BIS ratios point to recovery but NPL worries linger
Signs of a general recovery in banking include the facts incurring losses are not recording them on the same scale as last year and that even the lowest Bank for International Settlement (BIS) capital ratios are higher than in 2009. The worst non-performing loan (NPL) percentages, on the other hand, are higher, suggesting that there is more pain to come.
Anglo Irish Bank's $18.4bn is one-third of the losses experienced by last year's worst performer, Royal Bank of Scotland. This year's 10 largest losses amounted to about 25% of last year's.
BIS ratios have improved, with most ratios above 7.4% and the 25th lowest bank, Deutsche Postbank, carrying a BIS ratio of 9.2%, compared with Japan's Shoko Chukin Bank's 8.8% last year.
NPLs are another story, however. Last year, even the highest NPL ratios did not breach 23%, but this year there are six banks with more than 20%. Of course, disclosure of NPLs is in some respects a positive step and PrivateBank's 31.8% puts it in the category of a Ukranian bank that has acknowledged the impact of that country's crisis and can start plotting a recovery strategy. In the list of 25 lowest NPLs there are nine Chinese banks but, given the massive expansion of assets books in China, it is unlikely that the country's banking sector can retain such unimpaired asset quality indefinitely.
Bottom 25 disclosed BIS ratio (%)
Highest disclosed non-performing loans (As % of total loan book)
Top 25 disclosed bis ratio (%)
Worst and lowest
