Rating agency Moody’s expects Africa’s big banks by stock market value, which are mainly found in South Africa, Kenya, Morocco, and Nigeria, to remain profitable in 2021, despite Covid-19 which led to an increase in provisions for credit risks.

In a report issued yesterday, Moody’s said it expects lower provisions in South Africa, Kenya, and Morocco to increase banks' profitability this year, although the resources that will be allocated to risk provisions are above their 10-year average.

In Nigeria, the rating agency expects returns on assets to fall as a result of the expected increase in risk provisions. The Nigerian banking sector ended 2020 with solid profitability. But this resilience in profit margins was mainly due to loan restructurings, which limited the weight of delinquent or risky loans. But in 2021, these restructurings are expected to come to an end, and real credit risk will be noticeable.

Non-performing loans increased in 2020 for the top 20 banks listed on African stock exchanges, according to financial data available on the Capital IQ platform. The data shows that bad loans have increased the most in Kenya, exceeding the 10-year average.

For the moment, the market valuation of the top 20 listed African banks has increased by $6.5 billion, according to calculations by Ecofin Agency. Behind this overall performance lies a stock market downturn for the big banks on the Nigerian Stock Exchange.

Idriss Linge