Thursday, September 1, 2011

The 20 Largest Banks & Financial Institutions in the World (most globalized) as of September 1, 2011 (revenue, assets, profit, ranked last fiscal half)


TD Bank data is from the February to July 2011 period. % change in market value over the last year represents the change in stock, which isn't necessarily in dollars (for example ICBC stock fell 8% in Chinese currency, but the Chinese currency rose 6.3% in value over the period meaning that its USD market value only fell by a couple percentage points). When USA, NYSE, or ADR is shown it means the stock is already in USD. Just missed the list: Unicredito Italiano (Unicredit Group), Assicurazioni Generali (Generali Group), Royal Bank of Scotland, Royal Bank of Canada. Not included in the list is Japan's largest finance company Mitsubishi UFJ Financial Group because it's more of a holding company than a bank (otherwise it would've made it with $60B in market cap, $51B in annual revenue, -$1.7B profit in 1h11 (first loss in half since 2009) and $2.2T in assets).

Update:  On September 3, 2012 the data was updated for the 6 -months ending June / July 2012. Visit new article for more information.

                     The last year has been tough on banks, many suffered from losses in Greece (Societe Generale, for example reported 18% less profit in 2011 first half even though the 2010 period included €1.8 worth of risky assets from Greece alone and the bank was coming off a €7 billion fraud loss/euro was worth 5% less). But things are looking up, major European institutions like Intesa Sanpaolo and Credit Agricole, British banks Lloyds, Barclays and especially American ones such as Bank of America, appear to be oversold; They still have a large and growing revenue
stream and hold lucrative assets. Billionaires like Warren Buffet are showing more interest as well (Berkshire Hathaway buys 700 million shares of Bank of America for US$5 billion the week of August 25, 2011 after divesting itself of the company in February 2011). Ironically at the same time, Bank of America is selling 13 billion shares in China's Construction Bank (one of the 10 largest in the world, with modest performance over the last 12 months) after holding more than 9% since initially acquiring it in 2005 (leaving it with 5.01%, BoA was construction bank's second largest shareholder as recently as 2008 even after the sale of 5.62B shares in Jan 2009 which left it with 16.6%). This comes after Bank of America spent $8.5B to settle lawsuits directed at its Countrywide business (in Nevada over 250,000 complaints were issued, the settlements aim to reduce mortgage costs for borrowers, more could be further allocated to caring for already foreclosed properties). Countrywide was guilty of predatory lending; it failed to endorse critical loan documentation before mortgages were sold as securities, that should have precluded it from foreclosing homes. Bank of America was caught by the Attorney General of Nevada, of modifying loans so as to raise interest rates on troubled mortgages even though it had already promised in a previous agreement not to do that; As well, it didn't provide new loan terms as required (would have kept some homeowners in their homes). Bank of America was also forced to shutdown its Columbia portfolio money market fund ($34 billion) because investors had extracted from it $21B due to the fund losing too much by investing in subprime mortgages. Many banks used to consider subprime mortgages to be a safe investment (invested their cash and cash equivalents there to earn some interest when the money wasn't being used).
Chinese institutions close the revenue gap with their Western counterparts; ICBC only 45% the revenue of Bank of America (56% of Citigroup) in 2010 1st half but 2011 first half that inreased to 88%.
In September 2011 it was revealed that UBS (Switzerland) senior trader, Kweku Adoboli lost $2 billion of the bank's money through fraud (since January 2009) and false accounting (initially made October 2008), the largest loss through fraud by one individual since Kerviel's $6.7B Societe Generale loss in 2008. Adoboli's law firm is the one that represented Nick Leeson (collapsed Barrings Plc in 1995). Adoboli was an investment banker speculating and hedging against securities (with and without the bank's money meaning the retail banking division may have been affected). Adoboli's family is from Ghana but he was educated in England.
Another thing you might want to know if you're new at this: stocks traded as ADR's, the market value listed for them is in American currency. If they are SA's the market value is in the currency of their home country.
A key reason insurance companies have suffered is because they traditionally invest insurance premiums into bonds, stocks and equities and with interest rates rock bottom their investments haven't yielded significant gains.
Performance in Canada, also has been mixed with the biggest bank by assets, Royal Bank of Canada, recording a net loss tied to its venture into the American retail market (which was cut short when it sold the U.S. retail business it invested billions of dollars in, at a loss). September 1, 2011 was also notable in Canada; For the first time in over a decade the Royal Bank of Canada was overtaken by TD Bank in market capitalization. TD which has an asset value approximately 30% lower than Royal Bank, has been a rarity in the financial industry. Over the last month its stock is up almost 1%, jumping more than 17% in the last 12 months (8.5% year to date).

Results for TD Bank reflect the most recent six month cycle ended July 31, 2011 (fiscal year for the company ends in October). In the last quarter (ended July 31, 2011) TD Bank's earnings increased by 23% even though the wholesale banking division (minor part of company) fell by 40%. Personal/Commercial business profited US$328M in the USA (up 21%) and C$954M in Canada. Dividend in the quarter went up 68 cents per share. TD solidified its position as the 10th biggest bank in the US by assets after it acquired more banks in Florida and the Carolina's.

Some other notes
Bank of America was hurt by an $9.1B second quarter loss stemming from a $8.5B settlement with mortgage bond investors. UBS revenue in swiss francs actually fell 14.73% but because the swiss franc was worth 19.8% more versus the US dollar, its revenue quoted in dollars was up 2.16%.

Societe Generale net banking income actually fell 1% but because the euro was up 5.78% against the greenback (USD) the bank's results are shown to have increased 4.68%. Even though net income was down in the second quarter it said it has no plans to sell Emporiki Bank of Greece; In 2010, Greece was the source of €3B worth of risky assets (compared to €850M for Credit Agricole) and over €11B in writedowns/provisions since 2007. (Societe Generale revenue in the table is what the company calls net banking income in its quarterly announcement).

Intesa Sanpaolo total assets were actually 1.58% smaller on June 30 2011 than on June 30, 2010 however the USD fell in value versus the Euro and that caused assets to rise slightly. Revenue used for Intesa Sanpaolo is quoted on the income statement as operating income. Goldman Sachs revenue is net revenue. Itau Unibanco Holding (ITUB) results come from the Management Discussion & Analysis most recent report.

Notable Exclusions
Royal Bank of Scotland - Hasn't recorded a profit since the second quarter of 2010 (even then it was a minute 133M pounds). The market value has dipped below US25 billion and assets continue to be near a record low of 1.4 trillion pounds (half what they were beginning of 2009).

About the table at the top of the article, currencies used
*Average fx rate calculated myself using data at x-rates.com and google finance exchange.
Exchange rates used to convert to USD: Chinese RMB 1hfy11 6.5387913, 1hfy10 6.82573578 up 4.2%.
Euro 1hfy11 1.403703906, 1hfy10 1.32699944881 up 6.25%. Swiss Franc 1hfy11 1.10659625, 1hfy10 0.92365506299 up 19.81%. Brazilian Real 1hfy11 1.6312765625, 1h10 1.796809375 up 9.21%.
British Pound 1hfy11 1.61702795275, 1hfy10 1.52447228346 up 6.07%. Canadian Dollar 1hfy11 1.030360625, 1hfy10 0.96748478294 up 6.50%,

In other news
A new report is out that says in 2015 only 30% of marketing budgets (medium sized businesses) will go to traditional advertising sources. That's in stark contrast to 2010 when 52% of advertising occured through traditional outlets. The 70% (up from 48% in just five years) will go to online media.

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