The undisputed leader of the Latin American rankings by Tier 1 capital, Brazil fills the top five positions at the top of the Central and South American list. Itaú Unibanco leads the pack, with $37.1bn in Tier 1 capital, followed by Banco do Brazil, Bradesco, Caixa Economica Federal and investment banking specialist BTG Pactual. Only one-fifth of Caixa Economica’s size, BTG Pactual’s Tier 1 capital is still larger than Mexico’s biggest locally owned bank, Grupo Financiero Banorte. The Mexican lender climbed to sixth position from ninth in last year's ranking, and is followed by Banco de Chile and Banco Inbursa, which have both improved their standing – seventh place for the Santiago-based bank, up by one position from last year, and eighth place for Mexico’s only other lender in the ranking, up from 10th.
Philip Alexander reports on the full results of The Banker’s Top 1000 World Banks ranking 2014, in the story Top 1000 World Banks 2014: Back on track?
But if Central and South America’s more dominant markets – Brazil, Mexico and Chile – top the regional ranking, it is Venezuela that provides eye-catching figures elsewhere. The ranking’s top three highest movers are indeed from the oil-rich country: Banco Occidental de Descuento, Mercantil Servicios Financieros and Banco del Tesoro, which recorded Tier 1 capital increases ranging from more than 50% to just under 75%. Mercantil is the highest scoring Venezuelan lender in the regional ranking, jumping to ninth place from the 20th it held last year. Furthermore, the top two banks by return on capital (ROC) are also Venezuelan: Banesco Banco Universal and Banco de Venezuela, with ratios of 64.99% and 61.86%, respectively.
A number of analysts remain sceptical of banking data from Venezuela, as they believe it is heavily affected by spiralling inflation (of about 57%). High inflation may well be largely responsible for boosts in capital, assets and profits figures; high ROC ratios can also be explained by relatively low capital bases – even if Banesco improved its Tier 1 capital to $2.67bn from the $2.25bn it recorded in last year’s ranking, and Banco de Venezuela’s capital marginally expanded to $2.3bn from $2.2bn.
But Venezuela’s impressive data should not be completely dismissed; it is indicative of a lucrative banking sector in a very challenging environment.
