South African banks insulate their earnings
The ranking of the top seven banks in Southern Africa remains unchanged, even as the gap between the leader and the following banks continues to narrow. The banks are heavily affected by the travails of the South African economy but increasingly insulated as they develop a larger share of their earnings from the rest of Africa. The detailed statistics show how well the banks have been able to insulate much of their earnings from the economic difficulties.
Leader Standard Bank Group saw a 6.5% decline in Tier 1 capital to $11.1bn, despite a 10% gain in total assets to $161.9bn and profits slipping 4% to $2.2bn. Absa was on the growth track with Tier 1 capital up 13% to $5.9bn (after decline in 2018), a 10% gain in total assets to $82.5bn and only a marginal increase in net profits to $561m. FirstRand continues to be extremely profitable, with net profit up 10% to $1.6bn, and Tier 1 capital up 6% to $5.4bn.
The top bank from outside South Africa is the redoubtable Mauritius Commercial Bank, again #7 in the region, with a 10% gain in Tier 1 capital to $1.1bn, total assets up 19% to $12bn and net profit up 27% to $248m.
A top banking merger in South Africa was finalised in November 2019 when Capitec Bank (down from #22 to #24 in the overall ranking) acquired Mercantile Bank. Capitec is South Africa’s largest digital bank and largest bank by active banking clients. In its results to February 2020 it shows Tier 1 capital up 5% to $1.2bn, total assets up 20% to $8.6bn and net profit up 5% to $399m. The banks are run independently for the time being, with retail clients served in Capitec branches and business banking clients in Mercantile branches.
Angola’s economy has been devastated by low oil prices but the impact is likely to hit the banks properly in this coming financial year. Its second top ranked bank, Banco de Poupança e Crédito pushed up Tier 1 capital by 25% to $669m and climbed from #41 to #39 in the ranking, but its results to December 2019 showed a $839m net loss and assets crashing by 32% to $4.2bn. The largest bank by Tier 1 capital, Banco de Fomento Angola, rose from #35 to #29 with a large increase in capital from $608m to $958m and profits rising from $56m to $249m. ■
The top bank from outside South Africa is the redoubtable Mauritius Commercial Bank, again #7 in the region, with a 10% gain in Tier 1 capital to $1.1bn and net profit up 27% to $248m