A slower Chinese economy and a faltering property market have not yet shown up in the results of the country’s banks. The top 10 Chinese banks by Tier 1 capital all saw increases in pre-tax profits ranging from 9.51% for fifth-placed Bank of Communications to 30.18% for China Citic Bank in seventh place.
On current form, Chinese banks are among the most profitable in the world. The four big state owned banks – ICBC, China Construction bank, Agricultural Bank of China and Bank of China – are the top four most profitable banks in the world in that order as listed in The Banker’s Top 1000 World Banks ranking.
In a China-only ranking, there is a large gap in profits, assets and capital between these four and the next tier of banks headed by Bank of Communications. Bank of Communications placing fifth in the main Tier 1 ranking has about half the capital of fourth-placed Agricultural Bank of China, about 40% of the asset base and 35% of the profits.
As well as growing their profits, the top 10 Chinese banks all continued to grow their assets and capital. ICBC, which tops the ranking, grew its assets by 11.16% and Tier 1 capital by 29.24% to $207.6bn making it the largest bank in the world by both measures.
In all but one case the top 10 Chinese banks grew their capital faster than their assets, which bodes well for their ability to ride out a slowdown. The exception was China Citic Bank which grew assets by 26.81% and Tier 1 capital by 21.36%. The largest foreign-owned bank in China is HSBC, which grew its assets by 26.33% and capital by 30.07%.
Small bank, big steps
The largest leap in Tier 1 capital among all 100 Chinese banks listed here was made by the smallest one – Jilin Jiutai Rural Commercial Bank, which grew its capital 90.87% to $725m allowing it to enter the ranking in 100th place. Two larger banks that made impressive Tier 1 capital gains were the 65.54% advance by Huishang Bank to $5.16bn – taking it up the main ranking from 26th to 22nd – and the 55.64% push by Shengjing Bank to $3.52bn allowing it to rise from 31st position to 28th.
In asset terms Jilin Jiutai Rural Commercial Bank was again the star performer with 99.04% growth to $9.048bn followed by Guangdong Huaxing Bank’s 68.77% increase to $8.5bnm. The largest bank in the top 10 by assets growth is Chengdu Rural Commercial Bank which increased its assets by 46.94% to $70.36bn. It placed 31st in the overall ranking on a Tier 1 basis.
When it comes to return on capital, the winner is Nanchong City Commercial Bank with 36.45%. Bank of Changsa is runner up with 31.33%. Some larger banks also perform well on this score with China Minsheng Bank – ninth in Tier 1 terms – producing a return on capital of 28.18%. Its pretax profits of $9.37bn rank it seventh on this measure across all 100 banks.
In terms of growth in pre-tax profits, the leader is Qingdao Rural Commercial Bank, which saw profits increase by 205.83% to $365m while a modest 8.42% capital increase saw it fall from 46 to 59 in the main ranking. The bank’s assets grew by 27.5% to $20.59bn. Second in the growth in pre-tax profits table is Xiamen International Bank, which recorded a 70% increase to $351m. Xiamen lands 49th in the main Tier 1 ranking and fell six places even though its capital rose by 21.87%.
Finally the top 10 Chinese banks by return on assets is headed by Bank of Taizhou with a 2.74% return, followed by Bank of Rizhao at 2.26% and Bank of Ningxia at 2.19%. Among the top 10 banks by Tier 1 the best return on assets performance is from China Construction Bank with 1.82% followed by ICBC 1.79% and China Minsheng Bank at 1.77%.
The Banker's Top Chinese banks ranking, 2014 originally appeared in the December 2014 issue of the magazine. The full results of the ranking are available on The Banker Database. Find out more about the database, register for a free trial or subscribe today.
