Tuesday, 29 November 2022

Bank Watch List

Balance sheets and financial results-based evaluations are, by nature and definition, backward-looking. To overcome this, we introduced a forward-looking element called the “Bank Watch List” into the strongest bank evaluation.

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.

2021
2020 2019 2018
Strength Rank 2021 AB 500 Rank 2021 Commercial Bank Country Gross NPL Ratio (%) Loan Loss Reserves to Gross NPLs (%)
492421Janata BankBangladesh22.632.9
338222IDBI Bank India22.493.0
451359Sonali Bank Bangladesh18.367.7
446189Central Bank of IndiaIndia16.665.4
445231Yes BankIndia15.465.7
30455Punjab National BankIndia14.363.2
478253Suruga BankJapan14.248.0
500385Bank of Huludao China13.932.4
417102Bank of IndiaIndia13.874.4
457386Punjab & Sind BankIndia13.873.0
36169Union Bank of IndiaIndia13.768.9
361437DBS Bank IndiaIndia13.075.0
283498Bank of PunjabPakistan13.090.2
489413Agrani Bank Bangladesh12.564.2
217397United Bank Pakistan12.393.1
499487Rupali BankBangladesh11.842.4
310230Indian Overseas BankIndia11.770.0
50301Halyk BankKazakhstan11.170.9
235456Commercial Bank of Ceylon Sri Lanka10.949.8
413292Philippine National BankThe Philippines10.847.4
107485Subsidiary Bank Sberbank of Russia Kazakhstan10.398.5
298375Bank of CeylonSri Lanka10.359.1

Source: TABInsights, S&P Global Market Intelligence

What does it mean to be in the Bank Watch List?
In this year’s ranking, we have identified gross non-performing loan (NPL) ratio (above 10%) and loan loss reserves to gross NPLs ratio (below 100%) as key parameters that will impact financial strength. The “Bank Watch List” is a tool to monitor and review the parameters to give a holistic view of the financial strengths of the institutions under evaluation. This is the first iteration of what we think will be a powerful tool for the industry to benchmark financial strength and will be continuously enhanced.

Who are in the Bank Watch List?
The weighted average gross NPL ratio of the 500 largest banks in Asia Pacific was only up from 1.53% in 2019 to 1.62% in 2020, as the continued COVID-19 relief measures resulted in delayed recognition of problem loans. Banks’ gross NPL ratios will rise further once relief measures are withdrawn and the number of banks on Bank Watch List will likely increase.

In addition to banks from Bangladesh, India, Japan and Pakistan, this year’s Bank Watch List also includes banks from China, Kazakhstan, Sri Lanka and the Philippines. IDBI Bank recorded the highest gross NPL ratio among Indian banks, at 22.4%, followed by Central Bank of India and Yes Bank. DBS Bank India reported a considerable deterioration in gross NPL ratio after its takeover of troubled Lakshmi Vilas Bank, rising to 13% from 2.6% in the previous year. UCO Bank was removed from the list as its gross NPL ratio improved to 9.67%. China’s Bank of Huludao had the worst asset quality among Chinese banks and its gross NPL ratio stood at 13.9%, above the average in China of 1.5%.