Asset quality challenge intensifies for world banks
With the onset of the financial crisis, The Banker has focused much more of its Top 1000 data gathering on asset quality. This year, a total of 179 banks supplied comprehensive data on their levels of impaired assets, compared with 142 last year. While this still accounts for only 18% of total banks in the Top 1000, it is sufficient to begin to understand global trends in asset quality.
In addition, this year for the first time The Banker has gathered more information about risk-weighted asset volumes and their relationship to total assets, which, broken down by region, highlights the challenges facing banks in different parts of the world. This information was supplied by 589 banks, representing more than half of the Top 1000 universe.
Whereas last year more than half of the respondent banks (61%) were reporting that their volumes of impaired assets were 2% or less of total assets, this year only 44% of banks were in this happy situation, meaning that more of the Top 1000 banks have higher percentages of impaired assets.
Meanwhile, the number of banks reporting that impaired assets were more than 10% of total assets has increased from 8% to 14% of the total.
Risk-weighted assets in western Europe account for 53% of the world total but represent only 38% of these banks' own total assets, suggesting that some balance sheet restructuring has taken place.
By contrast, banks in eastern Europe recognise risk-weighted assets as 85% of total assets, thus acknowledging that loan problems may still lie ahead for this region.
Impaired assets (%)
Risk-weighted assets by region ($m)
Risk-weighted assets Composition
