The western European banking sector faced significant headwinds in 2021, as illustrated in the headline numbers in The Banker’s 2022 Top 250 Western European Banks ranking. The aggregate Tier 1 capital of the lenders listed contracted by 4.3%, to $2.6tn, while their total assets dropped by 3.1%, to $50tn, based on year-end 2021 results.
In contrast, their pre-tax profits more than doubled, reaching $277.7bn compared to just $133.4bn in the 2021 ranking. In the previous ranking, only 77 of the 215 institutions that recorded a profit in 2020 managed to increase their pre-tax profits. In this year’s ranking, 234 banks recorded a profit, with 182 making bigger gains in 2021 than they did in 2020, and 27 moving from loss to profit. However, much of this boost can be attributed to a reduction or reversal in last year’s credit impairment charges for expected loan losses that didn’t materialise.
Denizbank Austria recorded the biggest increase in pre-tax profits – a whopping 1389.6%. Bank of America Ireland and National Bank of Greece also saw more than 1000% increases – 1191.4% and 1051.9%, respectively.
However, only 97 banks of the 250 improved their Tier 1 position. Sweden’s Nordax Bank, which jumps into the ranking at 214th position, saw the biggest increase in Tier 1 capital among the top 250, recording a 204.3% rise. Nordax, a specialist bank focused on consumer loans, non-standard mortgage loans and equity-release mortgages, completed its acquisition of Bank Norwegian at the end of 2021, which gave its total Tier 1 a significant boost.
Alpha Bank, on the other hand, saw the biggest drop in Tier 1 capital (-45.2%). The Greek bank, like its compatriots, spent much of 2021 and previous years restructuring its balance sheet to improve asset quality.
HSBC retains top spot
Yet again the UK has the greatest number of lenders in the 2022 ranking based on Tier 1 capital, with 38 bank holding companies and foreign-owned subsidiaries, two more than in last year’s list. Switzerland is next, with 33 banks, followed by Germany (26) and Italy (25). However, it is France that dominates the top 10, occupying half of the positions.
HSBC remains the largest lender in the region by Tier 1 capital, with $156.3bn. The London-headquartered bank keeps its 12-year lead, despite a 2.4% decrease in Tier 1 capital. Most of the other banks in the top 10 saw drops in Tier 1 over the course of 2021; only Barclays and Crédit Mutuel improved their Tier 1 position.
For the second year in a row, BNP Paribas has hung on to the title of the largest bank in the region in terms of assets, with $2.99tn, but saw a 2.6% contraction. Barclays is the only bank in the top 10 to have increased its total assets in 2021, adding 4.0% to its balance sheet.
Top performers
In addition to the Tier 1 ranking, we applied our best-performing methodology to the largest bank holding companies in six countries: Austria, Denmark, Greece, the Netherlands, Portugal and Switzerland.
For the second year in a row, regional lender Oberbank has taken the title as the overall best-performing bank in Austria. The lender outperformed its peers in growth, as well as soundness, which takes into account the annual improvement in capital assets ratio. The country’s biggest lender, Erste Group, only comes first in asset quality, which considers improvements in impairment charges to total operating income, among other criteria.
In Denmark, another smaller lender, Spar Nord Bank, tops the best-performing table, ousting similar-sized Sydbank. Spar Nord excelled in five categories: growth, profitability, liquidity, soundness and leverage. Danske Bank, the country’s largest lender, languishes in fourth position, dropping one spot since the previous ranking.
Greek banks had another difficult year of restructuring. But it is the country’s second largest lender, Eurobank Ergasias, that regains the title as best-performing bank, after losing out to National Bank of Greece (NBG) in the 2021 ranking. Eurobank topped the table in profitability, which looks at improvements made in asset utilisation, among other areas.
The second largest lender in the Netherlands, Rabobank, has managed to come out on top this year, ousting specialist lender Bank Nederlandse Gemeenten, which drops to fourth place. Rabobank outperforms its peers in the areas of growth profitability, asset quality, return on risk, soundness and leverage. ING, the country’s largest bank, rises from third place in the 2021 ranking to second this year.
In Portugal, Novo Banco – Banco Espírito Santo’s reincarnation following its troubles in 2014 – is the best-performer for 2022. The country’s fifth largest bank comes in first for growth, profitability, operational efficiency, asset quality, return on risk and leverage. Portugal’s largest lender, Caixa Geral de Depositos, hangs onto second place for the second year in a row.
Private bank J Safra Sarasin comes out on top again in Switzerland, besting its four larger peers in growth, operational efficiency, return on risk, liquidity, soundness and leverage. Credit Suisse, the country’s biggest lender, remains at the bottom of the table for the second year in a row.
Please visit The Banker’s Top 1000 World Banks to see the best-performance results for France, Germany, Italy, Spain and the UK.
