In this year’s The Asian Banker Strongest Banks By Balance Sheet evaluation, the top 10 strongest banks in Africa comprise four Nigerian banks, three Egyptian banks, two South African banks and one bank from Mauritius. With average strength score of 3.46 and 3.23, out of five, respectively, banks in Egypt and South African continued to outperform.Banque Misr, Egypt's second-largest bank, is the strongest bank in Africa. This year, financial information in the first half of financial year 2020 (1H FY2020) was collated and incorporated into the assessment of how commercial banks and financial holding companies (banks) performed during the COVID-19 pandemic.
Banks in Africa enjoyed strong liquidity, with an average of liquid assets to total deposits and borrowings ratio of around 40%. Liquidity improved further in this year’s evaluation. The average loan to deposit ratio dropped to 70% at the end of 1H FY2020 from 74% in the prior year. Overall profitability weakened, average ROA fell from 1.7% in 1H FY2019 to 1.15% in 1F FY2020 and cost to income ratio rose from 51.9% to 52.3%.
Banking sectors in the region continued to deliver mixed financial performances. Egyptian banks maintained the strongest asset quality and their average cost to income ratio remained the lowest. Ghanaian banks enjoyed the highest average ROA at 3.2% and also maintained robust capital levels, but the high level of NPLs is the main challenge they face. South African banks recorded the largest drop in average ROA from 1.75% to 0.7%. Kenyan banks achieved lower strength score than their regional peers. In addition to weak asset quality, they are also among the smallest banks in the region.
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Notes: (1) 5 = Highest score, 0 = Lowest score. (2) * FY2019 data. (3) ** FY2020 data. (4) # 2H FY2019 data.
Source: Asian Banker Research