In this year’s The Asian Banker Strongest Banks By Balance Sheet evaluation, the top 10 strongest banks in Africa included four South African banks, three Egyptian banks, two banks from Mauritius and one bank from Morocco. Banks in South Africa and Egypt achieved the highest weighted average strength score at 3.43 and 3.16 out of five, respectively. The rankings are based on a detailed and transparent scorecard that evaluates commercial banks on six areas of balance sheet financial performance: ability to scale, balance sheet growth, risk profile, profitability, asset quality and liquidity.
The balance sheet growth in the South African banking sector accelerated in 2018. South African banks maintained adequate capitalisation and liquidity and sound asset quality. However, their average cost to income ratio stood at a high level of 58.1%, only lower than that of Nigeria. FirstRand, the strongest bank in Africa, posted lower cost to income ratio and gross non-performing loan (NPL) ratio compared to its South African peers.
Egyptian banks maintained solid liquidity buffers, and their average loan to deposit ratio reached only 42.5%. Their balance sheet growth decelerated in 2018, while overall capital levels increased slightly. The average cost to income ratio of Egyptian banks on the list increased from 27.5% in the prior year to 34.3%, but still the lowest among banks in the region.
In Africa, some weaker banks have been acquired following the consolidations, which has contributed to more resilient banking systems. Some changes in the rankings are expected in the near future, as the recent mergers and acquisitions drive in the region is expected to create larger and stronger banks.
For a full explanation of the evaluation criteria please click here.
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