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Bank Watch List

Balance sheets and financial results-based evaluations are by nature and definition backward looking. To overcome this, we are introducing a forward-looking element called the “Bank Watch List” into the strongest bank balance sheet evaluation. This identifies and considers the impact of specific evaluation parameters on balance sheet strengths, should macro-economic and business conditions change. By identifying the parameters and institutions that are most likely to be impacted by such changes, we aim to provide a holistic 360 degree view of the ranking without materially changing the composition of the scorecard.

Bank Watch List 2015

Monitoring and tracking small banks that have grown assets rapidly, yet kept low NPL levels in the last two years.

Download the Bank Watch List:
Strength Rank 2015 AB 500 Rank 2015 Commercial Bank Country Net Loans CAGR
(3-year)
Gross NPL Ratio Average
(3-year)
402 274 China Resources Bank of Zhuhai China 74.5 0.54
245 457 RBL Bank India 51.8 0.65
76 100 China Construction Bank (Asia) Hong Kong 39.2 0.08
61 329 Bank of Fuxin China 34.8 0.71
205 472 Bank Sumitomo Mitsui Indonesia Indonesia 34.0 0.22
232 408 Hana Bank (China) China 33.2 0.67
35 477 Shinhan Bank (China) China 32.2 0.81
104 25 Ping An Bank China 29.6 0.96
Source: Asian Banker Research

What is the Bank Watch List?

It identifies and considers the impact of specific evaluation parameters on balance sheet strengths, should macro-economic and business conditions change.
By identifying the parameters and institutions that are most likely to be impacted by such changes, we aim to provide a holistic 360 degree view of the ranking without materially changing the composition of the scorecard. The identification and setting of the parameters are based on The Asian Banker research team’s analysis of past performance as well as outlook of the banking sector in the region going forward.

Why introduce the Bank Watch List?

We see smaller and relatively new Chinese banks making it to the top of the ranking. Eight of the top 50 strongest banks belong to these small Chinese banks, which rank outside the Top 100 in terms of the size of their balance sheets. The assets of these eight banks range from $3.7 billion (477th in the AB 500 2015 ranking) to $82.3 billion (76th in the AB 500 2015 ranking).

Who are in the Bank Watch List?

Compared to other banks in the Top 50, these banks generated much higher growth in loans and deposits, and at least on their balance sheets reflected better profitability, risk profile, asset quality and liquidity than other banks.
These comprise mainly small provincial Chinese banks that have grown mainly in a period of benign credit expansion and excess liquidity fuelled by the state’s growth-focused policies in the last decade or so.
However, the real test of financial strength is when the business and credit cycles turn and become less benign and asset quality and liquidity positions are stressed. With a marked slowdown in the Chinese economy and signs of stress showing, we anticipate that the performance of these banks in the key parameters will start to show real vulnerabilities.

What does it mean to be in the Bank Watch List?

In this year’s ranking, we have identified net loan growth (CAGR of more than 30%) and NPL (less than 1%) as parameters that will impact financial strength due to fluctuations in macroeconomic and business conditions such as a downturn in credit cycle and asset quality in the region. Banks that have grown net loan relatively quickly and yet been able to maintain NPL at very low levels on the balance sheet are generally in great shape. However, such performances also show up potential susceptibility and vulnerabilities to a credit cycle downturn.
The “Bank Watch List” does not reflect the financial performance or management of these institutions. It is a tool to monitor and review parameters in order to give a holistic view of financial strengths and the institutions being evaluated. This is the first iteration of what we think will be a powerful tool for the industry to benchmark and review financial strength and which will be continuously enhanced.


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