The weakness of the rand has done no favours for South African lenders in this year’s Top 1000 World Banks ranking. While the country’s big four all produced positive results in 2022, the currency’s weakness undermined banks’ positions relative to their international counterparts.
As a result, all but one South African bank – the continent’s largest lender, Standard Bank Group (SBG) – saw its overall position worsen in 2023’s Top 1000 ranking.
The impact of the rand’s fall against the dollar was particularly felt by Investec South Africa in this year’s rankings. The currency shed 19% of its value against the dollar during the bank’s reporting period for the 12 months to end-March 2023, prompting a 23% fall in Tier 1 capital and a 12.8% fall in assets.
SBG continues to rule the roost in South Africa and the wider continent, its Tier 1 capital and asset position comfortably ahead of the country’s second-largest bank, FirstRand. Higher interest income on the back of raised rates helped SBG achieve a pre-tax profit increase of 26% in dollar terms, despite a rise in impairment charges linked to the bank’s exposure to Ghanaian Eurobonds.
Such results see SBG rise to the top of South Africa’s performance table for 2023 among the five largest lenders, after coming last in the 2022 table. While not ranking first in any of the eight metrics taken into consideration, the bank achieved second position in terms of growth, profitability, operational efficiency, return on risk and liquidity, putting it just ahead of FirstRand in terms of overall performance.
FirstRand, whose second-place position in the performance table is unchanged from last year, scores first in four of the eight performance categories, with its high score for asset quality particularly noteworthy. Third-placed Absa Group tops the scores for operational efficiency and for growth, being the only South African lender in this year’s Top 1000 to record an increase in its asset base in dollar terms, albeit a slight 2.34% rise.
Investec South Africa’s difficult year saw it drop from first place to fourth in the country’s overall performance table, even as it remains the country’s fifth largest lender by Tier 1 capital. The bank remains the country’s best performer when it comes to liquidity.
The country’s economic situation is becoming ever-more challenging in 2023, thanks to a combination of the higher global interest rate environment, volatile commodity prices and worsening power cuts. Having grown by 2% in 2022, gross domestic product is set to increase by just 0.1% this year, according to the International Monetary Fund.
