Despite three consecutive years of sluggish economic activity, Brazil’s five largest lenders have retained the leading positions in The Banker’s latest ranking of Latin American banks by Tier 1 capital. Itaú Unibanco holds onto first place as the region’s largest lender for the seventh year running, with $31.9bn in Tier 1 capital. Banco Bradesco has moved up one spot into second place, overtaking Banco do Brasil, while Banco Santander Brasil and Caixa Economica Federal round out the top five.
Brazil’s Covid-19 figures are among the world’s worst. A recent report from the International Monetary Fund forecasts that the country’s economy will shrink by 5.8% in 2020, a figure revised upwards from a more pessimistic 9.1%. Latin America is now the worst-hit region in the world both by number of deaths and confirmed cases.
Overall, The Banker’s ranking reveals a regional banking sector that prior to the pandemic was in good shape generally, with leading lenders sustaining strong capital adequacy ratios, placing them in a good position to weather the coronavirus-driven economic downturn. Mexico, for example, has four banks in the top 10 by Tier 1 capital, all recording double-digit growth, as well as double-digit rises in pre-tax profits, in 2019. Bancomer, the country’s largest lender, increased its Tier 1 by 12.6% and profits by 11.8%; however, it was outshone by second largest Grupo Financiero Banorte, which saw jumps of 28.1% and 18.1%, respectively. Colombia’s Bancolombia remains the only lender outside Brazil and Mexico to make it into the top 10 by Tier 1 capital, but it slid down two places to ninth in the 2020 ranking.
Beyond the main ranking, The Banker has applied its best-performing methodology to the five largest bank holding companies in each country. In Brazil, Banco BTG Pactual achieves the highest overall performance score with 6.62, thanks to the bank’s leading performance in the growth, profitability, operational efficiency and soundness categories.
Banco Macro tops the best-performing table for Argentina, scoring 7.86 and leading its peers in four metrics: profitability, asset quality, soundness and leverage. It is the third largest bank in the country. The biggest bank, Banco de la Nacion Argentina, comes in last out of the top five bank holding companies, with a score of 1.81. It was the worst performer in seven out of eight metrics.
In Mexico, Banco Regional de Monterrey leads in overall performance, with a score of 6.75, taking first place for both profitability and operational efficiency. In second place is Grupo Financiero Banorte, Mexico’s second largest bank, with table-topping results in the return on risk and leverage categories.
Colombia’s best-performing bank with an overall score of 6.49, Banco de Bogotá, comes first for liquidity and leverage. Bancolombia, the country’s largest bank, places second in the country’s performance ranking, helped by a consistent, if not stellar, performance across the eight performance metrics.
Banco BICE has clinched the top spot in Chile with a score of 6.38, achieving first place for asset quality and operational efficiency. Banco de Chile, scoops second place, performing well in the return on risk, leverage and soundness categories.
Ecuador’s second biggest lender, Banco del Pacifico, achieves the highest overall performance score of 7.21, bolstered by strong results in profitability, return on risk, soundness and leverage.
In Bolivia, the best-performing accolade goes to Banco Solidario, with an impressive overall performance score of 7.97, which helped it beat out the country’s largest lender, Banco Union.
Peruvian lender Banco de la Nacion came first among the country’s top three bank holding companies, securing first position for profitability, return on risk, liquidity and soundness.
