5 July 2023: China’s banking sector is still growing, albeit at a slower pace than in recent years. However, the strong US dollar – the currency in which The Banker’s Top 1000 World Banks ranking is denominated – has taken its toll on the 2023 ranking, particularly China’s performance.
China, which has been the engine of growth for the global banking industry for the past decade, saw its aggregate Tier 1 capital, or the core measure of a bank’s financial strength* contract by 1.56% in 2022, to $3.3tn. However, the growth rate would be around 8% if the yuan was used as the base currency. While a much more positive result, this remains well below the double-digit expansion seen in the previous four years.
With 140 Chinese banks in the ranking for the second year, China has expanded its aggregate total assets by 1.12%, to reach $42tn, gross total loans by 1.57% to $24.8tn and gross total deposits by 0.87% to $31.3tn, even with the strong dollar influence. Overall, China holds 32.67% of the world’s Tier 1 capital and 27.69% of its assets.
The Banker’s editor Joy Macknight said: “Taking the strong dollar effect into consideration, China continues to outpace its nearest rival, the US, by both Tier 1 capital and asset growth. However, the growth rate among China’s largest banks has decelerated in the face of an economic slowdown.”
Industrial and Commercial Bank of China (ICBC) tops the ranking for a record-breaking 11th year in a row, with Tier 1 capital of $497.3bn. While its Tier 1 fell by 2.27%, the lender expanded its total assets by 2.63%.
ICBC is followed in the ranking by China Construction Bank, Agricultural Bank of China and Bank of China, marking the sixth year that they have held on to the top four spots. In addition, China’s Bank of Communications has overtaken HSBC, the only European bank in the top 10, to reach ninth position.
While the largest Chinese banks have consolidated their positions, the smaller banks in the ranking are growing at a faster pace. Zhuhai Rural Commercial Bank, for example, recorded a 62.6% rise in Tier 1 in 2022, while challenger banks MYBank and WeBank both registered increases of around 20%.
Global results
Aggregate Tier 1 capital has declined by 2.08%, to $10.2tn, and total assets have dropped by 1.65%, to $151.7tn, while combined pre-tax profits fell by 6.46%, to $1.3tn, after growing by 53.73% in the previous edition of the ranking.
In addition, the minimum Tier 1 capital needed to enter the 2023 ranking saw the smallest-ever increase of just $1m, to reach $557m.
The global slowdown can be predominantly attributed to the effect of a strong US dollar, which appreciated 9% against the Chinese yuan in 2022. Even without the exchange rate effect, however, the world’s banking industry has experienced muted growth in 2022, the full financial year data that the ranking is based on.
Joy Macknight said: “At first glance, it appears as if the global banking industry had a tough year. However, much of the slowdown in growth can be attributed to a strong dollar in 2022. Asset, loan and deposit levels are stable, and banks across the world are well capitalised and preparing for what is coming next.”
The US has benefited from the strong dollar, with an additional 10 lenders in the 2023 ranking to bring its total up to 196 banks, 56 more than China. In spite of this, the US’s Tier 1 capital base has expanded by just 1.51%.
In fifth place behind the top Chinese lenders, JPMorgan Chase remains the largest US bank by Tier 1 capital ($245.6bn), followed by Bank of America (BofA), Citigroup and Wells Fargo. Of the four, only BofA expanded its Tier 1 base, by 6.1%, while Citi was the only one to increase its total assets, by 5.47%.
Tables
Notes
*Tier 1 capital is the core measure of a bank’s financial strength under the Basel regulatory framework.
Contact
Danielle McGuigan | danielle.mcguigan@ft.com
TEAM LEWIS | banker@teamlewis.com
About The Banker
The Banker is the world’s premier banking and finance resource, providing global financial intelligence since 1926.
The Banker is the key source of data and analysis for the industry. The Banker’s Top 1000 World Banks ranking has been setting the industry benchmark since 1970, providing comprehensive intelligence about the health and wealth of the banking sector. To find out more, visit www.thebanker.com/top1000.
Joy Macknight is the editor of The Banker. She joined the publication in 2015 as transaction banking and technology editor and was promoted to editor in March 2021. She has been a financial and technology journalist for 20 years.
About the Financial Times
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