South African banks head our league table again, with the top five slots and a hefty chunk of Tier 1 capital.

Once again, this year the ‘big five’ South African banks occupy the top positions in The Banker’s Top 100 sub-Saharan African banks listing. The remaining places in the top 10 are filled by another South African bank, African Bank, at six and then four banks from Nigeria: First Bank of Nigeria, Union Bank of Nigeria, Zenith International Bank and Intercontinental Bank.

Five other South African banks are represented in the Top 100, helping that country to account for a massive 74.9% of the aggregated Tier 1 capital of the Top 100, 83.5% of the aggregate assets and 72.4% of the aggregate pre-tax profits.

Nigeria’s share

Nigerian banks, of which there are 25 in this year’s list, by comparison account for 11.3% of aggregate Tier 1 capital, 5.9% of aggregate assets and 9.2% of aggregate pre-tax profits. The third largest share of the aggregate Tier 1 capital is by the group of 38 banks from 22 countries grouped under “others”, which account for 6.6%, 5.6% of aggregate assets and 9.0% of aggregate pre-tax profit.

The aggregate Tier 1 capital for the Top 100 grew 33.5% to $23.4bn, while aggregate assets grew 21% to $367.6bn and aggregate pre-tax profit grew 39.6% to $7.4bn.

The dominance of the South African banks in the listing is likely to increase following the successful acquisition of a 56.4% holding in the ABSA Group by Barclays Bank. ABSA has a restricted reach in the rest of Africa, being limited to the subsidiaries Banco Austral in Mozambique, National Bank of Commerce in Tanzania and its April 2005 acquisition of a 50% holding in Banco Comercial Angolano in Angola. It also has significant minority interests in Capricorn Investments, Namibia, and Commercial Bank of Zimbabwe. Barclays, however, has well-established subsidiaries in most of the major African countries outside South Africa.

In Nigeria, compliance with the minimum capital limit of N25bn ($192m) by the end of 2005, set by the central bank, seems likely for at least 20 banking institutions, either through additional capital raised in the markets, retention of profits or by the integration of several smaller banks into single entities. However, some banks have yet to come up with merger resolutions – including the Alliance Bank Group of nine banks – and time is running out.

Depositors reassured

The governor of the central bank, in a November 2005 press briefing (following a meeting with the chairman and chief executives of the affected banks), again reassured depositors that they would be repaid as soon as possible if any of the banks failed to meet the capital target – the implication being that banks failing in this way will be wound up. Non-performing loans (NPLs) continue to be a problem, ranging from 0.01% to 35.81% for the 49 banks in our listing that reported them, with an average value of 9.91% (2004: 11.86%). These figures show a downward movement from those reported last year but lending policy remains a concern in many countries.

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