Tony Chukwunyem Despite their small size compared with lenders in other parts of the world, African banks are one of the most profitable, contributing, “two per cent of global profits and delivering a 19.49per cent return on capital — the third highest level in the world,” according to the The Banker Magazine.
The publication stated this in its latest ranking of the top 1000 World Banks, released yesterday.
It stated: “Africa’s banks have less than one per cent of total world bank capital compared to 47 per cent for Asia, 25 per cent for Europe and 19 per cent for North America. The Top 20 banks ranked by Tier 1 capital, a measure of banking safety, are all from these regions. But African banks outperform in profits. They make double the amount expected given their size. They contribute two per cent of global profits and deliver a 19.49 per cent return on capital — the third highest level in the world”
Brian Caplen, Editor of The Banker, said: “Africa is underbanked and has huge growth potential with millions starting to open their first bank account and receive their first credit card. After the financial crisis, international banks pulled back from the region allowing African banks to capture more of the business. The outlook for them is positive, especially if Africa manages to avoid the worst effects of the Covid-19.”
The magazine’s latest ranking of the top 1000 World Banks shows that the largest four banks in Africa are the major South African players – Standard Bank Group, FirstRand, ABSA Group and Nedbank Group – followed by banks from Egypt, Morocco and Nigeria.
Africa’s largest bank is Standard Bank, which only manages to place 152nd in the Top 1000 banks globally.
Egyptian banks staged an impressive recovery increasing pre-tax profits by 56 per cent. Three Egyptian banks topped the table for African banks with the largest increases in Tier 1 capital. Banque du Caire increased its Tier 1 by 76 per cent allowing it to climb 201 places in the Top 1000 to 794.
In a press release, the magazine said: “This year marks the 50th anniversary of The Banker’s Top 1000 ranking. The first ranking in 1970 contained 300 banks based on assets. A table of the Top 10 (see Table 5) is headed by Bank of America along with six other US banks. The three European banks are the UK’s Barclays and National Westminster (now part of Royal Bank of Scotland) and Italy’s Banca Nazionale del Lavoro now part of France’s BNP Paribas.
“In 1970, Bank of America topped the ranking with $25 billion in assets. Today’s leader Industrial and Commercial Bank of China (ICBC) has assets of $4.3 trillion which is 172 times larger.
