Japanese banks post mixed results in this year’s Top 1000 World Banks ranking. A focus on international and regional growth opportunities marginally offset the impact of the more sluggish domestic market, which has weighed heavily on overall performance in the past year. Japanese lenders posted an impressive 11% aggregate increase in pre-tax profits compared with last year's ranking, boosted by increased lending exposure to regional markets. According to most other metrics, including Tier 1 capital and total assets, they score considerably worse than the 2013 rankings.
Philip Alexander reports on the full results of The Banker’s Top 1000 World Banks ranking 2014, in the story Top 1000 World Banks 2014: Back on track?
Mitsubishi UFJ Financial Group (MUFG) maintains first place in the Japanese top 25, but slips three places to round out the global rankings at number 10. The bank’s Tier 1 capital reduced by 1.6%, from $119.1bn to $117.21bn, although pre-tax profits increased marginally by 1.91% to $14.6bn.
Sumitomo Mitsui Financial Group and Mizuho Financial Group also posted healthy pre-tax profits, with 19.5% and 22.7% growth, respectively. Much of this profitability was supported by international lending, predominantly to south-east Asia. As Japanese corporates have expanded their presence in the region, notably in Indonesia, Thailand and Myanmar, the country’s lenders have followed. This trend has enabled larger players to engage in acquisition opportunities, with MUFG’s $5.6bn stake in Thailand’s Bank of Ayudhya and Sumitomo Mitsui Financial Group’s acquisition of a $1.5bn stake in Indonesia’s BTPN among the standout deals.
Of the remaining top 25 Japanese banks, 77 Bank was the only new entrant, ranking 25th with Tier 1 capital of $2.91bn. The only notable movement came from Hokuhoku Financial Group, which falls two places to 19th. Besides this, Resona Holdings and Sumitomo Mitsui Trust Bank exchange positions from last year to rank sixth and seventh, respectively.
Japan’s highest movers category slowed drastically from our 2013 ranking. Only five lenders achieved positive Tier 1 capital growth momentum. Ashikaga Holdings takes the top spot in this ranking, with a 9.65% increase in Tier 1. Compared to the sizeable gains made last year, including the 23.8% jump by Chiba Kogyo Bank, 2014’s overall performance was significantly worse, pointing to the difficult year faced by most of the country’s lenders.
Return on capital was a more positive metric for Japanese banks, populated by a familiar list of players. North Pacific Bank, a new entrant from last year, tops this category with returns of 34.71%, while Nomura Holdings, another new entrant, places fourth with a 15.61% return on capital.
Once again, Japanese lenders were significantly outperformed by their Asia-Pacific counterparts across every major growth category.
