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The continent’s largest banks returned to profitability in 2021, even as growth slowed in Egypt and Morocco, writes John Everington. 

While African economies were slower to re-open than in most other regions in 2021, due to lagging vaccination rollouts, a recovery in global economic activity and an uptick in commodity prices proved beneficial for the continent and its lenders during the year. The Banker’s Top 100 African Banks ranking for 2022 demonstrates a broad return to stability after a torrid year for the continent’s largest lenders.

Improved economic prospects have seen banks cut back provisioning, boosting profits. More than 80 lenders in the top 100 — and 45 out of the top 50 — posted an improvement in net profits. An impressive 78 of the 100 saw an improvement in their Tier 1 capital position.

The improvement in fortunes was particularly noticeable in South Africa, which exited recession in late 2020, but still faces significant economic challenges. Each of the country’s big four lenders reported an increase in Tier 1 capital in 2021, with only Standard Bank recording such a rise in 2020. Each of the big four saw an increase in pre-tax profits of more than 90% for the year.

Standard Bank also remains the continent’s largest bank by assets, despite strong competition from National Bank of Egypt

Standard Bank retains its position as the continent’s largest lender, its Tier 1 capital base increasing by 5.1% to $11.7bn. It also remains the continent’s largest bank by assets, despite strong competition from National Bank of Egypt, whose asset base increased by 33.8% to $167.9bn — just $3.5bn behind Standard Bank.

Capitec Bank — South Africa’s sixth-largest lender — is the continent’s best-performing bank for the second year in a row, thanks to strong scores for profitability, return on risk, soundness and leverage. South African lenders account for three of the 10 best performers by profitability for the year, and four of the continent’s top 10 for asset quality.

After overtaking Nedbank last year to become the continent’s fourth-largest lender, National Bank of Egypt posted a 9.7% growth in its Tier 1 capital base in 2021, putting it narrowly behind third-placed Absa Group. National Bank of Egypt and Banque Misr were the top performing banks in Africa in terms of growth, with Banque du Caire and Faisal Islamic Bank of Egypt joining them in the top 10.

Such growth is notably slower than in previous years, however, as Egypt’s recent economic boom finally shows signs of slowing. While the country’s four largest banks all posted Tier 1 capital gains of more than 20% in 2020, Afreximbank led its peers in 2021 with an increase of 18.6%.

Growth was similarly muted for Attijariwafa Bank and Groupe Banques Populaire, Morocco’s largest lenders, even as the economy recovered strongly in 2021. Morocco and Egypt are especially vulnerable to higher fuel and food prices prompted by the war in Ukraine, with Egypt requesting support from the International Monetary Fund in March.

Faisal Islamic Bank of Egypt, the country’s eighth-largest lender by Tier 1 capital, is the continent’s second-best performer overall in this year’s table, coming in first place in operational efficiency and liquidity. Commercial International Bank and Afreximbank also feature in the continent’s top 10 best performing banks, at fourth and ninth place, respectively.

Yet, it is Nigeria that is the biggest contributor to the continent’s best-performing league table for 2021. With four banks in the top 10, First Bank of Nigeria leads its peers in fifth place overall, displacing Guaranty Trust Bank, now in seventh place. Access Bank ranks in eighth position, with Zenith Bank in 10th place.

While Zenith Bank remains Nigeria’s largest lender by Tier 1 capital, it is second-placed Access Bank (which in March 2022 became Access Holdings) that reported stronger growth than any other Nigerian lender in 2021, thanks in no small part to a series of acquisitions around the continent. The bank posted a 45.2% increase in Tier 1 capital in 2021 — a stronger gain than any other lender with a Tier 1 capital base of $1bn or more, helping it climb four places to 15th position in the African ranking.

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