Brazilian banks again dominate in the 2006 listing of the Top 100 Latin American banks both in numbers, 27, and in shares in the aggregate figures for Tier 1 capital, 51.2%, assets, 53.7%, and pre-tax profits, 56.0%.
The Brazilian economy continues to grow steadily and, as a consequence, loan books have increased significantly, leading to increased profitability in the banking sector. Mexico’s eight banks in the listing contributed 22.2%, 17.8% and 24.1% of the same aggregates, while the numerically stronger countries, Chile (13 banks), Argentina (13) and Panama (9), had significantly lower shares of the aggregates. The aggregate total for the Top 100 listing for Tier 1 capital was $93.5bn, for assets $1100.5bn and for pre-tax profits $30.2bn. This represents a growth in dollar terms of 24.5% in Tier 1, 24.9% in assets and 51.8% in pre-tax profits over the previous year’s Top 100 aggregates. For comparison,
Citigroup had Tier 1 capital of $79.4bn, assets of $1494bn and pre-tax profits of $29.4bn at the end of 2005.
Brazil versus Mexico
The battle between the Brazilian and Mexican banks for Top 10 positions continues this year with seven banks from Brazil and three from Mexico. At the top, the annual jockeying for position among the ‘Big Three’ Brazilian banks has resulted in Banco Bradesco moving to the top ahead of Banco do Brasil and last year’s leader Banco Itaú Holdings, which drops to third. BBVA Bancomer moves ahead of Banamex to be the highest ranked Mexican bank in fourth place.
Argentinian banks continue to struggle. Banco de la Nación Argentina fell three places to 15th this year even though it increased local currency Tier 1 capital by 5.4%. Banco Hipotecario also fell three places to 26, though it, too, increased its capital by 13%. BBVA Banco Francés continued its decline, falling to 34th place following a decline of 8.2% in capital, while Banco Río de la Plata was the only Argentinian bank to improve its position, moving from 51 to 49 following a 20.1% uplift in local currency capital.
There are only six new entrants to the list this year with Corporación UBC Internacional, incorporated in Panama, being the highest new entry at 33. This is the holding company for Banco Cuscatlán de El Salvador and a network of Cuscatlán banks and other subsidiaries in Central America. It follows in the footsteps of the BAC Credomatic group which, although headquartered in Costa Rica, has incorporated in Panama through BAC International Bank. Both groups have opted for this course because Panama has the most developed regulatory framework in Central America and more favourable regulations on non-domiciled loans and tax treatment.
Banco Davivienda from Colombia is the next highest new entrant coming in at 62. The others are Banco de San Juan from Argentina at 93, Panama’s Global Bank Corporation at 95, Banco BMC from Brazil at 97 and Banco G&T Continental from Guatemala at 100.
In spite of the uplift in aggregate pre-tax profits for the Top 100, 17 banks recorded a downturn in pre-tax profits while a further five recorded losses. Elsewhere, the highest percentage increases in pre-tax profits were generally recorded by those banks that had a severe profit dip in the previous year. The exception was Banco Bradesco, whose pre-tax profits more than doubled in 2005, following a 34% uplift in 2004.
