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Top 1000 World BanksSeptember 1 2021

First Bank Nigeria bucks trend by increasing Tier 1 capital

Nigeria’s banks have had a tough year, as the economy hit a two-decade low. 
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Nigerian lenders experienced difficulties on a number of fronts in 2020. The impact of the coronavirus pandemic, combined with a slump in oil revenues (which eased toward the end of the year), resulted in the country’s worst economic performance in more than 20 years. Its five largest lenders all posted significant falls in this year’s Top 1000 ranking, with only First Bank Nigeria registering an increase in its Tier 1 capital base during 2020.

Zenith Bank — the country’s largest lender by Tier 1 capital — fell 68 places to number 454 in the Top 1000 ranking, its Tier 1 capital position declining by 5.4% even as it recorded a 7.7% rise in total assets. Meanwhile, Nigeria’s second biggest lender, Guaranty Trust Bank, drops from 537 to 625 in this year’s main ranking.

When it comes to performance however, the position of the country’s top two lenders is reversed. Guaranty tops the performance tables for Nigeria for the second consecutive year, coming first in its scores for operational efficiency, liquidity, and leverage, with Zenith remaining in second position. Guaranty’s cost-to-income ratio remains far lower than its national peers, standing at 28.9% at the end of 2020, compared with 41.2% for Zenith and 56.1% for Access Bank.

Zenith scored highest for profitability and soundness in the 2021 performance tables. The lender’s return on equity stood at 20.6%, second only to Guaranty’s 24.7% at the end of 2020.

Guaranty also overtakes Access Bank in the main Top 1000 ranking to become Nigeria’s second largest lender, even as its Tier 1 capital base decreased 10.8% for the year.

Access Bank’s Tier 1 capital suffered a steeper fall of 18.1% for the year, putting it just behind Guaranty in the country rankings, and in 630th place in the overall Top 1000, compared with 508th spot last year. But Access remains the country’s largest lender by total assets, thanks in no small part to a series of acquisitions across the continent. After merging with local rival Diamond Bank and acquiring Kenya’s Transnational in 2019, Access announced the acquisition of Zambia’s Cavmont in 2020, and also acquired Mozambique’s African Banking Corporation earlier in 2021.

Access comes in in fourth position in 2021’s performance rankings, compared with fifth position last year. The bank topped the country for asset quality — its non-performing loan ratio dropping from 5.7% to 4.3% for the year — but ranked lowest in the country’s top five for soundness.

United Bank for Africa, the country’s fourth largest lender in the Top 1000, ranks third nationally for performance, with high scores for growth and return on risk offset by lower scores for leverage, soundness, asset quality and operational efficiency.

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John Everington is the Middle East and Africa editor. Prior to joining The Banker, John was the deputy business editor of The National in the UAE, and has also worked for Dealreporter, Arab News and The Telegraph. He has also covered the telecom sector in Africa and the Middle East, living and working in Qatar and the UK. John has a BA in Arabic and History and an MA in Middle Eastern Studies from the School of Oriental and African Studies (SOAS) in London.
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