World’s Best Banks 2021: Africa
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May 04, 2021
History has shown that necessity breeds innovation, particularly during crisis. For African banks, 2020 was a year to demonstrate the ability to innovate, due to unprecedented disruptions brought about by Covid-19. The pandemic undoubtedly wreaked havoc on economies. The banking sector was not spared, suffering a surge in nonperforming loans (NPLs) and a plunge in profitability.
In late March, McKinsey reported that the average return on equity (ROE) for African banks had fallen to 7% in 2020, from 14% in 2019, which is at least better than their counterparts in developed markets, where McKinsey estimates average ROE could dip below 1.5% in 2021. Rebound for Africa’s banking industry could be swift and could return to near precrisis levels within the next three years, largely because banks “acted boldly to manage the economic fallout of the pandemic,” says McKinsey.