Japan’s banks have suffered another difficult year of falling down the Top 1000 World Banks ranking, as declines in Tier 1 capital and slow domestic economic performance weighed heavily on their results. Hampered by slow exports, the country recorded just 1.1% gross domestic product growth for 2022. In addition, the Japanese yen depreciated just over 9% against the US dollar, the base currency of the Top 1000 ranking.
Japan’s largest bank by Tier 1 capital, Mitsubishi UFJ Financial Group (MUFG), slips further down the main ranking this year, falling two places to 14th, after recording an 11.93% decline in Tier 1 capital. It has also plummeted in the overall best-performing banks ranking, falling from first place in 2022 to ninth this year, although it did manage to take second place for liquidity.
The Banker’s best-performing bank methodology is run against the 10 largest Japanese banks, covering eight metrics including growth, profitability, asset quality and return on risk.
Sumitomo Mitsui Financial Group (SMFG) remains the second-largest bank in Japan, despite a 5.33% decline in Tier 1, and managed to hold on to 21st position in the Top 1000 ranking. For the second year in a row, MUFG is the only Japanese bank in the top 20. SMFG fared better in the best-performing table, where it climbs one place to finish second overall, while reaching third position in the return on risk and leverage categories.
Shizuoka Financial Group is crowned the best-performing bank in 2023, coming first for operational efficiency, soundness and leverage. The bank also moves up one place in the country ranking to 10th place, ousting Chiba Bank from the top 10. The positions of the other nine banks in the top 10 country table are unchanged from 2022.
Mizuho Financial Group and Shinkin Central Bank come joint first in the growth category, while taking third and eighth spots in the country ranking, respectively.
All of Japan’s 82 banks in the Top 1000 recorded a decline in Tier 1 capital, with the exception of digital-only Rakuten Bank, which managed a 3.82% increase. The biggest decline came from Norinchukin Bank, at 26.61%, which dropped 11 places in the main ranking to 41st. However, it holds on to fourth position in the country ranking with $49.85bn in Tier 1 capital, compared with fifth-placed Nomura Holdings’ $24.01bn.
Japan sees two new banks enter the Top 1000 ranking, following mergers between some of the country’s smaller regional banks. Aichi Bank and Chukyo Bank merged to form Aichi Financial Group (AFG), which comes 520th, and Aomori Bank and Michinoku Bank merged to create Procrea Holdings, which places in 677th. AFG reported the highest return on capital and highest return on assets ratios of all the Japanese banks, at 29% and 1.2%, respectively.
