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- Nine out of 25 Nigerian banks were among Africa’s largest lenders by Tier 1 capital and total assets
- The Banker’s 2024 Top 100 African Banks ranking showed that no Nigerian bank made it to the top 10 list
- Four Nigerian banks are among Africa’s top 10 banks by performance in 2024
The Banker’s 2024 Top 100 African Banks has revealed that only nine out of 25 Nigerian banks are among Africa’s largest lenders by Tier 1 capital and total assets.
This indicates that only 36 per cent of Nigerian banks have enough capital to be classified as tier 1 banks in Africa.
The report shows a decline from 11 Nigerian banks that achieved the same feat in 2023.
The Banker’s ranking assesses banks from selected African countries based on key financial indicators such as growth, profitability, operational efficiency, asset quality, return on risk, financial soundness, liquidity, and leverage to determine the level of capital/assets and overall performance.
The report attributed the decline to the floating of the naira by President Bola Tinubu’s administration in 2023, which allowed the foreign exchange market to trade on a willing-buyer-willing-seller model.
The policy led to the devaluation of the naira, with the local currency losing 43 per cent of its value in 2024.
“…no single market felt the impact of currency depreciation last year more than Nigeria, Africa’s third-largest banking market by Tier 1 capital.
“Following the scrapping of foreign exchange controls by President Bola Ahmed Tinubu in June 2023, the naira lost half of its value against the dollar by the end of the year, with the currency falling even further this year.
“As a result, eight out of nine lenders saw their Tier 1 capital positions decline by 15 per cent or more in dollar terms during the year,” the report stated.
Analysis of Tier 1 capital decline among 9 Nigerian banks
Analysis of The Banker’s 2024 Top 100 African Banks showed that no Nigerian bank out of the 25 in the country made it to the top 10 list of African lenders by Tier 1 capital and assets, which the report attributed to currency devaluation.
The report revealed that Zenith Bank dropped four places from its 10th position on the list to 14th with a $2.009 million capital base.
Zenith Bank was followed by Access Bank, which also lost 21 per cent of its capital value to reach $1.646 million, came second among Nigerian banks, dropping from a previous 13th place to 16th.
Nigeria’s third-largest bank by Tier 1 capital is the United Bank for Africa (UBA) with $1.469 million valuation. UBA moved place upward from a previous 19th position among African banks to 18th.
Guaranty Trust Bank (GTB) fell from a previous 16th position to 23rd in the new ranking of Africa’s largest banks by Tier 1 capital. The bank’s capital base currently stands at $1.098 million.
The fifth bank among the nine Nigerian banks ranked by Tier 1 capital is FirstBank. It fell from a previous 23rd position among African banks to 26th with a current capital of $875 million.
Stanbic IBTC Holdings saw the highest decline by Tier 1 capital, which stood at $384 million. The bank dropped from 29th to 61st position among African banks by Tier 1 capital.
With a $324 million valuation, First City Monument Bank (FCMB) stood as Nigeria’s seventh bank by Tier 1 ranking, having fallen from 58th to 67th position among Tier 1 banks in Africa.
Standard Chartered Bank of Nigeria made an entry into the African 100 banks list, debuting in the 83rd position with a capital valuation of $233 million.
Fidelity Bank completed the list of nine Nigerian banks among 100 African banks ranked by Tier 1 valuation. The bank fell from a previous 45th position to 84th with a current $232 million valuation.
The Banker stated, “The country’s largest banking groups, Zenith Bank and Access Holdings, both saw their Tier 1 capital positions weaken by 21 per cent, with Zenith falling out of the continent’s top 10 as a result.
“United Bank for Africa fared best among the country’s lenders in terms of its Tier 1 position — down by just 3.3 per cent in dollar terms — enabling it to move past Guaranty Trust Bank to become the country’s third-largest lender in this year’s rankings.
“UBA’s 90 per cent growth in assets in local currency terms — driven by a two-thirds increase in loans and advances to customers and a more than doubling of cash and bank balances across its group operations — helped it overtake Zenith Bank to become the country’s second-largest lender by assets.”
Decline in ranking raises concerns about core financial reserves
The drop in the ranking of Nigerian banks based on capital positions raises concerns about core financial reserves, which could expose Nigerian banks to economic shocks and external pressures.
To withstand these shocks, strengthen the financial sector, and enhance its global competitiveness, the Central Bank of Nigeria (CBN) introduced several structural, financial, and operational reforms, including bank recapitalisation, system upgrades and migrations, and Automated Teller Machine (ATM) withdrawal fee hikes.
The bank recapitalisation exercise aims to increase the capital base of banks to enable the sector to increase its capacity to play big in the targeted N1 trillion Nigerian economy by 2030.
Nigerian banks among Africa’s top 10 banks by performance in 2024
The Banker’s 2024 Top 100 African Banks also ranked African banks by performance in 2024.
Four Nigerian banks made it to the top 10 list, which was led by Egypt’s Commercial International Bank.
Guaranty Trust Bank (GTB) secured the second spot on the list but led as Nigeria’s highest-ranking bank, with a score of 6.79 out of 10.
It was followed by United Bank for Africa (UBA) in third place (6.73), Access Bank in fifth place (6.47), and Zenith Bank in seventh place (6.38).
While Nigeria has four banks on the top 10 list, Egypt has three banks, while South Africa, Morocco, and Mauritius have one bank each on the list.
Financial sector will see stronger regulations, tech advancements, market expansion in 2025 –Report
Meanwhile, TheRadar earlier reported that a report by Stren & Blan Partners, said Nigeria’s financial sector will be driven by stronger regulatory reforms and oversight, technological advancements, and market expansion in 2025.
It said the changes will be in the form of the bank recapitalisation policy of the Central Bank of Nigeria (CBN), mergers and acquisitions (M&As), financial inclusion drive, cryptocurrency regulation, and ESG financing.
