Chinese lenders shrug off global banking turmoil, gaining in value to top S&P regional market cap league table

Six of the eight Chinese banks to make the top 20 list compiled by S&P Global Market Intelligence enjoyed a quarterly increase in market value
They are less exposed to the international banking sector, which was rocked in recent weeks by the collapse of several lenders

Banking & finance

Iris Ouyang

Published: 11:00pm, 7 Apr 2023

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Chinese lenders largely shrugged off the recent banking crisis in developed markets, gaining in value to take the top five spots in a league table of banks in the Asia-Pacific region ranked by market capitalisation.

Five of the eight Chinese banks to make the top 20 list compiled by S&P Global Market Intelligence enjoyed a quarterly increase in market value in the first three months of 2023, bucking the trend across the region.

Industrial and Commercial Bank of China topped the table, having gained 3.9 per cent to US$221.27 billion, China Construction Bank rose 4.22 per cent to clinch second place on US$164.19 billion, while Agriculture Bank of China and Bank of China added more than 7 per cent each to round out the top four on US$155.93 billion and US$135.77 billion respectively, according to the rankings released on Friday.

China Merchants Bank managed to hold on to fifth spot despite shedding 8.23 per cent to US$126.37 billion.

Every non-Chinese bank on the list, bar one, saw its market capitalisation drop during the three-month period.

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The international banking sector has been rocked in recent weeks by the collapse of Silicon Valley Bank and Signature Bank in the US and the rescue of Switzerland’s troubled Credit Suisse.

“Chinese lenders are relatively less exposed to the global banking industry and have gained from a recovery in lending as the world’s second-biggest economy emerges from the Covid-19 pandemic,” said the report by the unit of S&P Global.

The three other Chinese lenders in the table are National Postal Bank of China in 12th place, Bank of Communications in 16th and Industrial Bank sat in 17th.

India’s biggest lender, the State Bank of India, took the biggest hit, with a 14.7 per cent plunge to US$56.9 billion. The depth of the loss is likely to be linked to the lender’s exposure to the troubled Adani Group, which itself lost billions in market value after a short-seller attack earlier this year.

The banking sector dominated global headlines in recent weeks, although experts have said contagion risks to Asia-Pacific lenders are limited. The collapse of a handful of American banks forced US regulators to roll out emergency measures to limit broader risks.

The historic government-brokered takeover of Credit Suisse by UBS Group last month, meanwhile, restored some investor confidence in the sector.

Tepid loan demand and narrowing interest rate margins will put pressure on Chinese banks’ profits this year, Fitch Ratings said in a report on Tuesday.

“Demand for residential mortgage and property-development loans should stay weak and weigh on overall lending growth until homebuyer sentiment improves meaningfully,” said analysts led by Vivian Xie.

“We see further pressure on banks’ [net interest margins], driven by mortgage repricing to reduce rates and ongoing deposit competition.”