The Banker's return on capital rankings show the success of retail and consumer banking in emerging markets. The Indonesian and Turkish banks that lead the rankings for Asia-Pacific and Western Europe all have a retail or small business focus.
The top bank in western Europe for return on capital, Home Credit, is actually the Dutch holding company for a specialist consumer lender that operates mainly in Russia, Vietnam and China. In central and eastern Europe, Getin Noble – primarily a mass-market retail lender plus a smaller private banking unit – is streets ahead of the pack. Orient Express Bank is also consumer-focused.
Of course, return on capital can be as much about capital as it can about profits. Both Home Credit and Getin Noble have similar ownership structures. Majority-owned by wealthy private individuals, they may keep more of their capital in the form of subordinated debt extended by their owner, rather than in Tier 1 equity.
In North America, the key differentiator is fee-earning activity. American Express is, of course, the highly branded provider of credit-card and merchant payment services, while Franklin Resources is one of the world’s largest asset managers with a banking licence attached.
Return on capital differs slightly from the profit on capital calculations shown elsewhere in the magazine because it uses year-end capital figures rather than the year-average.
