South Korea still leads among emerging-market banks, while some Gulf entities are rising in the ranks. 

Author: Andrew Cunningham
safest banks 2017 -2

South Korean banks take the top three places in Global Finance magazine’s ranking of the world’s safest emerging-market banks. Korea Development Bank and Export-Import Bank of Korea lead the list, with two AA ratings and one of AA-. Industrial Bank of Korea follows with one AA rating and two of AA-.

In fourth place is First Abu Dhabi Bank, the product of the merger earlier this year of National Bank of Abu Dhabi (NBAD) and First Gulf Bank. All three rating agencies transferred their ratings on NBAD to the new institution, enabling it to retain the place it held last year.

These four banks are the only emerging-market banks to have three ratings in the AA range. A score of 13 points, the minimum level for inclusion this year, requires two ratings of A- and one of A, or an equivalent configuration.

There are three new entrants in this year’s Emerging Markets ranking. Česká Spořitelna from the Czech Republic enters in 42nd place following an upgrade from S&P; and South Korea’s Suhyup Bank enters in 45th place, also through an S&P upgrade. Kuwait’s Boubyan Bank enters the rankings at 49th, following an upgrade by Moody’s.

Making room for these three were First Gulf Bank, which dropped out of the rankings after its merger with NBAD; and two Saudi banks, Al-Rajhi and Samba Financial Group. Both the Saudi banks scored the same as 50th-placed National Commercial Bank (also from Saudi Arabia), but are ranked lower due to their smaller asset size.

In line with the methodology used for the Global Top 50 list, banks that score the same are ranked by order of asset size, reflecting the strong positive correlation between asset size and high ratings. Qatar Islamic Bank moves up an impressive 22 places to 25th this year after receiving a first-time rating of A1 from Moody’s. KEB Hana moves up 13 places, to 22nd, following an upgrade from S&P.

Several large Chinese banks were downgraded by Moody’s following its downgrade of the Chinese government in May, but the broader story in this year’s Emerging Markets rankings is one of upgrades. This contrasts with the broad trend in the Global 50 Safest Banks ranking, where movement was prompted primarily by downgrades.

Banks from the GCC states contribute 23 of the 50 safest emerging-market banks this year, while banks in Asia contribute 21. Chile contributes four and the Czech Republic two.

Within the GCC, Qatar provides nine banks, Kuwait seven, the UAE six and Saudi Arabia one. Bank ratings are heavily influenced by their government’s ratings. With all three agencies signaling downward pressure on their ratings of the Qatari government as a result of the diplomatic dispute with its neighbors, Qatari banks may find themselves being downgraded.

No Middle Eastern country apart from these four Gulf states has banks that come close to scoring highly enough to rank among the safest 50 emerging-market banks. Banks in Oman used to enjoy mid-range investment-grade ratings, but a series of downgrades over the last two years has now put inclusion well beyond their reach.

South Korea contributes nine banks to the top 50, one more than last year. China contributes eight and Taiwan four.

Banks from many of the world’s largest emerging-market banking systems—Brazil, Turkey, Russia, India and South Africa—still fall far short of scoring highly enough to make the Global Top 50. The strongest Mexican banks are not far off, but would need at least a one notch upgrade from each of the three agencies to stand a chance of inclusion.

Similarly, in Central and Eastern Europe and the former Soviet Union, only Polish banks are in the running; other banking systems trail far behind. In sub-Saharan Africa, only South African banks are on terms with investment-grade ratings. Other banks in the region are rated deep in speculative-grade territory. 

 

THE 50 SAFEST EMERGING MARKETS BANKS

Rank

Group Name

 Country

Ratings

Total Score

Assets

$ mn

Statement

Date

Fitch

Moody’s

S&P

1

Korea Development Bank

South Korea

AA-

Aa2

AA

23

225,766

12/31/16

2

Export-Import Bank of Korea

South Korea

AA-

Aa2

AA

23

74,820

12/31/16

3

Industrial Bank of Korea

South Korea

AA-

Aa2

AA-

22

212,537

12/31/16

4

First Abu Dhabi Bank

UAE

AA-

Aa3

AA-

21

185,799

12/31/16

5

National Bank of Kuwait

Kuwait

AA-

Aa3

A+

20

79,073

12/31/16

6

China Development Bank

China

A+

A1

AA-

19

1,943,930

12/31/16

7

Agricultural Development Bank of China

China

A+

A1

AA-

19

644,401

12/31/16

8

Export-Import Bank of China

China

A+

A1

AA-

19

479,776

12/31/16

9

Qatar National Bank

Qatar

AA-

Aa3

A

19

197,718

12/31/16

10

Banco del Estado de Chile

Chile

A+

Aa3

A+

19

52,133

12/31/16

11

Bank of Taiwan

Taiwan

N/R

Aa3

A+

18.5

154,362

9/30/16

12

Shinhan Bank

South Korea

A

Aa3

A+

18

250,604

12/31/16

13

Banco Santander Chile

Chile

A+

Aa3

A

18

55,493

12/31/16

14

Kookmin Bank

South Korea

A

A1

A+

17

254,089

12/31/16

15

Abu Dhabi Commercial Bank

UAE

A+

A1

A

17

70,331

12/31/16

16

Banco de Chile

Chile

N/R

Aa3

A

17

47,117

12/31/16

17

Union National Bank

UAE

A+

A1

N/R

17

28,296

12/31/16

18

Al Hilal Bank

UAE

A+

A1

N/R

17

11,825

12/31/16

19

Industrial and Commercial Bank of China

China

A

A1

A

16

3,473,088

12/31/16

20

China Construction Bank

China

A

A1

A

16

3,016,447

12/31/16

21

Bank of China

China

A

A1

A

16

2,611,426

12/31/16

22

KEB Hana Bank

South Korea

A-

A1

A+

16

257,165

12/31/16

23

NongHyup Bank

South Korea

A-

A1

A+

16

207,561

12/31/16

24

Kuwait Finance House

Kuwait

A+

A1

A-

16

53,902

12/31/16

25

Qatar Islamic Bank

Qatar

A+

A1

A-

16

38,416

12/31/16

26

Mega International Commercial Bank

Taiwan

N/R

A1

A

15.5

93,251

9/30/16

27

Land Bank of Taiwan

Taiwan

N/R

Aa3

A-

15.5

79,819

6/30/16

28

Abu Dhabi Islamic Bank

UAE

A+

A2

N/R

15.5

33,299

12/31/16

29

Al Ahli Bank of Kuwait

Kuwait

A+

A2

N/R

15.5

13,998

12/31/16

30

Barwa Bank

Qatar

A+

A2

N/R

15.5

12,651

12/31/16

31

Ahli United Bank (Kuwait)

Kuwait

A+

A2

N/R

15.5

12,062

12/31/16

32

Qatar International Islamic Bank

Qatar

A+

A2

N/R

15.5

11,690

12/31/16

33

Ahli Bank

Qatar

A+

A2

N/R

15.5

10,485

12/31/16

34

International Bank of Qatar

Qatar

A+

A2

N/R

15.5

9,824

12/31/16

35

Agricultural Bank of China

China

A

A2

A

15

2,815,917

12/31/16

36

CTBC

Taiwan

A

A2

A

15

109,132

12/31/16

37

Banco de Crédito e Inversiones

Chile

A-

A1

A

15

46,232

12/31/16

38

Doha Bank

Qatar

A+

A2

A-

15

24,826

12/31/16

39

Bank of Communications

China

A

A2

A-

14

1,209,123

12/31/16

40

Woori Bank

South Korea

A-

A2

A

14

257,081

12/31/16

41

Emirates NBD

UAE

A+

A3

N/R

14

121,989

12/31/16

42

Česká Spořitelna

Czech Republic

A-

A2

A

14

41,598

12/31/16

43

Komerční banka

Czech Republic

A-

A2

A

14

35,990

12/31/16

44

Commercial Bank of Qatar

Qatar

A+

A2

BBB+

14

35,819

12/31/16

45

Suhyup Bank

South Korea

N/A

A2

A

14

23,950

6/30/16

46

Gulf Bank

Kuwait

A+

A3

A-

14

17,861

12/31/16

47

Al Khalij Commercial Bank (al khaliji)

Qatar

A+

A3

N/R

14

16,648

12/31/16

48

Commercial Bank of Kuwait

Kuwait

A+

A3

N/R

14

13,477

12/31/16

49

Boubyan Bank

Kuwait

A+

A3

N/R

14

11,375

12/31/16

50

National Commercial Bank

Saudi Arabia

A-

A1

BBB+

13

117,731

12/31/16

Note: Ratings valid on July 31, 2017