North Africa’s Top Banks: Calm Before The Storm

In terms of our regional table, North Africa is perhaps the most competitive region in African banking. Attijariwafa Bank retains top spot with Tier 1 capital of $2,786m, just ahead of Libyan Foreign Bank with $2.573m, while three other banks have a capital base of more than $2bn and a total of 10 banks have core capital in excess of $1bn.

However, North African banks have endured something of a torrid time in the period covered by our survey and in the run up to the historic political unrest that shook the region. The value of Attijariwafa’s Tier 1 capital has fallen significantly between our 2010 and 2011 surveys, down from $3,153m in 2010, while the threshold required for inclusion in our regional Top 25 has also fallen. Libya’s Gumhouria Bank secured 25th with $376m last year but Crédit Immobilier et Hotelier, Morocco needed just $358m to take the same position this year.

It will be interesting to see what impact political unrest and change has on our tables over the next couple of years. Investors hate uncertainty and economic activity across Tunisia, Egypt and Libya in particular has been severely affected by the events of the Arab Spring. Millions of people did not go to work for weeks on end, while Libya will take years to recover from the impact of its civil war. Libyan GDP is bound to suffer, although the economic effect could be positive. If – and it is a big if – more democratic and economically liberal governments are installed in Tunis, Cairo and Tripoli, economic activity could be boosted in the medium and long term.

A large part of the discontent has been driven by corruption, the lack of economic opportunity and the concentration of economic power in the hands of the governing elites, their relatives and friends.
Greater transparency and economic opportunity could encourage investment from both North Africans and also from those further afield. This should ultimately boost economic growth and create business for banks.

The Arab Spring could also have an impact in countries such as Morocco, where the authorities have offered to reform in an effort to diffuse popular opposition. If Rabat implements the economic reforms that it has promised, it would provide more opportunity for private sector investors. In any case, a trend towards economic liberalisation and deregulation seems inevitable.

Attijariwafa more profitable

In mid-August, Attijariwafa, which is still part owned by the Moroccan royal family, announced a 15.2% increase in net profits for the first half of this year and predicted a similar rise for the year as a whole.

Chief executive Mohamed El Kettani said that his bank would increase its efforts to expand into sub-Saharan Africa and also to develop Wafacash, a bank that it has set up to serve Moroccans on low incomes.

Although Morocco has enjoyed steady economic growth over the past decade and is served by 12 banks, 60% of the population remain without access to banking services.

It will be interesting to see whether the mobile banking revolution makes much of an impact in North Africa, or whether traditional banking services adapted for the poor have most impact. Egypt is the best-represented country in our North African regional table, largely because of gradual bank privatisation over many years and steady economic growth.

However, some Egyptian banks remain owned by the state. National Bank of Egypt (NBE), for example, is still overseen by the Ministry of Finance, although it has around a 25% share of the banking sector’s total assets and customer deposits. A new public offering has been mooted and here too there could be more rapid economic growth than in the past.