The Asia-Pacific region accounts for almost 57% of global profits in The Banker’s Top 1000 World Banks rankings for 2013. Based on year-end data for 2012, China generated total profits of $242bn, compared with just $144bn for the US, the second largest country by profits. China’s ICBC is now the world’s largest bank by Tier 1 capital, overtaking US giants JP Morgan and Bank of America.
However, despite high growth rates for assets and Tier 1 capital, China is far from offering the best returns. The total return on assets in the 2013 ranking was less than 1.6%, outstripped by other large emerging markets such as Mexico, Russia, Turkey and Indonesia. The most profitable region by return on assets is Africa, at 2.1%, followed by central and eastern Europe, at 1.9%.
Western Europe’s share of world profits was at just 1.59%, its lowest share since the 2008 financial crisis. This is mainly due to massive losses in certain eurozone banking sectors, especially Spain, which lost more than €72bn, but also Ireland and Greece. The worst return on capital is in Slovenia, where banks lost more than 36% of their Tier 1 capital. Aggregate losses in the eurozone were €49bn and, even excluding Spain, the return on assets for the single currency area was just 0.07%.
For more analysis and our warning indicators for credit bubbles, please see Top 1000 World Banks 2013.
