Standard Bank has once again been crowned the leading bank by Tier 1 capital in South Africa, and the continent as a whole, in this year’s Top 1000 World Banks ranking, with the country’s lenders continuing to report healthy growth despite the growing economic turmoil in their home market.
South Africa entered a recession in the fourth quarter of 2019, its second in two years, with severe electricity blackouts causing widespread disruption across all sectors of the economy. The outlook for 2020 remains bleak, with coronavirus containment measures set to compound structural weakness in the economy. The International Monetary Fund forecasts gross domestic product will contract by 5.8% in 2020, before rebounding by 4% the following year.
While Standard Bank’s earnings for 2019 were constrained by the difficult operating conditions in South Africa, the bank retained its prime position nationally, with its Tier 1 capital position improving by 8.16% to $10.5bn and its total asset base rising by 9.73%. However, the bank’s Top 1000 overall position fell to 152 from 149 in the 2019 ranking.
Standard Bank’s pre-tax profits continue to come in ahead of its rivals, though a significant loss by ICBC Standard – part of the Chinese banking group Industrial and Commercial Bank of China in which it co-invests – saw overall pre-tax profits rise by just 1.4% for the year.
The gap between Standard Bank and second place FirstRand closed a little in the 2020 rankings. The latter’s Tier 1 base increased by 11.3% in 2019, even as its overall asset growth remains slower than Standard Bank’s.
Absa Group, third in the South Africa ranking, saw the largest gain in Tier 1 capital with a 13.5% rise, followed by fourth place Nedbank with 12.2%.
Fifth-place Investec South Africa spun off its asset management business Ninety One in March 2020, naturally impacting its parent’s asset base and Tier 1 position. Investec dropped to 463rd position in the overall 2020 rankings, down from 375th in 2019.
Yet the demerger – in which Ninety One listed as a separate entity on the Johannesburg and London stock exchanges – has positively impacted Investec’s key metrics, putting it in poll position in South Africa’s inaugural best-performance rankings. While the drop in assets puts its last in terms of growth, Investec came top in four of the eight performance categories: leverage, asset quality, return on risk, and profitability.
FirstRand comes second for performance, and first overall for soundness. It also scored highly for return on risk, profitability and operational efficiency.
Little separates Standard Bank and Absa in third and fourth positions respectively, with Standard Bank inching ahead thanks to its higher scores for leverage, liquidity and asset quality. Nedbank rounds off the table in fifth place, with a strong showing for growth and operational efficiency constrained by its lower scores for profitability, return on risk and leverage.
