HSBC still runs the world’s most formidable overseas network, with its 18 foreign-owned subsidiaries (FOS) generating nearly three times as much profit as the firm as a whole in 2016. The Hong Kong business – its engine – is twice as profitable as any other FOS in the world, although Bank of China’s (BoC) local subsidiary is gaining ground. Its profits more than doubled in 2016 to $7.9bn, pushing BoC up to fourth in the list of best-performing foreign networks. While other Chinese banks have aggressively expanded overseas in recent years, they have done so via branches and so are notably absent from the FOS rankings.
Banco Santander comfortably retains second place in the list of most profitable foreign networks. Its FOSs now mirror HSBC’s efforts in posting a bigger profit than the parent. This is largely thanks to its Brazilian business which, after dropping out the top 25 FOS list last year, has staged an impressive comeback to rank third. It is consolation for Santander’s US business, which has tumbled since two years ago when its profits were second only to HSBC Hong Kong.
One overseas network to watch is Mitsubishi UFJ Financial Group. Profits at its Americas business doubled in 2016 and the Japanese parent is investing heavily in its European operations. Spain’s BBVA should also continue to grow overseas profits, having upped its stake in Turkey’s biggest bank, Turkiye Garanti Bankasi (which is now deemed a subsidiary), while its Mexican subsidiary remains a solid performer. A network likely to disappear is Nordea, which recently converted many of its subsidiaries into branches, including its top-performing Finnish business.
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