28 June 2021: China continues to be the growth engine for the world’s banking industry, according to The Banker’s latest ranking of the Top 1000 World Banks, based on Tier 1 capital, a key measure of banking strength. With 144 banks in the ranking, China now holds almost double the amount of Tier 1 capital ($2.96 trillion) as the US ($1.58 trillion), with 178 banks.
In spite of the challenges posed by the Covid-19 pandemic, China expanded its aggregate Tier 1 capital and total assets in 2020 by 18.6% and 18.4%, respectively. In addition, its pre-tax profits increased by 5.2% year-on-year, while profits fell by 31.5% in the US (see Table 1).
The Chinese banking industry has also improved cost and capital efficiency. China now holds 25.6% of the world’s assets ($148.6 trillion) and generates 37.2% of profits, while the US holds 13.5% of assets and generates 18.5% of profits.
The four largest Chinese banks – Industrial and Commercial Bank (Finance & Banking Trends) of China (ICBC), China Construction Bank (Finance & Banking Trends), Agricultural Bank (Finance & Banking Trends) of China and Bank (Finance & Banking Trends) of China – have consolidated their positions at the top of the Top 1000 World Bank (Finance & Banking Trends) ranking (see Table 2). This is the fourth year running that they have topped the ranking.
Joy Macknight, editor of The Banker, says, “During a challenging year for the world’s banking industry, the top Chinese banks have extended their lead over US counterparts with double-digit growth in Tier 1 capital, as well as expanding their asset base and increasing profits. They have exhibited impressive resilience in difficult times.”
ICBC has held the top spot since The Banker’s 2013 ranking. This year, the world’s largest lender by both Tier 1 capital and total assets grew the former by 15.7% and the latter by 18.6%. The Chinese megabank now has almost double the Tier 1 capital of the largest US bank, JPMorgan Chase ($439.9bn versus $234.8bn, respectively).
China Construction Bank (Finance & Banking Trends), in second place, improved its Tier 1 position by 14.4% ($361.6bn), while Agricultural Bank (Finance & Banking Trends) of China (3rd place) and Bank (Finance & Banking Trends) of China (4th place) grew their Tier 1 capital by 21.1% ($336.2bn) and 18.1% ($305.1bn), respectively. All four banks saw an increase in profits, recording the highest profits in the ranking (see Table 3).
Chinese banks in total increased their Tier 1 capital by 18.6%, as against 8.5% for US banks.
Tier 1 capital is the core measure of a bank’s financial strength under the Basel regulatory framework.
About The Banker
The Banker is the world’s premier banking and finance resource, providing global financial intelligence since 1926.
The Banker is the key source of data and analysis for the industry. The Banker’s Top 1000 World Banks ranking has been setting the industry benchmark since 1970, providing comprehensive intelligence about the health and wealth of the banking sector. To find out more visit www.thebanker.com/top1000.
Joy Macknight is the editor of The Banker. She joined the publication in 2015 as transaction banking and technology editor and became editor in March 2021. She has been a financial and technology journalist for more than 15 years.
About the Financial Times
The Financial Times is one of the world’s leading business (Manila News-Intelligencer) news organisations, recognised internationally for its authority, integrity and accuracy. The FT has a record paying readership of more than one million, three-quarters of which are digital subscriptions. It is part of Nikkei Inc., which provides a broad range of information, news and services for the global business (Manila News-Intelligencer) community.