Nigeria’s banks faced another turbulent year in 2019, even as Africa’s largest economy experienced an uptick in headline growth. Initiatives to force banks to issue more loans to the private sector have raised questions about asset quality, with more than $1bn of fines imposed by the central bank on recalcitrant lenders.
Such challenges are nothing compared with the challenges faced by lenders in 2020, however, with the double whammy of coronavirus containment measures and a collapse in oil revenues threatening to inflict serious damage on the country’s economy in the short term.
The government announced spending cuts of N1500bn ($3.9bn) in early March, followed up by a further N750bn of cuts in May, and has pleaded for the suspension and forgiveness of many of its debt obligations.
Despite what one bank CEO described as “a very difficult year”, the country’s top five lenders all performed impressively in 2019, each recording a higher position in this year’s Top 1000 rankings than last year, with all but one recording double-digit rises in Tier 1 capital.
In an unchanged top five, Zenith Bank remains top of the pile for Nigeria, its Tier 1 capital rising by 16.1% to $2.79bn by the end of 2019, extending its lead over second-placed Access Bank. Zenith’s financial performance for the year was underpinned by a 29% increase in non-interest income, with an improved market share in both retail and corporate sectors.
Access Bank recorded the country’s largest growth in Tier 1 capital for 2019, with a rise of 23.5%, driven by its landmark merger with Diamond Bank and the acquisition of Kenya’s Transnational Bank. Access recorded the most impressive improvement of any Nigerian lender in the headline Top 1000 rankings, rising 73 positions to 508th place.
Despite impressing in terms of growth and scale, Access’s profitability, asset quality and return on risk scores fell below its local rivals, putting the bank in fifth place in the country’s best-performance rankings.
Guaranty Bank, which placed behind Zenith and Access in the country’s Tier 1 ranking, came top in the best-performance rankings for 2020, this year’s inaugural super rankings, thanks to its best-in-class performance in categories including profitability, operational efficiency and leverage.
Zenith comes second in the new rankings, scoring highly on on metrics for profitability and operational efficiency, while falling short on growth, liquidity and return on risk metrics.
United Bank for Africa, the country’s fourth largest lender by Tier 1 capital, takes third position in the performance table. The lender, which operates in 20 African markets, was the country’s best performer in terms of return on risk, but saw its overall performance dragged lower by measures including profitability and asset quality.
First Bank of Nigeria rose 66 places in the overall Top 1000 rankings to 786th position, but remains in fifth place in Tier 1 capital for Nigeria itself. The lender is in fourth place in the performance rankings, despite topping the table for asset quality and liquidity.
