Profitability is resurgent among western European landers, and there are strong showings from Asia-Pacific and North America. Stefanie Linhardt reports.

Banks in western Europe have seen a strong resurgence in profitability as its institutions claw back their share of global profitability in The Banker’s Top 1000 World Banks ranking. This is largely due to a reversal of losses among Italian lenders, but also due to higher profits in France, the UK, the Netherlands and Germany.

Regional profit share

Western European banks increased their pre-tax profits by $90.6bn in 2017 compared with 2016 results. But across all regions, profitability has increased to a total of $1111.7bn in 2017, compared with $949.64bn in 2016.

Asia-Pacific leads the regional profit generation table with 43.38% of the global profits, despite ceding percentage points for the fifth year in a row. North America’s share has fallen by about two percentage points on the previous ranking.

Lenders in Latin America and the Caribbean have kept pre-tax profits stable, but due to the significant increases in profits in other parts of the world, the region’s share dropped by 3.5 percentage points on the previous ranking.

The profit share of Middle Eastern banks has come down slightly on a global scale, to 3.9% from 4.28%, while institutions in central and eastern Europe and Africa have kept comparable shares.

Despite the strong showing on an aggregate basis by institutions from Asia-Pacific, North America and western Europe, only six out of the top 25 banks by return on capital (ROC) are from one of these regions. The highest ranked is the only North American institution, American Express Company, with 50.34% ROC, making it the fifth most profitable of the ranking (returning nearly five percentage points more than in the 2017 ranking though both capital and profits have come down). It is immediately followed by one of two Italian banks, Banca Generali, while compatriot BancoPosta lies in 19th.

Indeed, despite the strong improvement, western Europe remains the weakest region by aggregate ROC globally.

The vast majority of banks with high ROCs – 20 of them – are in the lower half of the Top 1000 ranking by capitalisation. Caixa Economica Federal of Brazil is the bank with the highest Tier 1 capital (ranked 88th in the Top 1000) among the top 25 by ROC, where it ranks 16th. The next largest institutions are American Express (106th by capitalisation) and Banco de Credito del Peru (305th).

There are eight banks from Latin America in the top 25 (compared with 10 in the previous ranking), five of which are from Argentina – with Banco Provincia (first) and Banco de la Ciudad de Buenos Aires (21st) both new to the top ROC table – and as in the previous ranking we have excluded Venezuelan lenders to avoid skewing results.

Top 25 banks by return on capital (%)

ROC Rank World Rank Bank Name Country Return on capital % 
1 885 Banco Provincia Argentina 62.01
2 988 Banco de la Nacion Peru 59.09
3 979 Banco de San Juan Argentina 54.95
4 781 Banco de Fomento Angola (BFA) Angola 51.69
5 106 American Express Company US 50.34
6 937 Banca Generali Italy 50.20
7 977 Kaspi Bank Kazakhstan 49.52
8 612 National Bank of Uzbekistan (NBU) Uzbekistan 48.82
9 856 United Bank for Africa Nigeria 48.46
10 646 Banco de Galicia Argentina 48.44
11 870 Bank of South Pacific Papua New Guinea 48.30
12 739 Tinkoff Bank Russia 44.77
13 597 Sovcombank Russia 44.61
14 576 Guaranty Trust Bank Nigeria 43.44
15 971 Banco BIC Angola 42.83
16 88 Caixa Economica Federal Brazil 40.91
17 765 Techcombank Vietnam 39.23
18 569 CIB Egypt Egypt 37.78
19 397 BancoPosta Italy 37.40
20 450 Banco Macro Argentina 37.28
21 986 Banco de la Ciudad de Buenos Aires Argentina 36.89
22 766 Banco Angolano de Investimentos Angola 36.16
23 305 Banco de Credito del Peru Peru 35.48
24 579 Capitec Bank Holdings South Africa 35.20
25 945 People's Bank Sri Lanka 35.11

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