The rosy profitability score in The Banker's Top 1000 World Banks 2018 is underpinned by an unlikely candidate. Western Europe, which in the 2017 ranking was home to the 10 biggest loss-makers and which is often censured for lagging behind the US, has bounced back with a vengeance. Regional profits grew by more than 67% and ROE leapt three percentage points to 8.6%. It has led to a more even distribution of the global profit pie; Europe’s share has soared to 20.3%, a five-year high and just four percentage points shy of North America.
Western Europe’s biggest banking markets are key drivers. France cemented its reputation as the engine of European banking, growing profits by 18.5% to achieve ROE of 9.4%. The UK more than doubled its 2017 ranking profits; the only other country in the 2018 rankings with a more impressive profit turnaround is Uzbekistan, which is represented by just one bank.
The UK’s comeback is largely down to HSBC, which reversed its 62% profit slide in 2016; Standard Chartered, which grew returns fivefold; and RBS, which turned in its first profit in a decade despite paying US regulators $5.5bn to settle crisis-era mis-selling claims. In Germany, and across the eurozone as a whole, profits also more than doubled. Even German national champion Deutsche Bank, notwithstanding its strategy dilemma and leadership overhaul, posted a $1.5bn profit – its first in three years.
Deutsche Bank, RBS and Credit Suisse – which were repeat offenders on the 2017 ranking of biggest loss-makers – are among the top turnaround stories for the 2018 list. They are joined by five other European names, four of which are from the biggest loss-making countries in the 2017 ranking. Dogged by non-performing loans (NPLs) and the lingering effects of the eurozone crisis, Italy, Greece and Portugal have long-been Europe’s underperformers. But in the 2018 rankings their fortunes improved, resolutely led by their biggest banks.
