SAFEST EMERGING MARKETS BANKS 2014 - Global Finance Magazine

Safety In Numbers

The safest 50 EM banks are concentrated in 10 countries; Saudi Arabia, Korea and China account for more than half.

The safest banks in emerging markets continue to be concentrated in a small number of countries. Whereas 21 countries contribute banks to Global Finance’s ranking of the Safest Global Banks 2014, only 10 contribute banks to the ranking of the 50 safest banks in emerging markets.

The distinction is driven by the small number of emerging markets countries that enjoy high sovereign credit ratings, which in turn open the way for high ratings on their banks. Banks in countries with low sovereign credit ratings are effectively barred from receiving high ratings, even if they are strong on a stand-alone basis, owing to the danger that crises at the sovereign level could lead to failures of individual banks.

South Korea and Saudi Arabia each contribute nine banks to the Safest 50, China contributes 8, and Taiwan and the UAE six each. These five countries therefore account for more than two-thirds of the Top 50.

Chile continues to be the only Latin American country to contribute banks to the Top 50, despite recent rating upgrades to banks in Mexico and Peru. Four Chilean banks are included in the Top 50, the same as last year.

The Czech Republic is the only country from the region comprising Central and Eastern Europe and former Soviet Union to contribute banks to the Top 50.

National Bank of Abu Dhabi (NBAD) again heads the rankings of the safest emerging markets banks, with AA- ratings from each of the three major credit rating agencies—it is the only emerging markets bank to achieve this. NBAD ranks 25th in Global Finance’s Top 50 Global Safest Banks ranking. NBAD is followed by nine other banks that each have two AA- ratings and one of A+. The second-, third- and fourth-ranked banks are all Chinese; the next three and the ninth-ranked are South Korean. National Bank of Kuwait ranks eighth, and Chile’s Banco Estado, tenth.

One A rating and two of A- (worth 13 points) suffice to assure inclusion in this year’s emerging markets list, with a score of 12.5 enabling two banks to qualify in 49th and 50th places. Four other banks score 12.5 but are ranked outside the Top 50 based on their asset size: Poland’s Pekao, Taipei Fubon Commercial Bank, Qatar Islamic Bank and Suhyup Bank from South Korea.

Five of the six GCC states have banks in the Top 50. Qatar (with three), Kuwait (with two) and Oman (with one) join Saudi Arabia and the UAE, leaving Bahrain as the only GCC state without a representative, although Bahrain’s Gulf International Bank comes close, with 12 points.

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The performance of Saudi banks is remarkable. The Saudi commercial banking system comprises 12 domestic banks, so with nine banks in the Top 50, 75% of the Saudi banking system is represented in Global Finance’s ranking of the world’s safest emerging markets banks. (That contribution would be even greater if it were weighted for asset size.)

The regional list for emerging markets in Asia displays the dominance of Chinese and South Korean banks, which account for nine of the top 10 banks. Bank of Taiwan is the only interloper, in eighth position.As with the global list, no sub-Saharan banks other than those from South Africa come close to scoring highly enough for inclusion.

The eligibility criteria and scoring mechanism for the Safest Emerging Markets Banks are the same as those used for the global list. Banks must be among the biggest 500 in the world, ranked by assets, and they must be rated by at least two of the three major credit rating agencies. A sub-investment-grade rating from any of the agencies bars inclusion, regardless of the level of the other ratings. Eligible banks are then scored, with 10 points being awarded for an AAA rating (though no emerging markets bank carries such a rating) to 1 for BBB-. When a bank is rated by only two agencies, an implied score for the third rating is calculated by taking the average of the other two and deducting one point. We include regional lists only for those regions where the list differs from that of the global rankings (Asia, Middle East, Africa).

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The safest banks chart compares the ratings for the world’s largest 500 banks, based on asset size. Long-term foreign currency ratings issued by Fitch Ratings, Standard & Poor’s and Moody’s Investors Service were used. Where possible, ratings on holding companies were used rather than operating companies, and banks that are wholly owned by other banks were omitted. Government import-export finance institutions were also omitted. Within each rank set, banks are organized according to asset size, based on data for the most recent annual reporting period, provided by Fitch Solutions and Moody’s. Ratings are reproduced with permission from the three rating agencies, with all rights reserved. A rating is not a recommendation to purchase, sell or hold a security, and it does not comment on market price or suitability for a particular investor.

NEXT PAGE: TOP 50 | SAFEST EMERGING MARKETS BANKS 2014

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SAFEST EMERGING MARKETS BANKS 2014 \| TOP 50
Rank	Bank	Fitch	Moody’s	S&P	Total Score	Assets $mn	Statement Date	Country
1	National Bank of Abu Dhabi	AA-	Aa3	AA-	21	88,512	12/31/13	UAE
2	China Development Bank	A+	Aa3	AA-	20	1,341,642	12/31/13	China
3	Agricultural Development Bank of China	A+	Aa3	AA-	20	364,583	12/31/12	China
4	Export-Import Bank of China	A+	Aa3	AA-	20	308,873	12/31/13	China
5	Korea Finance Corporation	AA-	Aa3	A+	20	245,217	12/31/13	South Korea
6	Industrial Bank of Korea	AA-	Aa3	A+	20	201,424	12/31/13	South Korea
7	Korea Development Bank	AA-	Aa3	A+	20	158,921	12/31/13	South Korea
8	National Bank of Kuwait	AA-	Aa3	A+	20	65,958	12/31/13	Kuwait
9	Export-Import Bank of Korea (KEXIM)	AA-	Aa3	A+	20	58,181	12/31/13	South Korea
10	BancoEstado	A+	Aa3	AA-	20	48,802	12/31/13	Chile
11	Qatar National Bank	A+	Aa3	A+	19	121,837	12/31/13	Qatar
12	Samba Financial Group	A+	Aa3	A+	19	54,676	12/31/13	Saudi Arabia
13	Bank of Taiwan*	N/R	Aa3	A+	18.5	142,745	12/31/13	Taiwan
14	Banco de Chile*	N/R	Aa3	A+	18.5	49,356	12/31/13	Chile
15	National Commercial Bank	A+	A1	A+	18	100,608	12/31/13	Saudi Arabia
16	Al Rajhi Bank	A+	A1	A+	18	74,632	12/31/13	Saudi Arabia
17	Riyad Bank	A+	A1	A+	18	54,732	12/31/13	Saudi Arabia
18	Banco Santander Chile	A+	Aa3	A	18	51,734	12/31/12	Chile
19	Abu Dhabi Commercial Bank	A+	A1	A	17	49,869	12/31/13	UAE
20	SABB	A	Aa3	A	17	47,281	12/31/13	Saudi Arabia
21	Banque Saudi Fransi	A	Aa3	A	17	45,348	12/31/13	Saudi Arabia
22	Union National Bank	A+	A1	N/R	17	23,838	12/31/13	UAE
23	Industrial and Commercial Bank of China	A	A1	A	16	3,100,051	12/31/13	China
24	China Construction Bank	A	A1	A	16	2,517,568	12/31/13	China
25	Agricultural Bank of China	A	A1	A	16	2,386,291	12/31/13	China
26	Bank of China	A	A1	A	16	2,273,581	12/31/13	China
27	Kookmin Bank	A	A1	A	16	251,335	12/31/13	South Korea
28	Shinhan Bank	A	A1	A	16	225,550	12/31/13	South Korea
29	Nonghyup Bank	A	A1	A	16	185,093	12/31/13	South Korea
30	Kuwait Finance House	A+	A1	A-	16	57,233	12/31/13	Kuwait
31	Arab National Bank	A	A1	A	16	36,783	12/31/13	Saudi Arabia
32	Land Bank of Taiwan*	N/R	Aa3	A-	15.5	81,246	12/31/13	Taiwan
33	FGB	A+	A2	N/R	15.5	53,106	12/31/13	UAE
34	Abu Dhabi Islamic Bank	A+	A2	N/R	15.5	28,090	12/31/13	UAE
35	Hana Financial Group	A-	A1	A	15	154,344	12/31/13	South Korea
36	Mega International Commercial Bank	A-	A1	A	15	93,986	12/31/13	Taiwan
37	Banco de Crédito e Inversiones	A-	A1	A	15	38,756	12/31/13	Chile
38	Commercial Bank of Qatar	A	A1	A-	15	31,075	12/31/13	Qatar
39	Bank of Communications	A	A2	A-	14	976,818	12/31/13	China
40	Woori Bank	A-	A1	A-	14	236,246	12/31/13	South Korea
41	Korea Exchange Bank	A-	A1	A-	14	101,036	12/31/13	South Korea
42	CTBC Bank	A	A2	A-	14	71,845	12/31/13	Taiwan
43	Česká spořitelna	A	A2	A-	14	48,694	12/31/13	Czech Republic
44	Komerční banka	A-	A2	A	14	43,429	12/31/13	Czech Republic
45	BankMuscat	A-	A1	A-	14	22,072	12/31/13	Oman
46	Saudi Hollandi	A-	A1	N/R	14	21,458	12/31/13	Saudi Arabia
47	Doha Bank	A	A2	A-	14	18,405	12/31/13	Qatar
48	Saudi Investment Bank	A-	A2	A-	13	21,465	12/31/13	Saudi Arabia
49	Emirates NBD	A+	Baa1	N/R	12.5	93,141	12/31/13	UAE
50	Cathay United Bank*	N/R	A2	A-	12.5	66,661	12/31/13	Taiwan
Source for ratings: Fitch Ratings, Standard & Poor’s, Moody’s Investors Service *Source for Reporting Assets: Fitch Solutions, except for Moody’s Investors Service, and bank’s financial reports Ratings current as of August 14, 2014

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SAFEST EM BANKS 2014 \| ASIA
Rank	Bank	Fitch	Moody’s	S&P	Total Score	Reporting Assets $mn	Statement Date	Country
1	China Development Bank	A+	Aa3	AA-	20	1,341,642	12/31/13	China
2	Agricultural Development Bank of China	A+	Aa3	AA-	20	364,583	12/31/12	China
3	Export-Import Bank of China	A+	Aa3	AA-	20	308,873	12/31/13	China
4	Korea Finance Corporation	AA-	Aa3	A+	20	245,217	12/31/13	South Korea
5	Industrial Bank of Korea	AA-	Aa3	A+	20	201,424	12/31/13	South Korea
6	Korea Development Bank	AA-	Aa3	A+	20	158,921	12/31/13	South Korea
7	Export-Import Bank of Korea (KEXIM)	AA-	Aa3	A+	20	58,181	12/31/13	South Korea
8	Bank of Taiwan*	N/R	Aa3	A+	18.5	142,745	12/31/13	Taiwan
9	Industrial and Commercial Bank of China	A	A1	A	16	3,100,051	12/31/13	China
10	China Construction Bank	A	A1	A	16	2,517,568	12/31/13	China
11	Agricultural Bank of China	A	A1	A	16	2,386,291	12/31/13	China
12	Bank of China	A	A1	A	16	2,273,581	12/31/13	China
13	Kookmin Bank	A	A1	A	16	251,335	12/31/13	South Korea
14	Shinhan Bank	A	A1	A	16	225,550	12/31/13	South Korea
15	Nonghyup Bank	A	A1	A	16	185,093	12/31/13	South Korea
Source for ratings: Fitch Ratings, Standard & Poor’s, Moody’s Investors Service *Source for Reporting Assets: Fitch Solutions, except for Moody’s Investors Service, and bank’s financial reports Ratings current as of August 14, 2014

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SAFEST EM BANKS 2014 \| MIDDLE EAST
Rank	Bank	Fitch	Moody’s	S&P	Total Score	Assets $mn	Statement Date	Country
1	National Bank of Abu Dhabi	AA-	Aa3	AA-	21	88,512	12/31/13	UAE
2	National Bank of Kuwait	AA-	Aa3	A+	20	65,958	12/31/13	Kuwait
3	Qatar National Bank	A+	Aa3	A+	19	121,837	12/31/13	Qatar
4	Samba Financial Group	A+	Aa3	A+	19	54,676	12/31/13	Saudi Arabia
5	National Commercial Bank	A+	A1	A+	18	100,608	12/31/13	Saudi Arabia
6	Al Rajhi Bank	A+	A1	A+	18	74,632	12/31/13	Saudi Arabia
7	Riyad Bank	A+	A1	A+	18	54,732	12/31/13	Saudi Arabia
8	Abu Dhabi Commercial Bank	A+	A1	A	17	49,869	12/31/13	UAE
9	SABB	A	Aa3	A	17	47,281	12/31/13	Saudi Arabia
10	Banque Saudi Fransi	A	Aa3	A	17	45,348	12/31/13	Saudi Arabia
11	Union National Bank	A+	A1	N/R	17	23,838	12/31/13	UAE
Source for ratings: Fitch Ratings, Standard & Poor’s, Moody’s Investors Service *Source for Reporting Assets: Fitch Solutions, except for Moody’s Investors Service, and bank’s financial reports Ratings current as of August 14, 2014

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SAFEST EM BANKS 2014 \| SUB-SAHARAN AFRICA
Rank	Bank	Fitch	Moody’s	S&P	Total Score	Reporting Assets $mn	Statement Date	Country
1	Standard Bank of South Africa	BBB	Baa1	BBB-	6	96,843	12/31/13	South Africa
2	FirstRand Bank	BBB	Baa1	BBB-	6	77,564	6/30/13	South Africa
3	Nedbank	BBB	Baa1	BBB-	6	66,650	12/31/13	South Africa
4	Investec Bank	BBB-	Baa1	BBB-	5	28,622	3/31/14	South Africa
Source for ratings: Fitch Ratings, Standard & Poor’s, Moody’s Investors Service *Source for Reporting Assets: Fitch Solutions, except for Moody’s Investors Service, and bank’s financial reports Ratings current as of August 14, 2014

The safest 50 EM banks are concentrated in 10 countries; Saudi Arabia, Korea and China account for more than half.

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SAFEST EMERGING MARKETS BANKS 2014 | TOP 50

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SAFEST EM BANKS 2014 | ASIA

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SAFEST EM BANKS 2014 | MIDDLE EAST

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SAFEST EM BANKS 2014 | SUB-SAHARAN AFRICA

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