NIGERIA’S BANKING INDUSTRY
The banking sector handles credit facilities, cash holding, investments, and other financial dealings. Because it distributes money to borrowers who have profitable assets, the banking sector is one of the main forces behind most economies.
The banking business in Nigeria began during the colonial era with the founding of Colonial Banks, the major goal of which was to service the commercial demands of the Colonial Government. The Nigerian financial system is governed by the Central Bank of Nigeria. On July 1, 1959, this apex bank began operations.
Nigeria’s banking business is critical to the country’s growing provision of financial services, products, and access. As of the fourth quarter of 2020, there were over 95,000 bank employees in the country. These employees either directly or indirectly support banking operations and present potential clients to products such as account opening (savings or current) and credit and debit card services. As of 2021, the country had roughly 133.5 million active bank accounts, with approximately 120 million savings accounts.
In 2020, the industry group for Nigerian banks had total assets of $247.3 billion is expected to reach a value of $403.1 billion by 2025, growing at a 10.2% annual pace (compound annual growth rate, CAGR). Access Bank Plc, First Bank Plc., Guaranty Trust Bank Plc, United Bank for Africa (UBA), and Zenith Bank Plc are significant players in the Nigerian banking industry.
Monetary and fiscal policies drive the banking sector’s growth, but since the COVID-19 outbreak, industry participants have seen a decline in margin earnings.
SOUTH AFRICA’S BANKING INDUSTRY
The retail banking business in South Africa is dominated by five JSE-listed banking companies, although with the introduction of new banks, the banking environment is becoming less concentrated and more competitive. Bank fees have been reduced as a result of competition, particularly on entry-level accounts.
To maintain and attract consumers, banks are progressively investing in digital banking and focusing on product customization. Although new companies lack the geographical reach of established banks, their digital platforms enable them to address consumers’ need for affordable bank services that are faster and more convenient than traditional banking.
In light of the worldwide pandemic and the enormous economic shock that it has caused, the South African banking industry is in surprisingly strong health. Despite a sharp decline in earnings, capital, liquidity, and asset quality have remained exceptionally strong. Analysts anticipate that the rising interest rate cycle will be beneficial for bank profitability. Long-term poor economic growth, weaker sovereign and inflationary threats, as well as the possibility of other external or domestic shocks, are the sector’s main vulnerabilities.
The five banks in this research are Standard Bank, FirstRand (FNB), Absa Bank, Nedbank, and Investec, and they are the country’s largest banks. As of March 2021, these “big five” banks accounted for more than 90% of all banking assets in the country, worth around R5.8 trillion. Combined, South Africa’s banks carry a total asset value of just under R6.5 trillion, while the mutual banks account for R3.4 billion in assets.
