest lenders, will likely see the combined entity become one of Africa’s top 10 banks by assets. Another behemoth will be established once the merger of Ecobank Nigeria and Oceanic Bank, another Nigerian lender, is completed.
Elsewhere, lenders from Angola, which has the fifth largest number of bank assets on the continent, will also rise.
See the full rankings
