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Top 1000 World Banks – Kenya bucks Africa’s downward trend

The depreciating rand and falling oil prices have caused trouble in Africa, with South African and Nigerian lenders slipping down the overall rankings, but Kenyan entrants still managed to show Tier 1 growth.
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A number of Africa’s largest banking markets faced severe challenges over the 2015 review period. Tumbling commodity prices and volatile currency movements all contributed to the generally weak performance of most of the continent’s big hitters in the 2016 ranking. In aggregate terms, the continent’s total Tier 1 capital fell by 12.77%, accompanied by similar hits to both profitability and asset growth.

Africa

Mirroring the Top 25 African banks ranking in 2015, three South African lenders, Standard Bank, FirstRand and Nedbank, have secured the respective top three positions. But a closer look at their performance reveals that all of these banks have suffered in the rankings largely as a result of the depreciating rand. Standard Bank’s total Tier 1 capital in the 2016 edition is $7.48bn, down from $10.19bn in the 2015 ranking. In the global rankings, Africa’s largest bank has now fallen from 123rd place to 160th.

FirstRand fared slightly better, with Tier 1 capital declining marginally from $7.98bn in the 2015 ranking to $7.18bn in the 2016 edition. All six South African banks in this year’s Top 1000 World Banks ranking registered a fall in Tier 1 capital. In each case, this decline was by more than 10% year on year.

For Africa’s other major banking market, Nigeria, it was a similar story. In 2015, 13 lenders from the country were featured in the global ranking. In 2016 this has fallen to 10, with only two banks, Access Bank and Ecobank Nigeria, registering gains to their Tier 1 capital positions. This reflects the difficulties faced by the continent’s second biggest oil producer over the review period as low oil prices began to take their toll. Togo’s Ecobank Transnational has retained its global ranking of 306th and has moved up the regional table one place to sixth.

Beyond these larger markets, some African lenders have performed relatively well in the 2016 rankings. Building on their success in previous years, all three entries from Kenya recorded positive Tier 1 capital growth. Kenya Commercial Bank and Equity Bank both joined the continent’s Top 25 table in 2016 with a respective 2.24% and 29.82% growth in Tier 1 capital. The relative strength of this performance can in part be attributed to the performance of the Kenyan shilling in 2015, which declined modestly against the US dollar relative to many other African currencies.

Meanwhile, the dominance of Egyptian lenders in the top five banks by return on capital table has been cemented with the addition of Banque Misr, though the list is topped by Ethiopia’s CBE.

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