Top 1000 World Banks - Big Brazilian banks still lead in Latam but Mexicans on the rise

Brazil’s Itaú Unibanco, Banco do Brasil, Banco Bradesco and Caixa Econômica Federal yet again make up the top four in The Banker’s Latin America and Caribbean regional ranking. But while their combined Tier 1 capital comprises nearly two-thirds of Latin America’s top 25 banks’ total, it shrank at a slightly faster rate than the rest of the region in 2018, at 8.2% compared with a regional average of 5.9%.

These figures mirror Brazil’s fragile economic state. Gross domestic product growth hovered around the 1% mark in both 2017 and 2018 – a worryingly low rate for an emerging market that had suffered its worst recession in recent history in the previous two years. The pension reform designed to boost economic activity and provide up to 1100bn reais ($286.5bn) in public sector savings over the next decade is yet to be approved (although this is widely expected by September), while the tax reform aimed at simplifying Brazil’s cumbersome tax system – which often requires businesses to field tax compliance teams that are larger than their sales teams – is not yet on the table. This has taken its toll on banks, too.

However, the situation is much worse in Argentina. In 2018, it sank in a deep recession, causing the aggregate Tier 1 capital of the top three banks to drop by 28.6% that year. Banco de la Nación Argentina remains the largest bank in the country, followed at a relative distance by Banco Macro and Banco de Galicia.

But it is not all doom in gloom in the region. In Mexico, Grupo Financiero Banorte expanded its Tier 1 capital by 20%, and climbs one place to sixth position in the regional ranking. This makes its 28.47% return on capital all the more impressive. At both Banco Inbursa and Banco del Bajio, the other two Mexican names in the regional list, there was a Tier 1 improvement of about 16.5%, and they move up to ninth and 21st place, respectively.

Also notable is Chile’s Banco Falabella, a new entrant in the Latin American and Caribbean ranking, which expanded its Tier 1 capital by 84.75% – the largest rate in the region.

Top 25: Latin America and Caribbean ($M)

Highest Movers: Latin America and Caribbean ($M)

Top Five ROC: Latin America and Caribbean ($M)

New Entrants: Latin America and Caribbean ($M)