In terms of efficient use of assets, meaning higher return on assets and capital, America exceeds. This could change if US President Trump is successful in opening China’s market which could reverse the scales.
Brian Caplen, financial journalist for The Banker admits,
Free and open markets encourage banks to be more efficient. A more closed system in China with greater state involvement is less effective in driving efficiency, so if President Trump is successful in opening China’s market, it will improve the country’s banks.
Despite various challenges like stricter regulations, increased capital requirements, competition from fintechs and low-interest rates in the EU and US, this year has been very good for banks globally.
The total pre-tax profit is around $1,135 billion. That’s 10 times higher than when the financial crisis disrupted the system back in 2009.
Banks in various countries of Europe including Italy, Greece, Spain and Portugal had to make improvements by reducing requests for bad loans, in effect reducing their losses and increasing their profits.
Banks in the UK defied the Brexit situation and increased profits also, HSBC being the prime example for higher capital than most banks in England, and currently number 9 in the largest bank ranking list.
In Asia-Pacific, Vietnamese banks grew their profits, whereas India’s banks saw profit losses of 44% as they continue to restructure the banking sector. In Japan, profits were down by 30%, the same regarding return on assets and capital. Mitsubishi UFL ranked 10th in the top 10 largest banks list.
Finally, the US banks may be more efficient through their returns on assets and capitals than Chinese banks, but in comparison with banks in central Asia and Africa where return on capitals are as high as 23%, they are inferior.
So the list goes as follows:
- Industrial and Commercial Bank of China
- China Construction Bank Corporation
- Agricultural Bank of China
- Bank of China
- JP Morgan Chase
- Bank of America
- Wells Fargo
- Mitsubishi UFJ