China’s Banking Sector Emerges from Covid Stronger than Before, Accounts for 1/3 of Global Tier 1 Capital: The Banker

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China’s leading banks have become stronger and more resilient in the wake of the Covid-19 pandemic, according to a report from The Banker.

Chinese banks featuring on The Banker‘s Top 1000 World Banks list have seen an increase in their Tier 1 capital and assets base at a rate exceeding that of their US peers.

According to the report China’s 2021 GDP growth of 8.1% helped to drive an increase in the Tier 1 capital of Chinese banks by 14.4%, as compared to an increase of 4.7% for US banks. Total assets of Chinese banks has expanded 10.9%, as compared to 8.8% for US lenders.

China currently has 140 banks on the Top 1000 World Banks list, as compared to 186 US banks. The Tier 1 capital of Chinese banks stands at USD$3.38 trillion however, which is more than double the figure for US banks, and accounts for 32.5% of the world’s Tier 1 Capital.

The assets of Chinese banks on the list stands at $41.53 trillion, which is nearly double the figure for US banks, and comprises 26.9% of the global banking sector’s assets.

Chinese banks also account for 28.7% of the world’s banking sector pre-tax profits.

“It has been another exceptional year for China’s banking sector” said Joy Macknight, editor of The Banker. “In particular, lenders at the top of the ranking are growing faster than their counterparts in other countries, with nine of the 10 Chinese banks in the top 20 reporting double-digit growth in Tier 1 capital.”

Chinese banks now account for half of the placeholders on The Banker’s top 10 list of world banks, with the first four spots held by ICBC, China Construction Bank, Agricultural Bank and Bank of China, and Bank of Communications sitting in 10th spot.

ICBC has now been at the top of the list for a decade, and is the first bank in the world to see its Tier 1 capital exceed $500 billion, rising to $508.85 billion in total for a 15.7% increase in 2021. Its Tier 1 capital is now twice that of the largest bank in America, JPMorgan ($246.16 billion).

The global banking sector in general saw improvements to its capitalisation levels in 2021, with the aggregate Tier 1 capital of the world’s 1000 largest banks exceeding $10 trillion for the first time.