Egyptian and Nigerian lenders put in the most notable performances in The Banker's Top 100 African Banks ranking, while South African institutions continue to dominate the upper echelons of the table.

This year’s African banks ranking offers another snapshot of a continent on the rise. In aggregate terms, Africa’s top 100 lenders, measured by their year-end 2014 Tier 1 capital, recorded stellar gains according to most metrics. Total assets hit $1230bn accompanied by year-on-year asset growth of 5.03%. Encouragingly, these assets are being put to good use. The aggregate return on assets for these banks was 2.2% while their year-on-year pre-tax profit growth was a healthy 10.32%. The total value of pre-tax profits for 2014 edged slightly over $27bn. Meanwhile, the aggregate return on capital of the top 100 lenders hit a staggering 27.6%, up from the 25% recorded in the 2015 ranking. 

Within this bigger picture some markets have excelled by surpassing regional average performance figures, while others have fared less favourably. In particular, the impact of lower commodity prices, coupled with more stringent regulations, among other factors, had started to weigh on some lenders by the end of 2014. Elsewhere, encouraging political and economic reforms are opening up new frontiers for the continent’s banking sector, allowing higher growth markets to show their longer term promise.

Mixed news in north Africa 

In the 2016 ranking, Egyptian lenders emerged as the standout performers. The country’s improving political environment, coupled with a promising programme of economic reforms, has been a source of optimism for many lenders. With a population of more than 80 million and banking sector penetration of about 10%, as well as extensive and ongoing infrastructure investments, growth opportunities in the country are abundant. 

The total assets of the 16 Egyptian lenders featured in the ranking grew by 16.7% year on year, reaching $204.8bn. Their aggregate return on assets came in at 2.39% while year-on-year pre-tax profit growth hit 24.9%. Notably, the aggregate Tier 1 capital growth of Egypt’s banks hit 13.26% over the review period while their return on capital exceeded the regional average at 38.9%. 

Four Egyptian lenders featured in the top 10 banks by asset growth, compared with none in the 2015 edition. Two foreign-owned subsidiaries with Gulf-based parent entities – Union National Bank Egypt and NBK Egypt – topped the table in this category, pointing to the impressive gains made by foreign lenders who have entered the market in recent years. Meanwhile, four Egyptian lenders also featured in the top 10 banks by return on capital, with Banque du Caire taking the number two spot with a return of 72.2%. 

Elsewhere in north Africa, the performance of Morocco’s lenders dipped in this year’s rankings. Total assets for the country’s representative banks fell by -5.93%, while pre-tax profits followed a similar trajectory at -8.37%. This weaker performance relative to the regional norm is partly due to weaknesses in the country’s small and medium-sized enterprise sector, which is highly reliant on trade demand with Europe, as well as the poor performance of the agricultural sector, which has acted as a drag on economic growth.

Top African banks ranking

Nigeria's momentum 

Banks in Africa’s largest economy, Nigeria, have maintained the impressive gains made in The Banker's most recent rankings. Asset growth of the 14 Nigerian banks featured in the 2016 rankings came in at 14%, while their aggregate return on assets surpassed the regional average at 2.49%. Nevertheless, while these banks posted aggregate Tier 1 capital growth of 10.29%, their return on capital was unable to keep pace and came in under the continent-wide average (27.6%) at 23.6%. As the review period concludes at the year end of 2014, the full impact of the oil price drop is not accounted for in this year’s rankings. 

Union Bank of Nigeria (UBN) and Ecobank Nigeria topped the overall pre-tax profit growth table with 614% and 164%, respectively. UBN’s extraordinary performance is attributable in part to one-off profits from the disposal of non-core subsidiaries, totalling about $95m out of an annual pre-tax profit of $168m. Meanwhile, only one Nigerian lender, Guaranty Trust Bank featured the top 10 ranking by return on assets. 

Africa’s other big hitter, South Africa, continued to dominate the rankings in terms of their Tier 1 capital. With little change from previous years, Standard Bank, FirstRand, Barclays Africa Group and Nedbank Group taking the top four positions, respectively. Notably, not a single South African bank made it into the top 10 ranking by pre-tax profit, compared with four in the 2015 edition. This situation has emerged as the country’s cooling economic environment has led to a lack of notable growth opportunities for South African banks. 

Further north, Kenya’s banks enjoyed solid gains to both their assets, profitability and Tier 1 capital in 2014. In aggregate terms, asset growth hit 12.5% while return on assets were 4.81%. Similarly, aggregate Tier 1 capital increased by 13.4% as the banks achieved a return on capital of 38%. Of particular note is Diamond Trust Bank, which made it into the top 10 banks by asset growth as well as Tier 1 capital growth over the review period.

The Banker's Africa banks ranking, 2016 originally appeared in the January 2016 issue of the magazine. The full results of the ranking are available on The Banker DatabaseFind out more about the database, register for a free trial or subscribe today.

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