Devaluation takes toll as Nigerian Banks absent from S&P top 30

by | May 17, 2018 2:15 am



The latest global bank rankings report from S&P Global Market Intelligence found that South African and Egyptian banks dominated the list of largest banks in Africa in 2017, accounting for (7) of the 30 largest banks in the Middle East and Africa region, collectively reporting N668.18 billion in assets at the end of 2017.
The ‘Big Four’ South African banks Standard Bank Group (ranked 3rd on the list), First Rand (4th), Barclays Africa Group (9th) and NedBank Group (13th), remained as the top four banks in Africa by assets year-over-year, posting a combined $454.11 billion in assets.
This is up since last year’s ranking, with the banks benefitting from strengthening Rand against the US dollar.
National Bank of Egypt (ranked 14th) with assets of $75.3 billion, Attijariwata Bank of Morocco (23rd) with assets of $50.9 billion, Investec Ltd of South Africa (27th) with assets of $44.42 billion and Banque Misr SAE of Egypt (28th) with assets of $43.4 billion, round off the African Banks on the top 30 list.
The top five Nigerian Banks by total assets at the end of 2017 were Zenith Bank $15.5 billion (N5.59 trillion), FBN Holdings $14.54 billion (N5.23 trillion), Access Bank $11.394 billion (N4.102 trillion), UBA $11.3 billion (N4.06 trillion) and Guaranty Trust Bank $9.3 billion (N3.51 trillion).
Following the 2016 recession, Nigerian banks’ loan books contracted 15.4 percent in 2017, according to data from ratings firm Moody’s.
Major devaluations in 2015 (move from $1/NGN160 to $1/N199), 2016 (CBN move to $1/N282) and 2017 (I & E window), has also negatively impacted the value of the Nigerian banks assets in dollar terms.
“As bank profitability improves in terms of return on average equity, we expect banks to move away from cost-cutting and towards sustainable growth. In this low rate environment, growing the balance sheet can be an effective way to generate earnings. Moreover, as interest rates rise, we can expect a boost to bottom line earnings and this bodes well for future growth prospects within the banking sector,” said JP O’Sullivan, Managing Director of Financial Institutions at S&P Global Market Intelligence.
Looking at all banks in the top 30 list , Qatar National Bank is the largest bank by assets in Africa and the Middle East for the third consecutive year, according to the S&P Global Market Intelligence ranking.
The Qatari lender reported $229.01 billion in assets at the end of March 2018, $46.89 billion more than UAE-based First Abu Dhabi Bank, which placed second.
The strengthening of the Israeli shekel against the U.S. dollar helped Israel’s Bank Hapoalim BM and Bank Leumi le-Israel BM climb to the fourth and fifth spots in the ranking, respectively.
The banks would have ranked seventh and eighth if the shekel had remained flat against the dollar over the last year.
Another Israeli bank, Mizrahi Tefahot Bank Ltd., jumped four spots to 12th position as its assets grew to $81.12 billion.
The company’s assets were adjusted higher to account for the pending acquisition of Union Bank of Israel, which had $12.07 billion in assets at the end of 2017.
In the global rankings the U.S. had the next highest number with 11 banks holding $12.196 trillion in assets.
However, Wells Fargo was pushed out of the top 10 spot by France’s Crédit Agricole Group, while other U.S.-based banks also suffered ranking drops from the previous years. Goldman Sachs Group fell three spots last year to 35, Morgan Stanley dropped one spot to 38 and State Street Corp. fell ten spots to 100.
In Europe, HSBC maintained its position as the largest European bank with total assets of €2.100 trillion (US$2.522 trillion). It was the only European institution above the €2 trillion mark. Among the top 10 European banks, six posted a year-over-year decline in assets in euro terms.
“Asian banks continue to dominate the S&P Global Market Intelligence global bank rankings with Chinese institutions claiming the top four spots,” S&P said.
S&P Global Market Intelligence data shows that Chinese banks recorded the highest growth in assets in the past ten years. Nearly a third of the 20 largest S&P Global Market Intelligence-covered banks are based in China and reported an average of 190 percent increase in terms of asset growth over the decade.
S&P Global Market Intelligence compiled the World Bank Rankings using data derived from individual bank’s regional reporting standards. Banks reporting under IFRS have gross value of derivative assets reported on balance sheets, whereas reporting under U.S. GAAP, requires the net value to be disclosed.
In the latest ranking, company total assets were adjusted for pending mergers, acquisitions and divestitures, as well as M&A deals that closed after the end of the reporting period through March 31 on a best-efforts basis.
Assets reported by non-U.S. dollar filers were converted to dollars using period-end exchange rates. Total assets were taken on an “as-reported” basis and no adjustments are made to account for differing accounting standards.
S&P Global Market Intelligence is a division of S&P Global.

 

PATRICK ATUANYA