In a year of haves and have-nots, Asian banks took the biggest beating, fronted by an overall pre-tax profit decline in both China and Japan.
After a very good year in 2017, profits showed a general decline. Aggregate pre-tax profit growth in 2017 was at a healthy 15.57% year on year, but nearly ground to a halt, inching up a mere 2.05% to $1135bn in the 2018 financial results. The overall Top 1000 return on equity (ROE) ratio (the most commonly used measure to assess profitability) slumped by more than two percentage points to 9.56%, well short of the 12% commonly considered a good level for the banking sector.
In a year of haves and have-nots, Asian banks took the biggest beating, fronted by an overall pre-tax profit decline in both China and Japan. While the top four Chinese banks posted year-on-year increases in pre-tax profits of between 6.99% and 12.81% in the 2018 ranking, this year’s Top 1000 shows a contraction in profits of between -0.12% and -2.94% among the quartet.
Of the 18 Chinese banks in the top 100, only three boosted profits in this year’s ranking. In terms of net income, the global share of profits for the Asia-Pacific region came in at 41.74%, compared with 2018’s 43.38% – though this was based on pre-tax profits.
Eurozone banks had an uninspiring 2018 after the stellar results they recorded in 2017. Pre-tax profits increased by $2bn to $139bn in the 2019 Top 1000. Western Europe brought in 18.59% of the global share of net income profits, while CEE accounted for 2.68%. Banks in the UK put up a good showing, with a near 20% rise in pre-tax profit to $44bn. HSBC, RBS and Barclays provided bright spots with year-on-year increases of 15.86%, 40.53% and a whopping 118.19%, respectively.
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