US and Europe give way in 1001-2000 ranking

The world’s smaller banks, like their larger competitors, are reflecting the global trends towards improved profitability, increased consolidation and greater efficiency. In The Banker’s Banks of the Future survey – ranking the world’s 1001-2000 largest banks on their latest annual results – the aggregate pre-tax profits of 1000 banks reached $22.3bn, more than double the total two years ago.

While this aggregate profit is minuscule compared to the $417.4bn posted by the world’s Top 1000 banks (page 167, July 2004), it does represent a significant boost in profitability, with the aggregate Banks of the Future posting an overall return on Tier 1 capital of 27.4% compared to 14.3% two years earlier.

Like the Top 1000, the listing is dominated by US and European banks, which, combined account for 798 of the 1000 banks. This number, however, has dropped from the 848 total in our 2002 listing, as Latin American banks have increased to 59 from 36 and other regions have strengthened their position – African banks totalled 17, Asia has 62 and the Middle East 40.

As is the case with the Top 1000, the Banks of the Future are getting considerably larger, with aggregate Tier 1 capital rising to $81.4bn, up 18.7% on our 2002 listing. This is also the case in assets, where aggregate total assets are up 8.3% to $1152.6bn; while this represents solid growth, these banks combined, by comparison, only have the same asset size as France’s Credit Agricole Group.

The Banks of the Future listing is headed by Colombia’s Banco de Occidente, with Tier 1 capital of $171m, while India’s Vijaya Bank heads the Asian list. Sharjah’s Invest bank leads the Middle East, while Commercial Bank of Ethiopia, at 1031, is the top ranking sub-Saharan bank.

The dominant 509 US banks account for 47.5% of aggregate capital and 37.8% of aggregate assets. The 289 European banks account for 30.4% of capital, while achieving a relatively high 37.1% of the asset total.