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Rankings & dataDecember 3 2018

Mixed results for Africa’s largest banking sectors

South Africa is the profit powerhouse among Africa’s major banking sectors, with Nigeria close on its heels. However, both Kenya and Egypt saw profits fall in 2017. Joy Macknight reports.
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Following a few fraught years – mainly due to low commodity prices affecting general economic performance – Africa’s two largest banking sectors, Nigeria and South Africa, saw their pre-tax profits soar by 31.8% and 38.2%, respectively, in 2017. However, not all of the continent’s countries experienced an uplift. Egypt saw aggregate profits drop by 18.5%, while Kenya recorded a 12% contraction in profits.

Africa banking sector chart 1

Out of all of the African countries, Nigeria had the highest number of banks in The Banker’s Top 1000 World Banks 2018 ranking with nine. The First Bank of Nigeria, in third place in the country based on Tier 1 capital, led on pre-tax profits, recording an impressive 498.4% increase. It was followed by Ecobank Nigeria with a 249.1% rise.

Seven South African banks made it into the 2018 ranking. Standard Bank Group, the strongest bank by Tier 1 capital, was also the country’s leader in terms of profits, reporting a 30.4% growth in pre-tax profits, followed closely by sixth placed Capitec Bank.

Morocco also had seven banks present the rankings and saw its aggregate profits increase by 9.2%. Crédit du Maroc, the country’s seventh placed bank, led in terms of pre-tax profits, seeing a 29.4% growth, while Morocco’s biggest lender, Attijariwafa Bank, recorded a 20.2% rise.

Egypt's standouts

Not all five Egyptian banks saw a decline in pre-tax profits in 2017. QNB Alahli Bank, a foreign-owned subsidiary in fifth place by Tier 1 capital, saw the biggest increase – 35% – and CIB Egypt saw its profits rise by 30.4%. However, the country’s largest lender, National Bank of Egypt, saw profits plunge by 43.4%.

Two of the three Kenyan banks in the Top 1000 ranking recorded a loss. But the country’s biggest lender, Equity Bank, increased its pre-tax profits by 6.4%.

In terms of profitability as measured by return on capital (ROC), Nigeria and South Africa have improved their aggregate ROC over the past five years, while Kenya has suffered a consistent drop in profitability. The Egyptian banking sector is the most profitable, with an ROC of 31.6%. Of the five countries, only Egypt and South Africa surpass the continent’s average profitability of 26.4%.

The picture is similar with returns on assets (ROA), which indicates how profitable a bank’s assets are in generating revenue. Both Nigeria and South Africa have improved their banking sectors' ROAs over the past five years, whereas Egypt, Kenya and Morocco have seen declines. However, Kenya has the best ROA among Africa’s largest banking sectors, while only Morocco is below the continental average of 2.1%.

Africa banking sector chart 2

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Read more about:  Africa , Databank , Rankings & data
Joy Macknight is the editor of The Banker. She joined the publication in 2015 as transaction banking and technology editor. Previously, she was features editor at Profit & Loss, editorial director at Treasury Today and editor at gtnews. She also worked as a staff writer on Banking Technology and IBM Computer Today, as well as a freelancer on Computer Weekly. She has a BSc from the University of Victoria, Canada.
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