For the first time since 2015, British banks in The banker The world’s top 1,000 banks generated more profits than their French counterparts. The UK recorded $55.1 billion in total pre-tax profits in 2021, compared to $54.8 billion for France and $13.9 billion for Germany.
UK lenders also reported a higher ROA (0.50%) than French banks (0.37%), German banks (0.23%) and the European average (0. 44%).
The UK was also one of only seven of the 22 Western European countries in the ranking to record an improvement in its aggregate Tier 1 capital position, albeit by 0.94%. Overall, Western Europe was the only region to register a decline in Tier 1 capital (3.6%), a key measure of banking strength, as the sector continues to struggle since the global financial crisis of 2008/9.
HSBC remains the only European bank in the top 10 for 11th for another year and is now the only non-Chinese or US lender after Mitsubishi UFJ Financial Group slipped to 12th place. HSBC fell one place to ninth as Tier 1 capital shrank 2.4% to $156.29 billion.
Of the other ‘big six’ UK banks, Barclays (global ranking: 24), Lloyds Banking Group (42), Standard Chartered (51) and Nationwide Building Society (106) saw increases in their Tier 1 capital, with Nationwide posting the most -the big rise (30.1%) and climbing 15 places in the Top 1000. Like HSBC, NatWest Group (53) reported a decline in Tier 1 in 2021. This pattern was repeated with total assets.
All six banks were profitable in 2021, with Lloyds Bank posting the biggest rise of 470.6% and NatWest turning from a loss to a profit.
The Banker’s editor Joy McKnight said: “After a hit to profitability in 2020, the UK banking sector has bounced back to post a more than 200% rise in pre-tax profits. However, much of the boost can be attributed to a reduction or reversal of last year’s credit impairment charges for expected loan losses that, like most lenders around the world, have not materialized.”
When The banker The best-performing methodology, which looks at improved performance across eight metrics, is applied to the 20 largest Western European banks, with three UK lenders coming out on top. Lloyds Bank emerged as the best performing lender of the cohort, outperforming its peers in risk return, asset quality and growth, followed by NatWest and Barclays in second and third place respectively.