North African banks continue to dominate Africa’s banking landscape, with Egypt and Morocco leading the way. The region is home to 43 of the Top 100 banks on the continent, showcasing their resilience and strong management even amid economic volatility. Egypt stands out with 19 banks in the rankings, followed by Morocco with nine, Tunisia with eight, and Algeria with seven.
This dominance reflects the robust management of these banks, which have thrived despite challenging economic conditions. However, the tough trading environment has resulted in lower profits compared to previous years. Crédit Agricole du Maroc, for example, reported a near-zero return on equity (ROE) this year, underscoring the difficult market conditions many banks are navigating.
Egypt’s Banks Remain Resilient Amid Currency Volatility
The National Bank of Egypt (NBE) continues to lead the region and ranks second in Africa with Tier 1 capital of $7.5 billion as of June 2023, up slightly from $7.3 billion in the June 2021 results. This is a remarkable achievement considering the significant depreciation of the Egyptian pound against the U.S. dollar, particularly in March and October 2022 and January 2023. Egyptian banks have managed to mitigate some of the currency fluctuation effects by maintaining substantial foreign currency reserves. Moreover, stringent banking regulations have shielded them from engaging in riskier financial activities.
The Egyptian banking sector has also benefited from the government’s ongoing efforts to close the gap between official and black-market currency rates, spurring foreign exchange activity. Additionally, Egypt’s $8 billion program with the International Monetary Fund (IMF) and substantial investment inflows, including $35 billion from the UAE, have provided a much-needed financial boost, even as banks continue to extend significant loans to the government.
Despite these positives, some Egyptian banks have faced setbacks. Banque Misr, for instance, has dropped from third to sixth place on the continent, with its Tier 1 capital declining from $7.2 billion in December 2021 to $5.1 billion by December 2022.
Morocco’s Banking Giants Rise in the Rankings
Moroccan banks have shown resilience, with Attijariwafa Bank climbing to second place in North Africa and third on the continent, while Banque Centrale Populaire ranks fifth. Moroccan banks have built strong financial buffers, setting aside substantial provisions for non-performing loans, which have helped them weather economic uncertainties. Rising interest rates have also boosted profits, positioning Moroccan banks favorably in the current economic climate.
Bank of Africa – BMCE Group has improved its position, moving up to tenth place on the continent with Tier 1 capital increasing from $2.8 billion in December 2022 to $3.2 billion by the end of 2023. This growth highlights Morocco’s strengthening banking sector amid regional economic headwinds.
Algerian and Tunisian Banks Face Sovereign Risk
Algeria’s state-owned banking giants—Banque Extérieure d’Algérie, Banque Nationale d’Algérie, and Crédit Populaire d’Algérie—maintain prominent positions in the continental rankings. However, their performance reflects broader economic challenges, including exposure to sovereign risks and government financing needs. Crédit Populaire d’Algérie, which ranked 20th in 2022, now holds the 18th position.
Tunisian banks, such as Banque Internationale Arabe de Tunisie and Banque Nationale Agricole, are ranked 35th and 37th on the continent, respectively. In 2023, these banks faced increased exposure to sovereign risk as the government turned to local banks for financing through bonds and loans. While profits rose alongside interest rates, the reliance on local currency bonds and loans to the Ministry of Finance highlighted their vulnerability to sovereign financial pressures, as noted by Fitch Ratings.
Outlook for North Africa’s Banking Sector
Despite economic challenges, North Africa’s banking sector remains a pillar of stability and growth on the continent. Strong management, prudent financial practices, and strategic positioning have enabled these banks to navigate a complex economic environment. However, the road ahead will require continued resilience as banks balance profitability with the growing financial demands of their respective governments.
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