Nigeria’s top bank by Tier 1 ranking is FBN Holdings (First Bank of Nigeria), ranked at 15 (down one place), with capital of $1.9bn, in Africa’s Top 100 Banks for 2024, by African Business.
This is closely followed by Access Bank (16th) and Zenith Bank (17th, down from last year’s ranking as Nigeria’s top bank at 12th).
African banks are taking a lead in drawing together the continent’s economies, and increasingly operate across borders.
The biggest banks continue to be the winners, both at working across different jurisdictions and at adopting new technology and adapting to it, as well as their healthy finances and global networks.
Dramatic declines in Nigeria’s naira currency compared to the US dollar (USD) affect the rankings in this year’s table, since banks report their figures in domestic currencies and the research team compiling the rankings convert into USD either at the date of the results or another date.
Nigerian banks rank highly when it comes to Return on Equity (ROE), a key measure for investors. The top-ranked bank by this measure is Rawbank of the Democratic Republic of the Congo (DRC), a returning entrant at 88th in the table with net profit of $179m on Tier 1 capital of $286m, for a dramatic 62% ROE. HSBC Bank Egypt is close behind, with ROE of 61% for net profit of $397m on Tier 1 capital of $649m.
The total ROE across Africa’s 100 Top Banks has more than recovered from the lingering effects of the Covid-19 pandemic and other problems. It is 20% for the current ranking, up from 17% in 2023 and 14% in 2022. The ROE was down to 12% in 2021, after falling from 19% in the 2020 ranking.
By comparison, the average ROE for US banks for the first quarter of 2024 was reported to be 10.3% and any ROE greater than 10% is considered good by many analysts. The ROE for 2023 for global banks has not been reported but is expected to be 13%.
Nigeria’s giant Guaranty Trust achieved a very strong 57% ROE on Tier 1 capital of $1.1bn. Four Egyptian banks are among the continent’s best yielding for investors: Housing and Development Bank (ROE 57%), Credit Agricole Egypt (55%), Commercial International Bank (CIB) (49%), and Abu Dhabi Islamic Bank – Egypt (48%).
Nigerian bank United Bank of Africa (UBA) achieved ROE of 42%, slightly ahead of compatriots Zenith Bank (41%), Stanbic IBTC in Nigeria (38%), and Access Bank (38%).
Usually, higher interest rates in the domestic market boost the profits that banks earn from net interest margins, the difference between the cost banks pay when they borrow (from depositors and the market) and the income they receive from loans (interest).
Nigeria demands its banks hold more capital
By mid-2024 Nigeria’s banks were loading their capital war-chests after the Central Bank of Nigeria called for increased capital (see “West and Central” section). Guaranty Trust (GTCO, 27th in the ranking) said it targets growth in Côte d’Ivoire, Ghana and Kenya including with $253m of funds to be raised on the Nigerian Exchange (NGX).
Access Bank (16th in the ranking) is raising $222m on the stock market in 2024 as part of a $1.8bn campaign over four years. It already has presence in 18 countries.
It acquired 100% of Kenya’s Transnational Bank in 2020, now renamed Access Bank Kenya, followed by majority shares in Standard Chartered Bank’s subsidiaries in Angola, Cameroon, The Gambia and Sierra Leone in 2023, while in June 2024 it said it would purchase African Banking Corporation of Tanzania (ABCT).
In April 2024 Access Bank announced plans to acquire Kenya Commercial Bank’s stake in the National Bank of Kenya and its five-year strategy lists countries of interest as: Angola, Benin, Burkina Faso, Côte d’Ivoire, Morocco, Namibia, Niger, Senegal and Togo.
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