Top 500 Banking Brands 2023

The Banker/Brand Finance’s Top 500 Banking Brands ranking has seen another year of global brand value expansion. The aggregate value in the 2023 edition has increased for a second year in a row, to reach the highest-ever total of $1.41tn. However, it is a much smaller rise of 2.4%, compared to the 8.7% increase in 2022.

One of the main contributors to this lacklustre result is China’s 3.5% contraction in aggregate brand value, to $423.4bn. While the heady days of double-digit growth are well behind it, this is the first time that China has failed to register an increase since it overtook the US as the global brand powerhouse in 2017. Of the 52 Chinese banks in the ranking (one more than last year), a little over half (56%) saw an increase in brand value.

According to Declan Ahern, valuations director at Brand Finance, which produces the brand valuations for The Banker, “The Chinese economy and banking brands have been dealing with a series of factors in 2022 that have hampered growth. The continued Covid-19 outbreaks and subsequent stringent lockdowns, the war in Ukraine and the well-documented housing slump, coupled with consumer mortgage boycotting, have resulted in an increase in bad debts and a decrease in revenue forecasts for banking brands.”

In contrast, the US — in second place in the country table — saw a 7% growth in aggregate brand value, to $336.5bn. Of the 82 banks in the ranking (nine more than in 2022), 83% recorded an increase. One of the reasons for the growth in brand value in the US is the sharp increase in interest rates by the US Federal Reserve since March 2022, which has subsequently resulted in increased net interest income for US banking brands, Mr Ahern notes.

“Scale and regulatory environment are also helping US banking brands, which are nearly 10% more profitable as a result compared to their European counterparts,” he adds. Europe saw the smallest aggregate growth of those regions that recorded an increase, at 3.5%.

ICBC remains on top

For the seventh year in a row, state-owned Industrial and Commercial Bank of China (ICBC) takes the crown as the world’s premier banking brand, with a value of $69.5bn. However, ICBC saw its brand value contract by 7% year on year. The decline is mainly due to the three-point drop in the Brand Strength Index score and the weakening of the yuan against the dollar, according to Brand Finance.

“In 2022, in the face of multiple challenges such as the intensification of world changes, the impact of Covid-19 and the domestic economic downturn, ICBC actively gave play to its advantages in financing, structure and operation, and increased investment and financing to serve the real economy in a targeted manner,” says an ICBC spokesperson.

ICBC also accelerated the implementation of ‘GBC+’ (government, business and consumption) projects and launched its new digital brand, D-ICBC, as well as continued to improve the adaptability, competitiveness and inclusiveness of financial services.

In November, the bank released its green finance brand, ICBC Green Bank+, which actively advocates the concept of “harmony, integration and friendship”. According to the spokesperson, the brand includes two aspects: for its customers, the bank will promote green and low-carbon transformation; promote product innovation and risk management; enrich green finance products and services; and serve China’s goals of “carbon peak and carbon neutrality”.

In terms of its own operations, ICBC will advance its green and low-carbon transformation; improve its environmental performance; study and formulate its own goals of carbon peak and carbon neutrality and implementation roadmap; and guide the bank’s energy conservation, efficiency improvement and green operations.

ICBC remains firmly ahead of its compatriots at the top of the table — China Construction Bank, Agricultural Bank of China and Bank of China — which held onto their positions of second, third and fourth place, respectively, despite seeing similar drops in brand value. China Merchants Bank, in 10th place, managed to buck the trend with a 1% increase.

US strength

Behind the top four Chinese megabanks sit five American lenders. Of the US’s five largest banking brands, four have increased their brand value over the past year: Bank of America (BofA), Wells Fargo, JPMorgan and Chase. Citi was the only US bank in the top 10 that recorded a drop in value, of 11%, which saw it fall three places to ninth in the global ranking.

While BofA remains the strongest US brand, and holds onto fifth place in the global table with a brand value of $38.6bn, Wells Fargo was able to move up two spots to sixth, recording a 10% increase. It is an important improvement for the San Francisco-based lender, which held the title as the world’s strongest brand in 2016.

But it is the smaller US brands that recorded the biggest year-on-year improvements. For example, Silicon Valley Bank (SVB), a niche player serving the high-growth technology, life sciences and healthcare sectors, boosted its brand value by the greatest amount among the global cohort. SVB’s 148% increase, to $2.8bn, allowed it to jump 71 places in the ranking to 108th position.

Celebrating its 40th anniversary this year, the bank has grown alongside the innovation economy. Despite the current headwinds dragging on economic growth, SVB predicts that the innovation economy will outpace the rest of the global economy, as successful companies will continue to be funded even in challenging times. “Now is the time that we develop our best relationships with our clients,” says Michelle Draper, SVB’s chief marketing and strategy officer.

She says that the SVB brand is built on its commitment to partnering with clients across their whole journey — pre-seed all the way beyond initial public offering or merger and acquisition. “We also bring this deep knowledge of the innovation economy, understanding what is happening in technology, whether consumer tech, enterprise software, life sciences and health care, or frontier tech,” she adds.

In addition to organic growth, the bank has expanded its offering through two recent acquisitions: Leerink Partners, a healthcare investment bank (2019) and private bank Boston Private (2021). With these acquisitions, SVB took significant steps in its evolution from a monoline, commercial banking business to a platform of banking services.

At the start of 2022, it rebranded its four primary businesses — Silicon Valley Bank, SVB Capital, SVB Private and SVB Securities — under the brand name SVB. “We built a master brand to reflect our evolution to a comprehensive financial services partner for the innovation economy,” says Ms Draper. “We partnered across the entire organisation to create an enterprise brand strategy activated through all of our channels, refreshing our messaging and ad creatives.”

By mid-year, however, SVB recognised that the environment was changing for its clients. “We began to anticipate the challenges that our clients and prospective clients would face, so we adjusted our marketing and messaging to mirror their needs. We shifted our advertising to reinforce the depth of our expertise, how we stand with clients in challenging times and our more than 40 years’ experience,” she says.

The bank focused on publishing information that would be useful to clients and prospective clients, for example lessons learned from past economic cycles, the future of climate tech and responsible spending habits for its start-up community, as well as guidance for family offices investing in venture capital.

Asia-Pacific beyond China

While remaining the region with the most brand equity, Asia-Pacific’s aggregate brand value contracted by 1.9% year on year. But while China’s growth engine is slowing, other countries in the region are building up brand equity. For example, Singapore saw a 17% jump in aggregate brand value, spearheaded by DBS which increased its brand value by 21% to $10.5bn.

DBS moved up 10 places in the ranking, to 29th position — the biggest jump in the top 30. Karen Ngui, strategic marketing and communications, DBS, believes the bank’s success is based on delivering on its commitments to clients. “In these uncertain times, remaining purpose-driven and being a trusted partner to our customers and the community is a top priority for us,” she says.

She points to DBS’s focus on helping customers transition to more sustainable business operations by extending green and sustainable finance solutions, as well as embedding sustainability into its own business practices and operations. It also has committed to improving financial inclusion and democratising financial services, and strives to create impact beyond banking by championing social enterprises.

In 2018, as DBS turned 50 years old, it changed its brand promise to “Live more, bank less”, reflecting its aim of delivering simple, seamless banking in the digital era, according to Ms Ngui. Its latest regional brand campaign across Singapore, China, Hong Kong, India, Indonesia and Taiwan, in July 2022, further entrenches the bank’s commitment. “The category-defying campaign signals DBS’s belief that a different kind of bank is needed in a post-pandemic world — one that is more technology — and sustainability-focused,” she says.

The bank demonstrates its purpose by standing by customers through different market cycles. “For instance, we have rolled out various financial planning solutions and education materials to help our customers cope holistically in the current high inflation environment. Since the launch of our latest brand campaign in July 2022, we have seen significant uplift in brand perception, for those who saw the campaign versus those who didn’t, across multiple attributes such as: digital innovation leader, and improving lives and contributing to the community,” she adds.

Sparks, DBS’s award-winning web series, was launched in 2016 and is inspired by true stories of banking with a purpose, showing how bankers can be agents for positive change. In 2019, it released Sparks Season 2, inspired by social enterprises supported by the DBS Foundation and how they address some of the most pressing social and environmental issues of the day.

“To date, Season 2 has garnered more than 500 million views and more than 30 million digital engagements across Asia — a marked increase from the figures for Season 1 with 10 episodes,” reports Ms Ngui. “The series has won more than 10 global and regional industry accolades, and was recognised as a Webby Award 2021 Honoree.”

DBS launched Sparks Season 3 in November, which is already seeing record high levels of audience engagement, she adds.

Brazil challenger

Among the regions, Latin America saw the biggest jump (19.5%) in aggregate brand value, fuelled by the region’s powerhouse, Brazil. With 12 banks in the ranking, the country increased its total brand value by 31%, to $24.6bn, and moved into the top 10 in the country table.

Brazilian banks hold five of the top 10 positions in the Latin American regional table, with four occupying the top of the table: Itaú, Bradesco, Banco do Brasil and Caixa. Itaú expanded its brand value by 32%, to $8.7bn, and has remained well ahead of its compatriots.

While the biggest Brazilian brands have long dominated the top of the regional table, they have a new compatriot in challenger Nubank, which joins them in the top 10 in the region. Founded in 2013, Nubank entered the global ranking at 286th place in 2022; this year, it increased its brand value by 110%, breaking through the $1bn mark and jumping 88 places in the ranking, to 198th position.

According to Cristina Junqueira, co-founder of Nubank, the digital bank began the year with a strong capital position from its initial public offering (December 2021), and grew to consolidate its position as one of the largest and fastest-growing digital financial services platforms worldwide, as well as the fifth-largest financial institution in Latin America by number of active customers.

“Since the beginning, Nubank has been an appealing brand for those who were tired of the bureaucracy and complexity of the traditional banking services,” she says. “Our high net promoter scores, as well as our largely organic growth, is a testament of the customer’s satisfaction. Today, around 40% of adults in Brazil are Nubank customers, but we still have a lot of room to grow.” Over the past year, it expanded its portfolio with more than 25 product and feature launches.

The challenger also focused on growing the impact and reach of its brand with national TV campaigns, as well as seeking to increase its regional presence and global positioning by being a regional sponsor to the World Cup, with campaigns in Brazil, Colombia and Mexico. “We reached over 90 million people with our marketing strategy during the tournament and became the most-searched financial institution at the event,” says Ms Junqueira.

The year ahead

What challenges lie ahead for banking brands in 2023? “Pessimistic economic outlooks in both the US and Europe, as well as sustained inflation, could potentially lead to a recession, which will negatively impact banking brands’ asset quality and profits,” says Mr Ahern. “In other markets, such as China, the ongoing property market crisis could result in further defaults and further economic pressures for banking system.

“There are also greater external pressures on banks, and indeed other industries, from different groups which are aiming to increase awareness of environmental issues among the public,” he adds. “This, coupled with new regulation, the adoption of standardised accounting methods to quantify and disclose environmental, social and governance [data], as well as legal action, all have the ability to impact both the reputation of a banking brand among its customers as well as its profitability.”

These challenges are front of mind for DBS. Ms Ngui says, “During these challenging times, we remain committed to upholding the trust of our stakeholders and ensuring that we continue to provide solutions for all their banking needs. While the environment is likely to remain uncertain, we are confident that our strong capital base, deep customer relationships and robust digital strategy will ensure that we are able to continue supporting our customers and communities. We will continue to broaden our product portfolio, grow our business and invest in sustainability.”

SVB will be focused on supporting its niche client base through a potentially difficult business cycle. “In 2023, we will continue to focus on unlocking that value through awareness of our full platform of services that’s unique to the innovation economy,” says Ms Draper. “It’s not just any investment banking services or any private banking services — we deliver those services with the overlay of understanding the client, their journey and what their needs are at all stages of growth.”

The world’s strongest brand, ICBC, plans to expand its global financial services brand ‘Yes ICBC’, actively serve cross-border economic and trade exchanges and meet the diversified financial service needs of global customers. In addition, the bank will adhere to the unity of business principles and social responsibility, highlighting its role as a large bank to take more measures to benefit the masses, thereby deepening its achievement of “brand leadership and public welfare co-building”, the bank’s spokesperson says.

Over the coming year, Nubank will be strongly focused on its mission: to empower people to make better decisions for their financial lives. “We have built a brand that goes beyond the daily interactions that one can have with their bank to build a true lifestyle brand,” says Ms Junqueira. “As we grow the presence and impact we have in our customers’ lives, we are able to generate more value for them, and that is a virtuous cycle of growth.

“Money is a taboo concept for many, especially in the countries in which we operate, so we want to make these conversations uncomplicated and transparent, and promote financial education for our more than 70 million customers and the public in general,” she adds.

Methodology

Brand Finance employs a discounted cashflow technique to discount estimated future royalty earnings in a hypothetical situation where the brand is licensed to a third party at an appropriate rate. These discounted ‘brand earnings’ equate to the net present value of a bank’s trademark and associated intellectual property – its brand value.

The steps in this process are to:

1. Obtain brand-specific financial and revenue data. The revenue is then segmented into the following revenue streams: retail banking, wholesale/commercial banking, investment banking, asset/wealth management, Islamic banking and credit cards. This segmentation is based upon publicly available annual reports.

Three forecast periods were used:

I. If not yet reported, then financial results for 2022 were estimated using the Institutional Brokers Estimate System (IBES) consensus forecast.

II. An explicit forecast period, from base year 2022 up to 2026. This was determined using three sources: IBES, historic revenue growth and gross domestic product (GDP) growth supplied by the International Monetary Fund.

III. Perpetuity growth based on a combination of growth expectations (GDP and IBES).

2. Establish the royalty rate for each bank by:

I. Calculating the strength of each bank’s brand on a scale of zero to 100, according to several attributes, including asset strength, emotional connection, market share and profitability. A large portion of the calculation relies on a global market research program.

II. Determining the royalty rate for each revenue stream mentioned in step one.

III. Calculating the future royalty income stream based on the royalty rate and forecasted net revenues.

3. Calculate the discount rate specific to each bank, taking account of its size, geographical presence, reputation, gearing and brand rating.

4. Discount future royalty streams (explicit forecast and perpetuity periods) to a net present value – the brand value.

Royalty relief approach

Brand Finance uses a ‘relief from royalty’ methodology that determines the value of the brand in relation to the royalty rate that would be payable for its use were it owned by a third party. The royalty rate is applied to future revenue to determine an earnings stream that is attributable to the brand. The brand earnings stream is then discounted back to a net present value. This approach is used for two reasons: it is favoured by tax authorities and the courts because it calculates brand values by reference to documented third-party transactions; and it can be done based on publicly available financial information.

Brand ratings

These are calculated using Brand Finance’s Brand Strength Index, which benchmarks the strength, risk and potential of a brand relative to its competitors, on a scale from AAA to D. Conceptually, it is similar to a credit rating; the data used to calculate the ratings comes from various sources including Bloomberg annual reports and Brand Finance research.

Brand ratings definitions

AAA Extremely strong

AA Very strong

A Strong

BBB-B Average

CCC-C Weak

DDD-D Failing

Valuation date: All brand values in the report are for the year ending December 31, 2022.