Even after a tumultuous year for the global economy, China has sealed its position as the dominant force in the world banking industry by retaining the top four places in the overall Top 1000 World Banks ranking 2021.
The Chinese banks have been buoyed by the country’s bounce back from the pandemic, which saw gross domestic product reach $14.7tn during 2020, the review period for the ranking. With regulators set to impose stricter capital requirements on the systemically important banks, it is possible the capital levels will continue to rise.
The top four banks managed to increase their Tier 1 capital against the backdrop of a stunted economy and national lockdowns during the early months of 2020. Industrial and Commercial Bank of China (ICBC) retains the top spot, after improving its Tier 1 capital by 15.7% to $439.9bn. ICBC’s total assets increased 18.6% year-on-year and pre-tax profits rose by 7.1%.
China Construction Bank held onto second place, with a Tier 1 capital increase of 14.4% to $361.6bn, while Agricultural Bank of China (ABC) remained in third spot, with a sizeable 21.1% rise in Tier 1 capital to $336.1bn. What is marked about these rises is that the rate of growth is larger than that seen in the 2020 results, when ABC recorded the biggest increase of Tier 1 capital of the top four of 14.3%.
Looking at the best-performing rankings shows the story beneath the top-level capital numbers. China Merchants Bank, which comes sixth in the country table, has overtaken China Minsheng Bank to become the best performer overall, following the former’s second-place finish in last year’s rankings. China Merchants Bank excelled in profitability, return on risk, liquidity, soundness and leverage. However, it came ninth out of the 10 largest Chinese banks for operational efficiency, demonstrating room for improvement in this metric.
Meanwhile, Industrial Bank, which slipped one place in the country rankings to ninth, saw a boost as it took second place in the overall best-performing table, up from fourth, and claimed the top position for growth. The bank saw the biggest increase in operating income, rising 19.8% year-on-year. Industrial Bank reported a 35% increase in profits for the fourth quarter of 2020.
All the largest Chinese banks saw declines in profit margins, with the exception of Postal Savings Bank of China, which recorded a slight increase from 23.0% to 23.8%. Postal Savings Bank, which placed seventh in the China ranking, moved up seven places in the Top 1000 main ranking to 15th following a 32.8% rise in Tier 1 capital, which is the biggest increase recorded among the top 20 world banks.
