LONDON–The biggest banks in the world have emerged from the Covid-19 pandemic stronger and more resilient, and have now built up their Tier 1 capital to the equivalent of five times the total assets of the U.S. credit union community.
According to The Banker’s Top 1000 World Banks ranking, the 1,000 largest banks’ aggregate Tier 1 capital has surpassed $10 trillion for the first time in the history of the rankings.
The total Tier 1 capital, a key measure of banking strength, has reached $10.38 trillion, an increase of 4.7% year on year, The Banker rankings show. The minimum Tier 1 capital needed to enter the 2022 ranking also reached an all-time high of $556 million, according to the report.
In addition, aggregate total assets have broken the $150 trillion barrier for the first time – at $154.21 trillion.
“Profits saw a healthy rebound, with aggregate pre-tax profits reaching a record-breaking $1.44 trillion,” the Banker said. :This is a 53.7% year-on-year increase, compared to a decrease of 19.2% in the 2021 ranking.”
The publication noted, however, that much of that increase can be attributed to a reduction or reversal in last year’s credit impairment charges for expected loan losses that didn’t materialize.
China Dominates
According to The Banker’sanalysis, China continues to outpace its nearest rival, the United States, in terms of both Tier 1 capital and asset growth, underpinned by a strong domestic economy that grew at 8.1% in 2021. China expanded its aggregate Tier 1 capital by 14.4% (versus 4.7% for the U.S.) and total assets by 10.9% (versus 8.8% for the U.S.), the publication reported.
“With 140 banks in the ranking, four fewer than in 2021, China has more than double the Tier 1 capital ($3.38 trillion) and almost double the assets ($41.53 trillion) compared to the US, with 186 banks,” The Banker said. “Overall, China holds 32.5% of the world’s Tier 1 capital and 26.9% of its assets.”
The largest bank in the U.S., JP Morgan Chase, was ranked fourth-largest in the world and reported a 4.8% rise in Tier 1 capital.