The biggest banks in South Africa in 2023

 ·5 Jul 2023

The Banker has published its annual ranking of the 1,000 biggest banks in the world, as measured by their level of tier 1 capital – with six South African institutions making the list in 2023.

South Africa’s banking sector is again led by Standard Bank, which retains its position as the biggest bank in the country when measuring capital. This is followed by FirstRand, Absa and Nedbank.

Notably, South Africa “big four” banks are also the biggest banks on the African continent, with only Afreximbank in Egypt making it to the top five.

However, the ranking reveals a strained year for local banks, with most dropping down the global rankings, and all but one bank seeing a drop in the value of its tier 1 capital.

The Banker attributes this drop to the much weaker rand, which undermined local performance relative to global counterparts.

“As a result, all but one South African bank – the continent’s largest lender, Standard Bank Group – saw its overall position worsen in 2023’s Top 1000 ranking,” the group said.

The impact of the rand weakness against the dollar hit one local bank particularly hard: Investec South Africa saw its tier 1 capital drop by 23% on the back of the rand shedding 19% of its value against the dollar during the reporting period for the 12 months to end-March 2023.

“Investec South Africa’s difficult year saw it drop from first place to fourth in the country’s overall performance table, even as it remains the country’s fifth largest lender by Tier 1 capital. The bank remains the country’s best performer when it comes to liquidity,” The Banker noted.

Capitec was the only other bank to be ranked this year, with African Bank – which made its debut on the rankings in 2022 – dropping off.

Standard Bank bucked the trend, however, being the only finance group to climb the rankings – despite a 0.3% drop in its tier 1 capital. It now ranks 155th overall, up from 157th in 2022.

“Higher interest income on the back of raised rates helped SBG achieve a pre-tax profit increase of 26% in dollar terms, despite a rise in impairment charges linked to the bank’s exposure to Ghanaian Eurobonds.

“While not ranking first in any of the eight metrics taken into consideration, the bank achieved second position in terms of growth, profitability, operational efficiency, return on risk and liquidity, putting it just ahead of FirstRand in terms of overall performance,” The Banker said.

Nedbank was the only bank to see its tier 1 capital grow, albeit marginally. The group still dropped down the rankings, however.

This is the top local bank in each indicator:

Performance IndicatorTop BankSecond
GrowthAbsaStandard Bank
ProfitabilityFirstRandStandard Bank
Operational EfficiencyAbsaStandard Bank
Asset QualityFirstRandInvestec
Return on RiskFirstRandStandard Bank
LiquidityInvestecStandard Bank
OverallStandard BankFirstRand

Looking ahead to the rest of 2023, The Banker noted that South Africa’s economic situation is becoming ever-more challenging thanks to a combination of the higher global interest rate environment, volatile commodity prices and worsening power cuts.

These factors push the country’s growth prospects down to just a hair above nothing, with the IMF predicting 0.1% GDP growth in 2023.

#Bank2022 T1C2023 T1CChange
155Standard Bank11 72711 690-0.3%
171FirstRand10 46410 087-3.6%
203Absa8 2388 041-2.4%
255Nedbank5 8875 925+0.6%
469Investec3 2822 528-23.0%
562Capitec2 0271 900-6.3%

According to The Banker, since the Top 1000 results are denominated in US dollars, the data must be analysed in the context of a strong dollar appreciation.

In 2022, the dollar had a strong year, gaining 12% against the pound, 9% against the Chinese yuan and 7% against the euro.

Thus, most country results – including South Africa – will seem lower when converted from national currency into dollars.

Methodology note on performance indicators:

GrowthAnnual percentage growth on assets, loans, deposits and operating income
ProfitabilityReturn on assets, return on equity, profit margin, asset utilisation
Operation EfficiencyCost-to-income ratio
Asset QualityAllowances for loan losses to gross total loans, non-performing loans, impairment charges to total operating income
Return on RiskReturn on risk-weighted assets
LiquidityLoans-to-assets ratio, loans-to-deposits raio
SoundnessCapital-to-assets ratio
LeverageTotal liabilities to total assets

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