Monday, April 11, 2011

BRIC Banks, verses EU and US Banks, by Assets, Market Capitalization and Asset Growth Rates

As economies grow, their banking assets by institution also grow in lock step. The following charts show banking assets at the largest of the banks in the BRIC countries (Brazil, Russia, India and China) compared to assets and growth rates in the largest banks in the US and the EU (plus Switzerland).

Note that all of the US and EU banking institutions have seen very low asset growth over the past three years -- due to a large degree to the Global Financial Crisis in Oct 2008 which forced these countries to cut bank on problem assets and shore up financial ratios.

It is interesting to note that asset growth all the selected BRIC banking institutions was relatively unaffected by the GFC -- BRIC banks on average saw annual average total asset growth in the mid to high teens.

From a total asset level, the largest US and EU based banks still hold the lead in overall assets. Interestingly, Industrial and Commerical Bank of China is the largest bank in China by total assets and market capitalization, and has been growing at an average annual rate of 13.9% per annum over the past three years. This means it will be as large as the largest EU and US bank by assets -- Deutsche Bank -- within the next three years (if growth rates continue).

From the perspective of market capitalization to net tangible assets, it appears the market has more than priced in growth at the BRIC banks, with market capitalization/tangible book value averaging 2.5x for the BRIC banks on average, compared to 1.3x for the EU & US banks, on average.

1 comment:

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