Bubbling under

The Banker's benchmark annual survey of global banking may stop at 1000, but the banks themselves naturally do not. To provide a taste of the banks and markets that might be on the way up, we have compiled a list of the 200 largest banks that supplied 2009 data to our survey, but did not quite make the Top 1000 - a kind of 'Next 200'. This should not be taken as a comprehensive snapshot of the contenders for entry into the Top 1000: it excludes banks that have not delivered 2009 data, so it rewards those that have more timely reporting practices. A just reward, we feel, in a world that has become much more conscious of the need for better visibility in the banking sector.

The rise of Asia, so noticeable in the Top 1000 this year, is equally prevalent just below the surface. Asia accounts for 30% of the banks in this survey by number, but 48% of the profits. Asian assets are 52% of the total for the ranking, suggesting that return-on-assets in Asia may be lacklustre. But this is mainly due to the presence of Japanese banks that have large asset bases, but poor profitability: half the top 20 banks by assets are Japanese, but only one Japanese bank (Minami-Nippon) features among the top 50 by return-on-assets. If Japanese banks were excluded, the average return on assets for Asian banks bubbling under is 1.72%, compared with 0.73% for the list as a whole.

The return-on-assets for these Next 200 candidate banks is also superior to that for the Top 1000, which came in at 0.42% in our 2010 rankings. Interestingly, however, profits on average capital (roughly equivalent to return-on-equity) for the Next 200 are at 6.25%, lower than the 8.16% recorded for the Top 1000. This is because the aggregate capital-to-assets ratio found among these banks is significantly higher than for the Top 1000 - 6.8%, as against 5.1%.

The reason for such high capitalisation is not hard to discern. Many banks in this ranking are operating in frontier markets, where good quality lending opportunities are scarce, and risks are high. In fact, banks from no less than 31 markets that do not feature at all in the Top 1000 are to be found here, including 11 countries from Africa, eight from Latin America and the Caribbean, six from Asia, five from eastern Europe and one from the Middle East. Of these, the standout is surely Bangladesh - a country of at least 160 million people in which the largest bank, Sonali, comes in at just 1029 in the world by Tier 1 capital.

Look east

Another notable feature of the Next 200 is the overweight presence of banks from eastern Europe and central Asia. They comprise just 4.8% of the Top 1000, but 28% of the banks in this ranking. However, their assets are only 6% of the Next 200, reflecting a highly fragmented banking sector in the former Soviet Union. There has been little cross-border consolidation, and the largest market in the region, Russia, is home to more than 1000 banks, many with negligible capital and a handful of clients related to the banks' own shareholders. The financial crisis has exposed the funding vulnerability and loan concentration of many of these banks.

Several Russian banks in this ranking have exited the Top 1000 since the 2009 survey, including Bank Severo-Vostochny Alliance, BIN Bank and Masterbank. This is a reminder that the Next 200 includes falling as well as rising stars, and subprime-affected US banks are among the most prominent slides - Miami-based Ocean Bancshares, 18 in this ranking, was 856 in the 2009 Top 1000.

Who will join next year's Top 1000? Profitable Chinese banks high in these rankings, such as Bank of Rizhao, are clear contenders. And keep an eye on Kaspi Bank, transformed by private equity ownership and now making one in every two new retail loans in Kazakhstan.

Profit share of banks in sample by region

Number of banks in sample by region

Total assets of banks in sample by region

Capital adequacy ratios of banks in sample by region

Average return on assets of banks in sample by region