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Dominance under threat.

As IN OUR PAN-AFRICAN SURVEY OF the Top 100 African Banks, South African banks dominate our table of the Top 25 banks in Southern Africa. The largest South African financial institutions are more than 10 times the size of the largest in any other African country. As last year, the five biggest banks in the Southern African Development Community (SADC) region outside South Africa are all Angolan, reflecting the continued strong economic growth and cash rich economy that stems from the country's oil industry.

The number of Southern African banks in our Top 100 has fallen from 22 last year to 19 in this year's survey. Bidvest Bank secures 25th position this year with a value of $103m, far higher than the $62m that Standard Bank Mozambique needed to secure the same spot in our 2011 regional table. There are still three Namibian banks in the regional table and two from Botswana but Zambia and Malawi have both lost their single entries of last year: Zambia National Commercial Bank and National Bank of Malawi, while Standard Bank of Mozambique has also dropped out of the rankings.
SOUTHERN
REG   AFRICA  BANK              COUNTRY      DATE OF   CAPITAL
RANK  RANK                                 RESULTS     ($M)

1     1       Standard Bank   South       31 Dec 11    9,842
              Group           Africa
              (Stanbank)

2     2       FirstRand       South       30-Jun-ll    8,471
              Banking         Africa
              Holdings

3     3       ABSA Group      South       31 Dec 11    6,304
                              Africa

4     4       Nedbank Group   South       31-Dec-ll    5,123
                              Africa

5     5       Investec Bank   South       31 Mar-12    2,896
                              Africa

6     26      African Bank    South       30-Sep-ll      748
                              Africa

7     27      Banco Africano  Angola      31-Dec-ll      708
              de
              Investimentos
              (BAI)

8     28      Banco de        Angola      31-Dec-ll      705
              Poupanca e
              Credito

9     32      Banco BIG       Angola      31-Dec-ll      650

10    33      Capitec Bank    South       29-Feb-12      648
                              Africa

11    38      Banco de        Angola      31-Dec-ll      473
              Fomento
              Angola

12    49      Banco Espirito  Angola      31-Dec-10      383
              Santo Angola
              (BESA}

13    67      Millennium BIM  Mozambique  31-Dec-ll      244

14    72      First National  Namibia     30-Jun-ll      226
              Bank of
              Namibia

15    73      Standard Bank   Namibia     31-Dec-10      220
              Namibia

16    79      Bank Windhoek   Namibia     30-Jun-ll      191

17    85      Mercantile      South       31-Dec-ll      173
              Bank            Africa

18    86      Banco           Angola      31-Dec-ll      171
              Millennium
              Angola

19    100     First National  Botswana    31-Dec-ll      134
              Bank of
              Botswana

20    -       Banco Privado   Angola      31-Dec-10      130
              Atlantico

21    -       Banco           Mozambique  31-Decll       127
              Comerciaf e de
              Investimentos
              (BCI)

22    -       Barclays Bank   Botswana    31-Dec-ll      125
              Botswana

23    -       Sasfin Bank     South       30-Jun 11      121
                              Africa

24    -       Banco de        Angola      31-Dec-10      119
              Negocios
              Internacional
              (BNI)

25    -       Bidvest Bank    South       30-Jun-ll      103
                              Africa

REG   AFRICA  BANK            ASSETS    CAR   PROFITS   ROE    ROE
RANK  RANK                      (SM)      (%)     ($M)          (%)

1     1       Standard Bank   183,329   5.37    2,810  28.55   1.53
              Group
              (Stanbank)

2     2       FirstRand       102,390   8.27    2,762  32.60   2.70
              Banking
              Holdings

3     3       ABSA Group       96,614   6.52    1,745  27.68   1.81

4     4       Nedbank Group    79,594   6.44    1,128  22.01   1.42

5     5       Investec Bank    45,362   6.38      429  14.82   0.95

6     26      African Bank      6,235  11.99      433  57.88   6.94

7     27      Banco Africano   11,876   5.96      200  28.20   1.68
              de
              Investimentos
              (BAI)

8     28      Banco de          7,864   8.97      183  25.88   2.32
              Poupanca e
              Credito

9     32      Banco BIG         5,513  11.79      176  27.08   3.19

10    33      Capitec Bank      3,179  20.38      210  32.36   6.60

11    38      Banco de          7,063   6.70      249  52.67   3.53
              Fomento
              Angola

12    49      Banco Espirito    7,892   4.85      332  86.75   4.21
              Santo Angola
              (BESA)

13    67      Millennium BIM    2,274  10.72      164  67.18   7.20

14    72      First National    2,335   9.68       99  44.02   4.26
              Bank of
              Namibia

15    73      Standard Bank     2,155  10.19       65  29.44   3.00
              Namibia

16    79      Bank Windhoek     2,299   8.30       60  31.36   2.60

17    85      Mercantile          763  22.70       22  12.57   2.85
              Bank

18    86      Banco             1,793   9.54       48  28.07   2.68
              Millennium
              Angola

19    100     First National    1,748   7.69       86  63.73   4.90
              Bank of
              Botswana

20    -       Banco Privado     1,931   6.73       43  65.94   4.43
              Atlantico

21    -       Banco             1,862   6.82       42  67.44   4.60
              Comerciaf e de
              Investimentos
              (BCI)

22    -       Barclays Bank     1,510   8.26       86  68.70   5.67
              Botswana

23    -       Sasfin Bank         642  18.89       20  70.69  13.35

24    -       Banco de          1,215   9.77       32  72.13   7.05
              Negocios
              Internacional
              (BNI)

25    -       Bidvest Bank        531  19.36       59  83.33  16.13


Boost for Mozambique banks

On a more positive note, the two remaining Mozambican banks have increased their capital strength over the past year. Millennium BIM moves up from 15th to 13th as a result of a big increase in value from $l70m to $244m, while Banco Comerciale de Investimentos is worth $127m in this year's table in 21st position.

According to figures from the Bank of Mozambique, just im out of the 23m population of Mozambique hold bank accounts. The domestic banking sector is still at a relatively early stage of development, while mobile banking has yet to take off.

[ILLUSTRATION OMITTED]

However, continued strong economic growth, improving standards of living and not one but three impending booms - in the form of coal, gas and transport - should see the economy boom in the near future, providing a much more attractive environment within which to offer banking services. Foreign banks may also begin to take more of an interest in the country following the government's decision in March to revise its 2002 money laundering and terrorism finance law.

In addition, the Bank of Mozambique and the Confederation of Economic Associations of Mozambique are setting up a Credit Risk Centre to share information on customer credit, in order to help banks and other financial institutions to offer lower interest rates to suitable customers.

The Minister for Industry and Trade, Armando Inroga, said: "We believe that reducing interest rates will drive commercial credit which, at the moment, is being driven by a policy to create and encourage micro-finance institutions for rural areas."

The governor of the Bank of Mozambique, Ernesto Gove said: "In 2011, we continued to assist in the expansion of financial services as part of the strategic aim of 'bancarisation' of the economy, having increased the number of financial and credit institutions operating in the country and that progress was seen alongside the consolidation of the main indicators of solidity of the financial system, which remained satisfactory and above the levels outlined in the Basil I criteria."

The implementation of Basel III capital requirements, which were drawn up to prevent a repeat of the 2008-09 global financial crisis, is a major concern for South African banks. Research by consultants Bain & Co found that the net stable funding ratio (NSFR) required by Basel III would cost South Africa's five biggest banks R471bn ($56.4bn) in new capital through increased costs or greater wholesale lending.

Bain & Co partner Fabrice Franzen commented: "The liquidity coverage ratio is not a problem as the Reserve Bank has set up a liquidity facility to support bank. It is costly to put more liquidity aside. It could be questioned whether banks would be able to increase their retail deposits in time. It is quite tricky to obtain the right returns and in the process not consume too much capital." Higher interest may be charged on loans in order to cover any shortfalls.

$103m Bidvest Bank secures 25th position this year with a value of $103m, far higher than the $62m that Standard Bank Mozambique needed to secure the same spot in our 2011 regional table.

"We believe that reducing interest rates will drive commercial credit which, at the moment, is being driven by a policy to create and encourage micro-finance institutions for rural areas."

Ernesto Gove
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Title Annotation:SOUTHERN AFRICA; growth in banking industry
Comment:Dominance under threat.(SOUTHERN AFRICA)(growth in banking industry)
Publication:African Business
Article Type:Survey
Geographic Code:60AFR
Date:Oct 1, 2012
Words:1330
Previous Article:Fastest growth rates in Africa.
Next Article:Microfinance comes of age.
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