South Africa’s banks tank in global ranking

The Banker has published its annual ranking of the world’s 1,000 biggest banks, which includes major South African financial institutions, and how they performed over the last 12 months.

South Africa’s banks continue to dominate the rankings for Africa, but have been hampered by local economic conditions which has led to a decline on the global rankings.

In the past year, the local economy has suffered a technical recession, as well as one of the biggest quarterly drops in economic growth in over a decade.

This pulled South African banks down the global rankings, and being one of the biggest economies on the continent, pulled down the overall performance for Africa, despite the continent seeing many bright spots of improved performance.

Of the top 10 African banks by Tier 1 capital, South Africa’s Standard Bank retains the top spot in the 2019 rankings with $9.8 billion.

This represented a 3.7% fall on the bank’s Tier 1 capital in the 2018 rankings, The Banker said, with its position in the global table down to 149th, from 145th.

FirstRand retained its second position in the Africa table (and its 173rd position in the global rankings) despite a 2.3% drop in Tier 1 capital during the review period.

Absa and Nedbank retained their respective third and fourth positions in the Africa rankings, despite both experiencing double-digit falls in their Tier 1 capital positions over the period.

Absa fell 14 places to 184th in 2019’s global ranking, with Nedbank down 23 places to 240th.

Investec is the only other South African bank listed in the African top 10, ranking 375th globally. The other top African banks include two from Egypt (National Bank of Egypt and Banque Misr), two from Morocco (Groupe Banques Populaire and Attijarwafa Bank) and one from Nigeria (Zenith Bank).

Capitec ranked 18th overall, and showed some growth in its Tier 1 Capital over the past year, recording a 1.7% improvement.

African Bank was included in the 2019 top 25 for Africa at 25th place (885th overall), with Tier 1 Capital recorded at $682 million.

The biggest banks in South Africa

# Bank 2018 Tier 1 Capital $m 2019 Tier 1 Capital $m Change
149 Standard Bank 10 129 9 752 -3.7%
173 FirstRand 8 425 8 231 -2.3%
198 Absa 7 752 6 848 -11.7%
240 Nedbank 5 741 5 109 -11.0%
375 Investec 3 163 2 801 -11.4%
588 Capitec 1 488 1 513 +1.7%
885 African Bank 682

Global banks

Among global banks there has been little change over the past 12 months, with Chinese banks continuing to dominate in terms of Tier 1 Capiteal – however, American banks are more efficient, The Banker said.

Chinese banks make the most profits, globally, but US banks are 40% more efficient in the use of their assets, the magazine said, and subsequently have a much higher return on both assets and capital than their Chinese counterparts.

“Globally, banks had their best year ever despite all the challenges of tighter regulation, higher capital requirements, competition from fintechs and low interest rates in Europe and the US,” The Banker said.

Total pre-tax profits for the Top 1000 World Banks were $1,135 billion – more than 10 times higher than back in 2009 when the financial crisis hit results.

These are the 10 biggest banks in the world:

# Bank Country Tier 1 Capital $m
1 ICBC China 338 000
2 China Construction Bank China 287 000
3 Agricultural Bank of China China 243 000
4 Bank of China China 230 000
5 JPMorgan Chase USA 209 000
6 Bank of America USA 189 000
7 Wells Fargo USA 168 000
8 Citigroup USA 158 000
9 HSBC UK 147 000
10 Mitsubishi UFJ Japan 146 000

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South Africa’s banks tank in global ranking