TWELVE Nigerian banks have been named among the top 1000 commercial banks across the world and the top 20 in sub-Saharan Africa by the Banker magazine published by the Times of London.
On the list are First Bank (fifth in sub-Saharan Africa and 215th in the world); Zenith (sixth/218th); Oceanic (seventh/327th); Intercontinental (eighth/335th); UBA (ninth/356th); Access Bank (19th/392th); Guaranty Trust Bank (11th/ 402nd); Fidelity Bank (12th/ 450th); Union Bank (14th/556th); Skye Bank (15th/580th); and Afribank (19th/895th). The ranking is said to be a reflection of the strength, size, soundness, profit and performance of the banks.
The magazine in explaining how it arrived at the ranking said: â€œThe rankings are based on the definition of Tier 1 capital as defined by Baselâ€™s Bank for International Settlements (BIS).
The definition is stricter than total stockholders equity and covers only the core of the bankâ€™s strength – the shareholdersâ€™ equity available to cover actual or potential losses.
Tier 1 includes common stock, disclosed reserves and retained earnings, and in the case of consolidated accounts, minority interests in the equity of subsidiaries that are less than wholly owned, but excludes cumulative preference shares, revaluation reserves, hidden reserves, subordinated and other long-term debt. These are defined as Tier two capital. Goodwill is deducted from Tier one.
The object of the survey is to show the banksâ€™ soundness in relation to the Basel requirement of a minimum Tier one capital to risk-weighted assets ratio of four per cent, and a minimum ratio of total capital to risk-weighted assets of eight per cent.
The published assets figures differ from the risk-weighted assets figures used to calculate BIS ratios. Weights applied range from zero (to assets such as cash, claims on central banks and governments in local currency) to 20 percent (to assets such as lending to multilateral development banks), 50 per cent (to residential mortgages) to 100 per cent (to private sector lending, non-OECD lending and so on). However, the Basel rules adopted by individual countriesâ€™ regulatory authorities will vary to some extent.
Wherever possible, the total assets figures shown exclude third-party items such as acceptances, guarantees and securities held with third parties. Pre-tax profits are used to show banksâ€™ performance, and the figures for real profit growth take inflation into account. The profit-on-capital ratios are calculated using the average of the latest and previous yearsâ€™ capital figures.
The NPL column refers to the gross non-performing loans as a percentage of the total loan book.Continuing the policy we started in 2007 of not including results more than three years old, we have excluded banks whose latest figures were prior to December 31, 2006, even though they may still be operating.
Top 1000 by country listing: As cross-border mergers continue, a number of banks have disappeared from the Top 1000 listing through consolidation into their new parent banksâ€™ accounts but remain a significant presence in their country of origin.
In an attempt to more correctly reflect this situation in these countries, the Top 1000 by country listing continues to include banks that are foreign owned provided that their Tier 1 capital is above the lowest limit of the Top 1000 listing. These banks are marked by â€˜foâ€™ in the world ranking column.