The world's top banks? Four out of five are Chinese

Up to a few years ago the world banking system was characterised by Anglo-Saxon leadership, American in particular. Today this has changed: four out of the world’s five top banks are Chinese, according to the 2018 edition of the R&S Mediobanca focus on international Banks. The study analyses the results of the 67 biggest international banking groups: 28 are based in Europe, 15 in Japan and another 14 in the USA. China is present with the 10 biggest banks.

 

The top ten

China has filled the podium: the Icb of China is in pole position since 2016 and has even overtaken USAs JP Morgan Chase in terms of assets, indeed the latter has since slipped back into fourth place. In 2017, Icb achieved a total of 3,343 billion Euros in assets, 800 more compared to the former leader, Jp Morgan. China Construction holds second place, followed by the Agricultural Bank of China, in third place. USA’s Jp Morgan Chase comes in at fourth place, the only one to break the Chinese continuum,  restored in earnest at fifth place with the Bank of China.

The remaining places in the ranking of the world’s top ten banks are filled by the Japanese Mitsubishi, the British HSBC, the American Bofa and the French Bnp Paribas and Crédit Agricole.

 

The reason behind China’s boom

On the one hand, Chinese banks are following and accompanying growth in their country’s GDP, which despite slowing down compared to a few years ago, grew almost twice as much as the USA and more than three times as much as Europe. Nor should we forget that in the wake of the crisis, many banks started selling assets, all over the world, thus favouring Chinese expansion.

 

USA-Europe: reduction of the gap

Progress which confirms how the gap between American and European banks is narrowing. This is attributable to the USA tax reform. In 2017 net profits doubled in Europe (from 34.7 to 69.9 billion) and fell by 21.6% in USA banks. In 2017 revenues grew both in Europe (+1.7%) and in the USA (+3.1%), as well as net commissions (+4.3% in Europe and +5.2% in America) and negotiation (+22.2% in the EU and +7.2% n the USA).

Despite these improvements, total European net profits are markedly lower than those achieved by the USA (410.9 billion Euros compared to 625.6 billion Euros). This is due to higher operative costs and diminished profitability. The shadow of Npl and its derivatives hangs low over both shores of the Atlantic. The situation is showing considerable improvement for both.

Deteriorated loans have dropped by 8.4% in Europe compared to the previous year, insofar as among Italy’s five biggest banks, the share of total number of loans to clients remains 14.8% (in the USA this figure stands at 2.4%), above the threshold indicated by the ECB. The effect of the tax reform proposed by the Trump Administration has had an effect on this comparison: it will enter into full force as of this year, however its impact was already felt in part during 2017.