Share the article
twitter-iconcopy-link-iconprint-icon
share-icon
Best-performing banksOctober 5 2008

Asia banks increase global role

Asian banks have avoided the worst of the credit crunch and shown steady economic growth. China is predictably the big winner, accounting for 41 of the Top 200 and dwarfing India’s aggregate sum. Writer Stephen Timewell.
Share the article
twitter-iconcopy-link-iconprint-icon
share-icon

Despite the global credit crunch, Asia managed a very creditable economic growth of 9.1% in 2007 and, although expansion is expected to ease, the continent is still likely to maintain robust growth in 2008 and 2009 of 7.5% or more, according to a recent IMF report.

With China achieving 11.4% growth and India 9.2% in 2007 the Asian banking sector continued to grow strongly, accounting for an increasing slice of the global banking market.

Based on 2007 results, the 184 Asian banks in The Banker’s Top 1000 World Banks (see The Banker, July 2008) accounted for 19% of Top 1000 aggregate profits, up from 12% the previous year and the only region in the world showing dramatic growth. Asia is on the rise and The Banker’s Top 200 Asian bank listing this year shows a 19.5% increase in aggregate Tier 1 capital to reach $655.6bn.

Meanwhile, the aggregate assets of the Top 200 grew by a sizeable 22.8% to reach $12,209bn and aggregate pre-tax profits rose a huge 51.2% to $166.7bn from $110.3bn the previous year.

Not surprisingly, China dominates the listing, increasing its share in all areas. ­Chinese banks, led by ICBC, account for 46 of the Top 200 Asian banks, up from 36 in last year’s listing, and their share of regional aggregates is also expanding significantly. Chinese banks now provide 41% or $268.4bn of the Asian aggregate Tier 1 capital and they also account for a stunning 44% of aggregate assets and 46.2% of aggregate pre-tax profits.

In short, China makes up more than 40% of the Asian banking market, a few percentage points over the previous year and about 10% up on two years ago. But what is important to note is not only the dominance of Chinese banks but also how small the Indian banks are in comparison and how little they are growing. India provides 30 banks in the Top 200, joint second-largest country in numerical terms along with Taiwan, but the India banks in aggregate terms are a mere sixth of the size of the Chinese.

India’s banks account for just 7% of aggregate Tier 1 capital and aggregate assets of the Top 200. China has seven banks in the leading 20 Asian banks with ICBC, Bank of China and China Construction Bank in the top three positions, while India has just one bank in this leading group, with State Bank of India in ninth place. The other key concern about the Indian banks is not just their relatively small size but the fact that despite the economic boom in India the banks’ share of the Top 200 aggregates has remained at 7% for the past three years – not a sign of a vibrant banking sector.

The leading 20 banks remained much the same this year, apart from China CITIC Bank jumping into 15th place from 30th following a massive capital increase. Besides China, the leading banking countries in capital terms are South Korea (13%), led by Kookmin Bank and Woori Financial Group, and Australia (12%), led by National Australia Bank and ANZ Banking Group.HIGHEST CLIMBERS AND TOP PERFORMERSIn the Top 200 there were some significant upward moves by not just the middle-ranking Chinese banks, but also institutions stretching from the Philippines to Kazakhstan in central Asia. Nanjing City Commercial Bank topped The Banker’s highest movers list, rising 79 places to 84th place following a quadrupling of Tier 1 capital to $1286m. The Philippines-based Banco de Oro Unibank moved up 71 places to 89th place after doubling its capital following the merger with Equitable Bank in May last year. In China, Nanchang City Commercial Bank and Ningbo Commercial Bank were other big movers, rising 51 and 50 places, respectively, while in Kazakhstan Bank CenterCredit moved up 35 places. The best performers in the Top 200 came from a wide range of countries, with China Minsheng Banking Corp providing the best profit return on capital at 215.6% following a massive 1630% increase in profits in 2007. Bank Rakyat Indonesia came second with a return of 50.4% followed by two highly profitable Pakistan banks; Muslim Commercial Bank and National Bank of Pakistan, with returns of 48% and 42.5%, respectively. In asset terms, the three leading countries in the Top 200 are China (44% of aggregate assets), Australia (14%) and South Korea (12%).

Was this article helpful?

Thank you for your feedback!