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Emerging markets dominate return on capital

Emerging market banks lead the way on return on capital, with notable performances coming from Middle Eastern, African and Latin American firms.
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Once again, The Banker’s return on capital rankings clearly illustrate the success of emerging market banking operations. Top-performing Middle Eastern, African and Latin American banks all posted higher returns than last year, in some cases markedly so. Meanwhile, Asian banks saw a decline, but still remain significantly ahead of their US or European counterparts.

The latter has suffered particularly badly. Argentinian private sector commercial bank Banco de Galicia, the global top performer, posted a return on capital of 70.68%, almost twice that of Europe’s best, Turkiye Halk Bankasi, which managed 36.23% – itself a marked drop from last year’s 50.42%.

Smaller institutions tended to perform better, with only one bank from the top half of the top 100 banks in this year’s Top 1000 ranking (Sberbank), and another from the bottom half (American Express) making it into the regional top five for return on capital.

Regionally, some countries had particularly strong showings. Iranian banks, for example, make up four out of five of the top performers for returns on capital for the Middle East. Meanwhile, three of the top five Latin institutions are Argentinian. Somewhat less surprisingly, three of the top five from central and eastern Europe are Russian.

Not all winners, especially in developed markets, are traditional banking operations, however. Top of the US breakdown is American Express, which is, of course, a provider of credit card and merchant payment services, while second placed Franklin Resources is perhaps better known as an asset manager.

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