African Banks Made Highest Returns On Capital in 2013

VANGUARD — African banks have been ranked by The Banker magazine as having generated the highest returns to shareholders in 2013. In its 2014 Top 1000 Bank ranking released last week, The Banker said “In terms of profit generation, African banks made the highest returns on capital of 24 per cent — double the average return for the rest of the globe and far exceeding average returns of only four per cent in Europe.

Standard Bank Group South Africa’s lenders, for so long the shining light in Africa’s representation in The Banker’s Top 1000 rankings, retain the top spots in the regional list but mostly with falls in their Tier Africa. This is despite African banks holding less than one per cent of global capital”.

“Global banking profits have reached an all-time high, with China dominating the post financial crisis banking sector, according to The Banker’s Top 1000 World Banks ranking. Chinese banks ICBC and China Construction Bank top the world ranking, with two more Chinese banks in the top ten.

Chinese banks now account for a third of total world banking profits, outstripping the USA (20% of profits) and contributing to the largest ever annual profits for the global banking sector of $920 billion – 23 per cent higher than the previous year.

According to the report “Struggling Eurozone banks contributed a meagre three per cent overall to global profits, down from 25 per cent before the 2008 crisis, as recovery remains slow or non-existent in many countries.

Italian banks lost $35 billion, topping the list of national losses while Portuguese and Irish banks also continued to suffer, losing almost $4 billion each. Spanish banks did at least manage to turn last year’s catastrophic losses of $68 billion into a profit of $12 billion.

The Banker said “Central and South American banks recorded the second highest returns of 23 per cent and the Middle East saw returns of more than 15 per cent, despite each holding less than four per cent of global capital.

Brazil did not perform as well with its share of global profits falling to 2.84 per cent, from 10 per cent before the financial crisis, though this still exceeds the UK’s 2.37 per cent share of profits.

Brian Caplen, editor of The Banker, said: “This is the first time since before the financial crisis that we have seen such a large annual increase in global banking profits. Apart from China’s contribution, US banks are also doing well and have recovered much faster from the crisis than European banks.”

 

This post was published in Vanguard Online.

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