Ranking Preview - Top 1000 World Banks 2012
While European banks count the cost of the eurozone sovereign debt crisis, China is leading the emerging markets into a new era of banking dominance. But the established markets of the US and Japan should not be forgotten. It will come as no surprise that 2011 was the year when the eurozone crisis dragged the global banking sector backwards. Assets and Tier 1 capital in The Banker’s Top 1000 World Banks ranking continue to grow, although at a much reduced rate to last year’s ranking. But aggregate profits, which had staged two years of recovery since the financial crisis, reversed by 1%, to stay only just above the $700bn mark.
Top 10 Banks
The Banker's annual Top 1000 World Banks Ranking has been the industry standard measure of bank strength and performance since 1970. We also publish a wide range of country and regional rankings each year, relied on for their high level of cross-border comparability.
Our Top 1000 and monthly regional rankings are regularly reported in national, regional and international media in more than 70 countries and closely scrutinised by the industry. Subscribers can view and download all rankings published in The Banker since 1996.
Ranking data points
Tier 1 capital
Tier 1 capital, as defined by the latest BIS guidelines, includes loss-absorbing capital, that is common stock, disclosed reserves, retained earnings (excluding current year results) and minority interests in the equity of subsidiaries that are less than wholly owned. It excludes cumulative preference shares, hidden reserves and revaluations reserves, subordinated debt and long-term debt; these are defined as Tier 2 capital, which we track but do not include in our rankings. Tier 1 capital figures are net of regulatory deductions outlined by the BIS committee on banking regulation. Where possible we exclude current years' earnings to allow more accurate cross-border comparisons with banks in countries where this is not permitted by regulatory authorities.
This refers to banks' total assets and excludes third-party items such as acceptances, guarantees and securities held with third parties, and off-balance-sheet assets.
The capital/assets ratio is commonly referred to as the 'leverage ratio'(Tier 1 capital/total assets), although some jurisdictions, notably the US, have further regulatory definitions for capital and assets used in calculating leverage ratios, which will differ from those published in The Banker's ranking.
All profits are before tax to make the figures comparable on a worldwide basis, and are net of provisions for impairment. Profit figures also include discontinued operations.
Return on capital
Return on capital measures banks' profitability on Tier 1 capital (profits divided by Tier 1 capital).
Return on assets
Return on assets is a measure of banks' profitability on total assets (profits/total assets).
BIS total capital ratio
The BIS capital adequacy ratio is used to assess the level of banks' capital in proportion to risk-weighted assets. Basel III guidelines, which will be phased in incrementally until 2019, will increase the amount of capital banks must hold. Risk-weighted assets are calculated by applying different risk weightings on assets from 0% to 100% depending on individual assets' riskiness and potential for default. Where banks have calculated the ratio according to both Basel I and Basel II we take the Basel II calculation.
The non-performing loan column refers to total non-performing loans as a percentage of gross total loans. The Banker's definition of non-performing loans is based on loans with outstanding payments of more than 90 days, plus all non-accrual loans. The ratio takes into account neither provisions nor third party guarantees.
Represents the proportion of loans in a banks' total balance sheet. Where possible, we take gross total loans including loans to banks and do not deduct provisions from the calculation.
This ratio is calculated by dividing total risk-weighted-assets (which are used to determine the level of regulatory capital banks are required to hold) by total assets. The RWA/total asset ratio reflects the perceived riskiness of the assets held by a bank. The lower the percentage, the lower the risk weightings that have been applied to a bank's assets in its calculation of its BIS total capital adequacy ratio.
This is the ratio of total general and administrative costs (ie, staff, sales and marketing, IT, premises) divided by total operating income. We do not include depreciation or amortization in this calculation. Total operating income is calculated as the sum of net interest income and net non-interest income.