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China's banks dominate rankings for profits, strength

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People walk in front of a Chinese bank branch in Beijing, China, on June 25, 2015.

[LONDON] China's banks are strengthening their position as the best capitalised and biggest profit makers in the world, a study showed on Monday.

Chinese banks filled the top four spots for profits across the industry in 2014 after making more than US$180 billion between them, according to The Banker magazine's annual rankings of profits and capital strength. Chinese lenders collectively earned almost double the amount of their US rivals, the data showed.

Industrial and Commercial Bank of China's (ICBC) US$59.1 billion profit last year topped the rankings, ahead of China Construction Bank, Agricultral Bank of China (Agbank) and Bank of China.

US bank Wells Fargo ranked fifth with a US$33.8 billion profit, followed by JPMorgan and HSBC.

ICBC also topped The Bankers' ranking of the strongest banks in the world for the third year, which is based on the amount of capital held, in amount rather than as a ratio of assets. The magazine says that method best reflects banks' ability to lend on a large scale and endure shocks.

China had four names in the top six strongest banks. There were four U.S. banks in the top 10 - JPMorgan was third and Bank of America was fifth - and one British and one Japanese bank.

China's big state-backed banks are growing in size and importance, fueled by their dominance of a huge domestic market. They are growing internationally, but still have relatively modest overseas assets.

In constrast, some of the most international US and European banks are slipping down the rankings as they close businesses and shed assets to try to improve profitability.

HSBC slipped to ninth at the end of last year (from fifth in 2013) and Citigroup was seventh (from sixth). HSBC, Citi and Royal Bank of Scotland were the top three banks in terms of capital just before the financial crisis in 2008.

The Banker said in most regions banks increased their profits last year from 2013.

The best returns on capital were made by banks in South America at an average of 26 per cent, followed by 24 per cent for African banks, 19 per cent in Asia and 15.5 per cent in North America. Returns in Britain averaged 7.3 per cent and lagged at 4.6 per cent in the Eurozone, The Banker said.

Italian and Greek banks made the biggest losses last year, with Banca Monte dei Paschi di Siena the worst performer with a US$9.3 billion loss.

REUTERS