High flyer: China Construction Bank was second only to ICBC for Tier 1 capital. Image: Bloomberg
China’s digital banks have rocketed up The Banker’s best-performing table, overtaking the mega state-owned lenders.
China’s digital banks have demonstrated their strength in the domestic market, showing strong results in The Banker’s best-performing banks table.
While China’s banks experienced stresses during the slow economic growth following the Covid-19 pandemic and have been weighed down by problems in the real estate sector, the country’s challenger banks have been largely unencumbered by these issues.
Nevertheless it is the traditional banks which take the top places in the performance tables. Bank of Tangshan, placed 81st in the Top 100 Chinese Banks ranking, took first position in the overall best-performing ranking of the 100 largest Chinese banks by Tier 1 capital. The Hebei province-located bank ranked first with an overall score of 5.40, and placed among the top 10 in growth, profitability, operational efficiency, soundness and leverage. Its lowest placing was for liquidity, where it ranked 81st.
Wuxi Rural Commercial Bank has placed second in the overall performance table and was a new entry in the Top 100 Chinese Banks ranking this year, placing 93rd after seeing a 10.6% increase in Tier 1 capital and a 15.1% rise in pre-tax profits. The bank earned top 10 spots in the performance tables for leverage, soundness, return on risk and profitability. However, it was only 64th for growth and 73rd for liquidity.
Coming in third for performance was the first of the digital banks, WeBank. The Tencent-owned bank placed 52nd in the Top 100 ranking, and, in a year when most Chinese banks suffered a decline in Tier 1 capital due to the strength of the US dollar, WeBank still recorded a strong 19.7% increase – allowing it to move up 14 places.
Across the best-performing metrics, WeBank came in fifth for growth, sixth for soundness and fifth for leverage. But most interestingly, the bank took the top place for profitability, thanks to a 19.7% increase in pre-tax profits. It also took first place for return on risk. However, the bank struggled in other metrics and came in 94th for asset quality.
The Alibaba-owned MYBank also had a strong showing, climbing to 88th in the Top 100 ranking, with a 23.6% increase in Tier 1 capital. While the bank only placed 29th in the overall best-performing table, it came in third for profitability, with a 59.3% increase in pre-tax profits. MYBank placed fourth for both operational efficiency and return on risk.
Interestingly, both digital banks were the worst performing overall for liquidity
Interestingly, both digital banks were the worst performing overall for liquidity, with MYBank coming in 99th and WeBank rounding out the table in 100th. While the systemically important banks are looking to build up their capital asset buffers, the same does not apply to the smaller banks.
Shanghai Rural Commercial Bank (SRCB), which topped the best-performing table in 2022, fell to 10th this year. This came as the bank slipped one place down the Top 100 Chinese Banks ranking to 26th, with a 1.5% decline in Tier 1 capital. SRCB only managed to place 10th in the return on risk category, but ranked in the top 40 for all other best-performing metrics.
Meanwhile, last year’s second-placed China Merchants Bank slipped to fourth in overall performance. The bank also took fourth place in profitability and second for return on risk. However, it was 48th for operational efficiency and 45th for growth.
Of the Chinese megabanks, ICBC was the highest ranked in 20th place for performance. ICBC took seventh place in the return on risk category, but otherwise ranked mid-table for the other metrics. Its lowest result was 55th place for growth.
China Construction Bank was ranked at 34th in overall performance, and ranked ninth for return on risk. Meanwhile, neither Agricultural Bank of China nor Bank of China made it into the top 10 in any of the best-performing metrics.
