For the second year running, the US has the largest country representation in The Banker's Top 25 ranking of banks holding the highest percentage of non-performing loans (NPLs) on their books, and once again it is a US bank – Dickinson Financial Corporation II – that holds the number one spot with a 31% share of NPLs to total loans.
In second position is South Africa’s African Bank, with a 27% share of NPLs, which are largely derived from its consumer lending. The bank has the largest market share in the personal unsecured credit market in South Africa. Even so, the bank ranks as the country’s most profitable bank this year with a 58% return on capital.
Slovenia has the second highest country representation with three banks in the Top 25 NPLs table – a reflection of the slowdown in growth and increased problems with asset quality. The US and Slovenia aside, the rest of the table is comprised of a varied collection of banks from across the globe.
It is also worth flagging that The Banker's Top 10 Worst Profit Performance table is comprised entirely of European banks. Unsurprisingly, debt-stricken Greece has three banks in the table, with National Bank of Greece posting the biggest loss of $17.36bn, while Piraeus Bank Group posted the fifth biggest loss of $9.67bn and Alpha Bank the seventh biggest loss of $6.12bn.
Posting the second biggest loss of $15.13bn, Belgium’s Dexia Bank’s liquidity squeeze has been well-publicised. The nationalised Belgian banking arm of crippled Franco-Belgian lender Dexia was sold to the Belgian state for $5.35bn in October 2011, when Dexia was bailed out for a second time in three years by France, Belgium and Luxembourg. Italian lenders Intesa Sanpaolo and UniCredit posted the fourth and fifth biggest losses, respectively, after suffering huge goodwill writedowns.
As for the ranking for the 10 banks with lowest capital-to-assets ratios (CARs), European banks once again comprise the lion’s share – accounting for nine of the 10 lenders. Belgium’s Dexia is the least capitalised bank in our Top 1000 ranking this year, with a CAR of 1.53%. The troubled lender is looking to raise more capital by selling assets and winding down remaining business.
Iran’s Bank Melli is in second position in this table after significantly increasing its leverage, with its CAR falling from 2.15% in 2011 to 1.6% this year. Two banks from the Netherlands and four from Germany make up the top nine positions, with a Spanish lenders in 10th with a CAR of 2.47%, which means that all 10 of the banks fail to meet the minimum leverage ratio of 3% discussed by regulators and therefore will have to raise a great deal of capital to come in line with potential new regulations.
