Banks Sustain Nigerian Domination

Article excerpt

Nigeria's biggest banks continue to dominate our survey of the Top 50 West African companies but this year has been one of reform and consolidation rather than rapid expansion.

In the wake of the global banking crisis, the Central Bank of Nigeria (CBN) was forced to intervene to rescue Afribank, Finbank, Intercontinental Bank, Oceanic Bank and Union Bank last August.

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The banks' chief executives were sacked in August, as the CBN injected N400bn ($2.56bn) into the five companies. It invested a further N200bn ($1.3bn) in Bank PHB, Equatorial Trust Bank, Spring Bank and Wema Bank in October.

In January 2010, the CBN introduced new regulations to strengthen the banking sector in the long term, introducing a maximum 10-year term for chief executives and preventing CBN senior officials from working for privately owned banks for three years after they leave the CBN.

Confidence seems to have returned to the sector and First Bank of Nigeria has regained top spot in our regional survey with market capitalisation of $2.8bn. Nigerian Breweries comes a close second with $2.7bn, as both Nigerian companies leapfrog last year's winner Sonatel, which is valued at $2.6bn this year.

Despite its higher market value, First Bank recorded an 89% fall in profits for the six months to the end of September 2009. However, its gross earnings increased 32% to N128bn ($844m) and total assets rose 14% to N2 trillion ($13.2bn). The bank argues that it will continue to seek selective expansion and adds: "Our strong capital adequacy ratio of 22% and stable funding base allows us to withstand short-term pressures without deviating from our long-term objectives." First Bank has now opened subsidiaries or offices in the UK, South Africa and France, and the China Banking Regulatory Commission has granted it permission to open a representative office in China.

Perhaps most encouragingly, Nigerian non-telecoms, oil and banking companies have registered higher profits in recent months. Dangote Flour Mills, which has moved up from 38th to 22nd in our regional survey, more than tripled its pre-tax profit to N8.46bn ($55.84m)in the nine months to the end of September, while Nestle Nigeria announced a 16% rise in pre-tax profits to N13.78bn ($91m) for the whole of 2009. It too moves up in our survey from 16th to 10th.

As last year, there are 42 Nigerian companies in the West African Top 50. Cote d'Ivoire and Ghana take five and three positions respectively, with Sonatel the only company from outside West Africa's three biggest economies to be represented. Although it is based in Senegal, Sonatel is listed on the Bourse Regionale des Valeurs Mobilieres in Cote d'Ivoire.

Overall, company values in West Africa have not recovered to the same extent as those elsewhere on the continent over the past 12 months, but the Nigerian banking reforms could inject more confidence into the Nigerian economy as a whole over the year to come.

West Africa's Top 50 companies

Regional  Rank  Company Name                      Country   Value ($m)
Rank       in
          2009

1         37      First Bank Nigeria              Nigeria     2,830

2         40      Nigerian Breweries              Nigeria     2,714

3         44      Sonatel                         Cote        2,621
                                                  d'lvoire

4         48      Zenith Bank International       Nigeria     2,549

5         55      Guaranty Trust Bank             Nigeria     2,227

6         66      United Bank for Africa          Nigeria     1,768

7         87      Benue Cement Company            Nigeria     1,298

8         89      Guinness Nigeria                Nigeria     1,258

9         90      Dangote Sugar Refinery Limited  Nigeria     1,201

10        96      Nestle Nigeria                  Nigeria     1,103

11        104     First City Monument Bank        Nigeria     1,019

12        108     Stanbic IBTC Bank               Nigeria       985

13        116     Access Bank Nigeria             Nigeria       912

14        125     Diamond Bank                    Nigeria       806

15        144     Lafarge Cement Wapco Nigeria    Nigeria       633

16        149     Unilever Nigeria                Nigeria       581

17        156     Oando                           Nigeria       564

18        159     Union Bank Nigeria              Nigeria       558

19        163     PZ Industries                   Nigeria       547

20        168     Skye Bank                       Nigeria       521

21        184     Flour Mills Nigeria             Nigeria       440

22        186     Dangote Flour Mills             Nigeria       434

23        194     Fidelity Bank Nigeria           Nigeria       404

24        196     Ecobank Ghana                   Ghana         401

25        199     Ecobank Nigeria                 Nigeria       394

26        204     Oceanic Bank                    Nigeria       382

27        205     Bank PHB Nigeria                Nigeria       380

28        211     UAC Nigeria                     Nigeria       338

29        213     Total Nigeria                   Nigeria       338

30        218     Standard Chartered Bank Ghana   Ghana         334

31        232     Intercontinental Bank           Nigeria       296

32        247     Societe de Limonaderies et      Cote          261
                  Brasseries (SOLIBRA)            d'lvoire

33              - Afribank Nigeria                Nigeria       253

34              - SocGen Banque en Cote d'lvoire  Cote          242
                                                  d'lvoire

35              - African Petroleum               Nigeria       239

36              - Sterling Bank                   Nigeria       237

37              - Nigerian Bottling Company       Nigeria       237

38              - Unilever CI                     Cote          235
                                                  d'lvoire

39              - Julius Berger Nigeria           Nigeria       227

40              - Mobil Oil Nigeria               Nigeria       199

41              - Ashaka Cement                   Nigeria       195

42              - Custodian and Allied Insurance  Nigeria       180

43              - GlaxoSmithKline Beecham         Nigeria       170
                  Nigeria

44              - Nestle Cote d'lvoire            Cote          159
                                                  d'lvoire

45              - Unilever Ghana                  Ghana         148

46              - UACN Property Development       Nigeria       146

47              - Cappa and Dalberto              Nigeria       125

48              - National Sports Lottery         Nigeria       123
                  Technology

49              - Cadbury Nigeria                 Nigeria       120

50              - National Salt Company Nigeria   Nigeria       118