South Africa’s financial institutions once again top the list for the African continent in The Banker’s Top 1,000 Banks global rankings.
TheBanker.com’s 2014 list shows that South Africa’s big three banks lead the rest of the African continent for profitability.
Standard Bank tops the list in Africa with Tier 1 capital of $10.57 billion and pre-tax earnings of $2.9 billion. However, despite its top position, the bank slipped in the global rankings from 109th in 2013, to 116th in 2014.
FirstRand (Including FNB) ranks second (152nd overall) with $7.83 billion in capital, while Nedbank ranks third (195th overall) with $5.11 billion.
In 2013, the “big four” took the top for spots in the African list, but Absa as an individual bank has dropped off, as it now forms a complete part of the Barclays group. Absa would have been placed 3rd, ahead of Nedbank.
Absa (Barclays Africa) has $5.9 billion in capital, according to The Banker.
“South Africa’s banking sector, Africa’s largest in terms of Tier 1 capital and assets, has endured yet another tough year,” The Banker reported.
“With the exception of FirstRand, all six of its lenders in Africa’s top 25 ranking experienced falls in their dollar-denominated Tier 1 capital, reflecting the country’s weak economic growth and the heavy depreciation of the rand, which lost 17% of its value versus the US currency in 2013.”
Other South African banks which cracked the top 25 banks in Africa include Investec – ranked 7th (320th overall) – with capital of $2.64 billion; Capitec in 18th (678th overall) with capital of $882 million; and African Bank at 22nd (754th overall) with capital of $732 million.
Top 25 African banks ($m)
|#||Bank||Country||Tier 1 Capital|
|116||Standard Bank Group||South Africa||10,566|
|195||Nedbank Group||South Africa||5,110|
|240||Group Banques Populaire||Morocco||3,804|
|320||Investec South Africa||South Africa||2,642|
|404||National Bank of Egypt||Egypt||1,994|
|407||BMCE Bank Group||Morocco||1,981|
|415||Quaranty Trust Bank||Nigeria||1,955|
|424||First Bank of Nigeria||Nigeria||1,865|
|539||United Bank for Africa||Nigeria||1,249|
|678||Capitec Bank Holdings||South Africa||882|
|679||Bancode Poupancae Credito||Angola||881|
|691||Mauritius Commercial Bank||Mauritius||856|
|754||African Bank||South Africa||732|
|762||Banco Angolanode Investimentos||Angola||720|
|769||First City Monument Bank||Nigeria||708|
In terms of profit generation, African banks make the highest returns on capital of 24% – double the average return for the rest of the globe and far exceeding average returns of only 4% in Europe.
“This is despite African banks holding less than 1% of global capital,” The Banker said.
Globally, China’s banks moved up the rankings to supplant US banks in first and second biggest banks in the world by capital.
ICBC is ranked as the world’s biggest bank with $207.6 billion in tier 1 capital, while China Construction Bank ($174 billion) climbed from 5th position in 2013 to second in 2014.
Last year’s number 2 – JP Morgan Chase – was subsequently pushed to third with capital of $165.7 billion.
“Chinese banks now account for a third of total world banking profits, outstripping the USA (20% of profits) and contributing to the largest ever annual profits for the global banking sector of $920 billion – 23% higher than the previous year,” The Banker said.
“This is the first time since before the financial crisis that we have seen such a large annual increase in global banking profits. Apart from China’s contribution US banks are also doing well and have recovered much faster from the crisis than European banks.”
Top 10 global banks ($m)
|#||Bank||Country||Tier 1 Capital|
|2||China Construction Bank||China||173,992|
|3||JP Morgan Chase & Co||US||165,663|
|4||Bank of America||US||161,456|
|7||Bank of China||China||149,729|
|8||Wells Fargo & Co||US||140,735|
|9||Agricultural Bank of China||China||134,410|
|10||Mitsubishi UFJ Financial Group||Japan||117,206|
The Banker’s Top 1000 World Banks ranking tracks the largest bank holding companies based on Tier 1 capital. The group analysed close to 2000 financial results in order to produce the Top 1000 for 2014.
Tier 1 capital is the core measure of a bank’s financial strength, composed of core capital, which consists primarily of common stock and disclosed reserves.
This year’s minimum Tier 1 capital for inclusion was $391 million, the group noted – compared with the $342 million last year (a 14.5% increase).