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.
|Strength Rank 2021
||AB 500 Rank 2021
||Gross NPL Ratio (%)
||Loan Loss Reserves to Gross NPLs (%)
|338||222||IDBI Bank ||India||22.4||93.0|
|451||359||Sonali Bank ||Bangladesh||18.3||67.7|
|446||189||Central Bank of India||India||16.6||65.4|
|304||55||Punjab National Bank||India||14.3||63.2|
|500||385||Bank of Huludao ||China||13.9||32.4|
|417||102||Bank of India||India||13.8||74.4|
|457||386||Punjab & Sind Bank||India||13.8||73.0|
|361||69||Union Bank of India||India||13.7||68.9|
|361||437||DBS Bank India||India||13.0||75.0|
|283||498||Bank of Punjab||Pakistan||13.0||90.2|
|489||413||Agrani Bank ||Bangladesh||12.5||64.2|
|217||397||United Bank ||Pakistan||12.3||93.1|
|310||230||Indian Overseas Bank||India||11.7||70.0|
|235||456||Commercial Bank of Ceylon ||Sri Lanka||10.9||49.8|
|413||292||Philippine National Bank||The Philippines||10.8||47.4|
|107||485||Subsidiary Bank Sberbank of Russia ||Kazakhstan||10.3||98.5|
|298||375||Bank of Ceylon||Sri Lanka||10.3||59.1|
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%.