By Omoh Gabriel
Nigeria’s top nine banks that featured in the Banker’s top global 1000 banks have a combined tier one capital of $11.699 billion as against the $11.332 billion they had in last year’s top 1000 banks. This showed a slight improvement in the tier one capital of the Nigerian Banks. However, the combine tier one capital of the nine banks is this time around slightly above the $9.842 billion of Standard Group of South Africa, the biggest bank in Africa and the 112th in the world. Standard Group’s tier one capital dropped from last year’s figure of $12.6 billion to this year’s $9.8 billion. This fact is contained in the 2012 edition of the Banker magazine top 1000 global banks, a publication of Financial Times of London.
Bank of America which occupies the first position in the global ranking has a capital base of $163.626 billion. It is followed closely by JPMorgan Chase with a capital of $142.450 billion. The third position is occupied by HSBC, a British bank with a capital base of $133.179 billion. China has three banks in the top ten positions while Japan has just one.
The Banker magazine’s endorsement has become an instrument that Central Banks and bankers sort after as a marketing tool. The low level of capitalization of Nigerian banks when compared to international standard is a challenge to regulators who are at the moment busy fragmenting the industry.
The Banker magazine in its benchmarking of the top 1000 global bank said that Zenith Bank PLC had, as at 2011 financial year, a total tier one capital of $2.398 billion as against the $2.405 billion of last year. This makes Zenith Bank the biggest bank in Nigeria, the 7th in Africa and the 322 in the world. It is followed by the first generation bank, First Bank, with a total of $2.262 billion in 2011 as against its last year’s figure of $2.221 billion shareholders stake in the bank known as tier one capital. First Bank occupies the 2nd position in the Nigeria banking, 8th in Africa and 338th in the globe. The third highly capitalized bank in Nigeria by the standard of Bank of International Settlement BIS is GTbank with a tier one capital of $1.478 billion as against the $1.362 billion of 2010 financial year. By tier one capital ranking, it is 3rd biggest, 11th in Africa and 455th in the world. Access Bank followed closely with a capital of $1.054 billion as against the $1.149 billion it had last year making it the 4th largest bank in Nigeria, 15th in Africa and 541 universally.
The United Bank for Africa (UBA), one of the oldest banks in the country, as at the 2011 financial year end had $1.003 billion compared to the $1.037 billion capital making it one of the internationally recognized strong banks in the country. It is by this classification, the 5th largest bank in Nigeria, 16th in Africa and 563 in the world. Fidelity is next with $867 million as against the $904 million tier one capital the previous year, making it the 6th biggest bank in Nigeria, 17th in Africa and 618 in the world. First City Monument Bank followed closely with $683 million compared to the $854 million capital base it had a year before. It thus becomes the 7th largest bank, 22 in Africa and 710 in the world. Skye bank has $665 million compared to $695 million it had previously to feature as the 721 top banks in the world, 24th in Africa and 8th in Nigeria.
However, the Nigerian banks did not rank among the top five in Africa. Zenith which is the most capitalized bank in the country ranks seventh as against its last year’s sixth position in the continent. The top three banks in Africa are those from South Africa. Standard Bank Group topped the Africa chart with a capital base of $9.842 billion and is in the 94th position globally. The second in Africa is the FirstRand Bank Holdings, South Africa with a capital base of $8.471 billion. The Needbank Group Limited, also of South Africa, came third in the top 25 banks in Africa with a capital of $5.123 billion.
Attjariwafabank of Morocco, an Islamic Bank, is fourth with a capital base of $2.786 billion. Investec of South Africa came fifth in the Banker ranking of the top 25 banks in Africa with a capital base of $2.519 billion. According to the Banker, two Nigeria banks featured in the capital adequacy ratio measurement. Fidelity Bank, the Banker said has a capital to asset ratio of 28.8 per cent, making it the soundest bank in the country. The report also said that First City Monument Bank with capital to asset ratio of 23.89 made it to the 1000 soundest capital to asset ratio banks in the world.
According to the Banker, going by the Bank of International Settlement measure, Zenith was the only Nigeria bank that attained the 1000 soundest BIS ratio of 36.
The Banker in the 2012 review of Africa Banking landscape said “African banks suffered in this year’s Top 1000 ranking from the weakness of their currencies, many of which fell sharply against the US dollar in the second half of 2011. South African banks were among the hardest hit, with the rand sliding almost 19 per cent versus the US currency last year, though Standard Bank retained its position as the largest bank on the continent by Tier one capital and assets.
“Yet while the latter rose 12 per cent in local currency during 2011, assets fell from $201billion to $183 billion in dollar terms. This was also largely the reason why Standard Bank’s Tier one capital decreased from $12billion to $9.8billion in 2011, causing it to drop from 94th to 112th in the ranking – leaving Africa without any banks in the Top 100.
“In last year’s Top 1000, Standard Bank had doubled the Tier one capital of its nearest rival, FirstRand, which had $6billion. FirstRand has closed the gap substantially and has $8.4 billion of such capital in this year’s ranking. It was helped, however, by its financial year ending on June 30, 2011. In the 12 months prior to that date, the rand actually strengthened against the dollar, Standard Bank’s year ended on December 31.
“Last year, 30 African banks made it to the Top 1000, whereas this time, 31 did. The continent’s Banks still account for a small proportion of global Tier one capital, collectively making up 0.98 per cent of the total in the Top 1000, down slightly from last year. Mauritian banks, assisted by the rupee being one of the few African currencies to hold its own against the dollar in 2011, were some the fastest risers in this year’s ranking. Two of them, Mauritius Commercial Bank and State Bank of Mauritius, were among the four African Banks that increased their Tier one capital the most.
“Angola’s banks also had a good year. Banco de Poupança e Crédito is a new entrant to the Top 1000, after its Tier one capital rose 31 per cent to $705m. Banco Angolano de Investimentos, Angola’s biggest lender, saw its Tier one capital increase by 11 per cent to $708m and assets expanded by a hefty 42 per cent to $12billion. This caused it to climb the global assets ranking from 674th to 596th.
“While Nigerian lenders did not move up the Tier one ranking significantly, Access Bank’s assets increased 93 per cent to $10.3billion, thanks to its takeover of local rival, Intercontinental Bank. This led it to move from 805th to 635th in the assets ranking. Togolese-based Ecobank moved from 609 to 498 in term of assets, thanks mainly to its acquisition of Nigeria’s Oceanic Bank.
While European banks count the cost of the Eurozone sovereign debt crisis, China is leading the emerging markets into a new era of banking dominance. But the established markets of the US and Japan should not be forgotten.
It will come as no surprise that 2011 was the year when the Eurozone crisis dragged the global banking sector backwards. Assets and Tier one capital in The Banker’s Top 1000 World Banks ranking continue to grow, although at a much reduced rate to last year’s ranking. But aggregate profits, which had staged two years of recovery since the financial crisis, reversed by one per cent, to stay only just above the $700billion mark.
The process of capital build-up demanded by regulators in the wake of the crisis also appears to be approaching completion, as the aggregate capital-to-assets ratio this year is almost exactly constant on last year, at 5.36 per cent. The heaviest capital increases in previous years had been among the top 25 banks, whereas the change in the capital-to-assets ratio for those largest banks this year is in line with the Top 1000 as a whole, gaining just 0.1 per cent.
Last year, we asked the question about whether the performance of banks in the largest markets was sustainable. In Europe at least, the answer this year is an emphatic no. In total, 49 banks reversed from a profit in 2010 to a loss in 2011, of which all but 13 are based in EU countries. By contrast, only 14 banks worldwide fell from a profit to a loss in 2010. Of the 25 largest losses at previously profitable banks, only one (Hudson City Bancorp in the US) comes from outside the EU. The scale of the damage is so severe that aggregate pre-tax profits in the Eurozone were just $2.1billion, compared with $85.5billion in 2010.
