Stanbic and dfcu banks are the only Ugandan banks that have appeared in the East African Top 20 banks despite banks recovering from the impact of the coronavirus pandemic.
The latest annual survey by South Africa’s African Business Magazine ranks Stanbic Bank Uganda in the 14th position with a capital base of US$259million and a net profit of US$ 67million in the East African Top 20 and in the 98th position in the Top 100 banks on the African continent.
This is closely followed by dfcu bank that is ranked 10th with a capital base of US$159million and a net profit of US$ 4 million but does not make it to the Top 100 banks.
The annual survey ranks Africa’s banks according to their Tier 1 capital. Tier 1 capital refers to the banks’ initial capital, plus reserves and retained earnings, which demonstrates a bank’s overall strength.
The capital amount is published in local currencies and then converted into US dollars at the exchange rates at the year-end date in the results. The data is collected from Bankers’ Almanac and from the in-house research of African Business excluding old and unreliable data.
Meanwhile, Kenya’s 10 leading banks appeared in the Top 20 banks followed up by Ethiopia with five, Tanzania with two, and Rwanda with one bank.
Despite Nairobi’s reputation as a banking centre, East Africa’s biggest bank – Equity Bank Group – is ranked just 24th across Africa as a whole with US$1.6bn.
KCB moves up ahead of the Commercial Bank of Ethiopia, which sees its capital fall from U$1.1bn to US$929m.
Next comes Co-operative Bank of Kenya, which secures third place with US$739m in the capital, up from US$650m last year, followed by Diamond Trust Bank Kenya in fourth.
Two Tanzanian financial institutions, Microfinance Bank and CRDB Bank, are ranked fifth and seventh but are the country’s only entries in our regional table or indeed in the continental Top 100, leaving both it and neighboring Uganda rather underrepresented in our rankings.
One key indicator of the weakness of the Eastern African banking sector is the fact that the size of capital needed to secure the final position in the regional Top 20 is the lowest of all the other regions at US$159m.
At US$22bn, Commercial Bank of Ethiopia has by far the biggest assets of any bank in the East Africa regional table, nearly double those of Equity Bank Group, yet this scale is not borne out in the size of its other key indicators. It is likely that the bank will have to change its operating model considerably as foreign competitors enter the Ethiopian market.
However, the Ethiopian banking sector has improved its performance over the past year in comparison with their other Eastern African counterparts, with six Ethiopian banks featuring in our 2022 regional table in comparison with just four last year.
At the same time, the total capital of Ethiopian banks included in our Top 100 table has declined from US$1.4bn last year to US$1.2bn in this year’s survey, reflecting a fall in the capital of all Eastern African banks in the Top 100 from US$8.5bn in 2021 to US$6.7bn this year.
For Kenyan banks at least, more rapid bank growth could come from the resumption of their expansion into other markets. Several had already moved into the rest of Eastern Africa, including eastern Democratic Republic of Congo and South Sudan, in the years before the pandemic, but a combination of the emerging AfCFTA and the opening up of the Ethiopian banking sector is likely to inject more urgency in the cross-border expansion of Equity Bank and KCB Bank Kenya among others.
The 15 biggest banks as measured by Tier 1 capital are the same as last year, although there has been some modest movement within the rankings.
South Africa’s Standard Bank Group is still the biggest bank in Africa by a considerable distance, with Tier 1 capital of US$13.6bn, ahead of National Bank of Egypt with US$7.2bn.
The biggest changes at the top of the table are Egypt’s Banque Misr jumping from eighth to the third position, with its capital more than doubling between 2019 and 2021 to US$7.2bn, and South Africa’s FirstRand moving from sixth to fourth position, with a US$1.5bn rise in capital to US$6.4bn.
Morocco’s Attijariwafa Bank and South Africa’s Absa Bank make up the rest of the top six. Indeed, the 15 biggest African banks are all based in either North Africa or South Africa at opposite ends of the continent.
Attijariwafa and National Bank of Egypt have steadily moved up the rankings over the past decade, breaking up what used to be a solid block of four or even five South African banks at the top of the table.