Shares in emerging market banks have traditionally traded at a discount to those in developed markets, because they were considered less transparent and more volatile in their earnings. That discount has reversed over the past year, as many developed market banks – especially in Europe – have seen price to book values fall below one. Though by no means immune to the eurozone crisis, emerging market bank stocks proved more resilient.
And perhaps with good reason. We have calculated the top 10 banks by average return on risk for 2009 and 2010 – one very difficult year for global banking, the other a year of partial recovery. Return on risk measures pre-tax profits as a proportion of risk-weighted assets (RWAs), rather than total assets, for those banks where risk weighted assets data has been provided for both those years.