Executive summary

Although banks in Sub-Saharan Africa faced slowing economic growth in 2014, they nevertheless reported sound profits growth. Weakening growth impacted South Africa and west Africa more than it did in east Africa, although impairment charges rapidly deteriorated in two of the four east African markets.

West Africa’s growth slowed late in the year and may only strain banking profits in 2015, while the region’s largest banking market, South Africa, faced a second difficult year of weak economic growth. Coupled with that, electricity shortages (and labor strife in the first half of the year) resulted in much weaker GDP growth in the south

The banking sector’s growth potential is considerable

Africa’s banking markets remain immature, in the sense that bank assets as a percentage of GDP, with the exception of South Africa, are very low. Only South Africa’s banking sector has assets in excess of its GDP. Although Nigeria is the region’s second-largest banking market, it holds only US$0.28 in bank assets for every US$1 of GDP. This means Nigeria has considerably fewer banking assets per GDP than what Kenya has, and the ratio is even lower than Tanzania’s.

Nigeria’s bank assets to GDP is lower than initially thought, given their GDP rebasing during 2014, with the resulting GDP being double the size it was previously thought to be.

Read more: Sub-Saharan Africa banking review: A review of the 2014 calendar year

Source: African Business Central