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Fidelity Bank and One Other Demoted to Tier II, As Four Banks Retain Tier I Status

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In the latest 2023 update of the Proshare Bank Strength Index (PBSI), it was disclosed that four top-tier banks and financial holding companies maintained their positions within the industry rankings.

Proshare made this announcement while unveiling the second edition of its ‘Tier 1 Bank Report‘ at an official launch event held in Lagos.

According to the reports, Access Bank, Guaranty Trust Company, Zenith Bank, and the United Bank of Africa (UBA) have maintained their positions in the top tier. On the other hand, Stanbic IBTC and Fidelity Bank have moved from Tier I to Tier II.

The ranking is determined by the PBSI methodology, where banks or financial holding companies above the 50th percentile are classified as Tier I, while those below are categorized as Tier II or III, respectively.

According to Proshare, Ecobank Transnational Incorporated, joined the Tier 1 ranking for the 2023 PBSI from the Tier II ranking in 2021/2022.

In the maiden edition of the “Tier 1 Banking Report” titled ‘The case for redefining tier 1 banks’, the PBSI focused on measures of asset quality, profitability, and liquidity.

It was expanded to encompass a range of aspects including efficiency ratios, risk management, and digital income, incorporating factors like assets, gross earnings (both in actual figures and on logarithmic scales), capital adequacy ratio, loans deposit ratio, cost to income ratio, cost of risk, net interest margin, non-performing loans ratio, digital income to gross earnings ratio, and the proportion of independent non-executive directors to the board.

According to the report, “it’s essential for businesses to embrace dynamism as a fundamental aspect to navigate disruptions in the post-2023 landscape. Proshare’s researchers emphasized, during their conversations with bank chief financial officers, that in order to avoid being caught off guard by upcoming socioeconomic challenges, commercial lenders need to shift from rigid routines and fixed mindsets. They should instead adopt more flexible and collaborative organizational structures, encouraging better internal cooperation and breaking down operational barriers”.

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