JP Morgan

Strong profitability, soundness, leverage and return-on-risk metrics put Discover Financial Services at the top of our best-performing banks ranking. Marie Kemplay reports.

Last year was one of recovery for US banks. Although most of them performed surprisingly well, given the scale of the disruption early in the Covid-19 pandemic, 2021 nonetheless saw a year of significantly increased profits and profitability for many.

It was also a year of change in our best-performing banks ranking. Discover Financial Services, which failed to make the overall top 10 in the 2021 table, has topped our ranking this year. It is also joined by five other new entrants — Silicon Valley Bank (SVB), Ally Financial, Wells Fargo, Citizens Bank and US Bancorp.

The Banker’s best-performing banks ranking scores firms on their performance across eight indicators, providing an overall score and eight individual scores in areas such as growth and profitability. Only the 20 largest banks, headquartered in the US, are included in the performance analysis.

Discover Financial Services, well-known for its credit card brand but also a provider of loans, as well as checking and savings accounts, not only topped the table with its overall score but achieved top ranking for profitability, return on risk, soundness and leverage. It achieved a 392% year-on-year increase in pre-tax profits and an impressive 35% return-on-capital ratio. Interestingly, however, it was ranked 20th out of 20 in The Banker’s growth metric, which measures growth in assets, loans, deposits and operating income. It also came in 19th position for asset quality and liquidity, suggesting there is some room for improvement in how it is positioned for long-term performance.

Last year’s top-performing bank, Morgan Stanley, has fallen to 11th position in our overall rankings. Where last year it ranked first for growth and second for profitability and return on risk, this year it is ranked fifth, 12th and 8th respectively, for each of those indicators.

SVB, whose main offices provides financial services to start-ups and the innovation economy more broadly, has placed second in this year’s overall rankings, as well as first for growth and liquidity, and third for soundness. Capital One Financial Corporation achieved third position overall, scoring particularly well for soundness and leverage, where it placed second, and achieved third position for profitability and return on risk.

Goldman Sachs maintained its fourth position for overall performance. It had a strong year, with its pre-tax profits increasing by 116% year on year. It also took the top spot in the operational efficiency metric, which analyses cost-to-income ratio performance and year-on-year changes to it.

The US’s three largest banks by Tier 1 capital, JPMorgan, Bank of America and Citigroup came in seventh, 17th and 15th place respectively for overall performance.

This year’s top 10 represents a broad geographic spread, with three based in New York (American Express, Goldman Sachs and JPMorgan); two in California (SVB in Santa Clara and Wells Fargo in San Francisco); Discover in Riverwoods, Illinois; Capital One in McLean, Virginia; Ally Financial in Detroit, Michigan; Citizens Financial in Providence, Rhode Island; and US Bancorp in Minneapolis, Minnesota.


The Banker’s global and regional rankings are industry-standard measures of bank size by Tier 1 capital. While the current rankings include some additional data to give an overall impression of bank performance, they use only a fraction of the very detailed analysis undertaken by our research team.

Knowing which bank is biggest, or has grown fastest, is useful; but what people really want to know is which bank is the best performer.

We have developed a model that scores and ranks banks in eight key performance categories, using 17 ratios, and assigns an overall best-performing bank score and ranking.

The key requirement of the model was that it could be used to identify the best performers in any sample group, be it an existing global, regional or country ranking or custom peer group such as global systemically important banks.

The model only uses performance ratios, and year-on-year percentages and basis points changes, so the size of a bank has no influence on its best bank ranking position.

The performance categories and indicators are:

  1. Growth — Annual percentage growth in assets, loans, deposits and operating income.
  2. Profitability — Return on assets, return on equity, profit margin, asset utilisation (and annual basis points [bps] change in these ratios).
  3. Operational efficiency — Cost-to-income ratio (and annual bps change in these ratios).
  4. Asset quality — Allowance for loan losses to gross total loans, loans, impairment charges to total operating income (and annual bps change in these ratios).
  5. Return on risk — Return on risk-weighted assets (and annual bps change in this ratio).
  6. Liquidity — Loans-to-assets and loans-to-deposits ratios (and annual bps change in these ratios).
  7. Soundness — Capital assets ratio (and annual bps change in this ratio).
  8. Leverage — Total liabilities to total assets (and annual bps change in this ratio).

When the peer group data is imported, the model assigns a score for each indicator based on the relative distribution of values. Thus, a bank that significantly outperforms on a particular indicator will receive a proportionately higher score. The maximum possible score for each category is 10 points and the maximum overall score is 80 points.

The model is neutrally weighted so that the underlying ratios and annual bps changes are of equal significance. Each performance category receives equal weighting. We plan to produce an online version of the benchmarking tool, which will allow users to assign data point and category weights according to their own preferences.


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