The Banker Magazine yesterday released its top 500 global banking brands for 2014 with Nigeria banks ranking very low despite rising profits and assets. The report said that Nigeria banks still have a long way to go to build their brands
According to the report “African banks made little headway. South Africa’s saw their total brand valuation dip by 4 per cent to $5.7billion, while Nigeria’s, despite experiencing a big rise in profits and assets in the past few years, only managed to increase their brand values by 3 per cent to $593million, suggesting they still have a long way to go in terms of building their brands.
. The brands which ranked banks according to how they mange to enhance shareholders value ranked United States and European banks high for appreciating in shareholders value.
According to the Banker “Brand valuations for US and European banks once again rose sharply. For emerging market lenders, the ranking looks less encouraging. Brand values in this year’s Top 500 Banking Brands ranking have increased 14 per cent from 2013, reflecting the continuing recovery of global banks from the financial crisis. Among the top 10 banks, eight saw their brand values rise by 9 per cent or more.
“Wells Fargo had another strong showing, topping the ranking for the second year in succession. Its brand value went from $26bn in 2013 to $30bn in 2014. HSBC moved up from third to second. Bank of America and Citi also jumped one place from last year to third and fourth, respectively. The bank brand to lose out to HSBC, Bank of America and Citi was Chase, which slipped from second to fifth spot, a result of its brand value declining 1 per cent to $23.2bn.
“Overall, developed world lenders had a good year. European institutions fared particularly well, reflecting the fact that their earnings projections and the perception of their riskiness – both important elements of their brand valuation – have improved as the eurozone crisis has abated and with many of them having increased their capital levels and cleansed their balance sheets of bad assets.
“The brand values very much mirror banks’ share prices and market capitalisations,” says Bryn Anderson, chief operating officer of Brand Finance, the consultancy that did the research for the ranking. Peripheral eurozone countries such as Ireland, Portugal and Greece stood out for positive reasons. The aggregate brand valuation of Greek banks rose a huge 101% between 2013 and 2014 to $2.1bn. Irish and Portuguese lenders increased by 68 per cent and 42 per cent, respectively. Cyprus, however, is yet to put its financial problems behind it. Its banks saw their collective valuation fall 3 per cent to $231m.
US banks managed to increase their valuations from $174bn to $194bn, ensuring that once again the country remained way ahead of any other in the ranking China, in second place, has a total brand value of $113billion. UK banks saw their valuations increase 18 per cent to $76billion, while German lenders enjoyed a 14 per cent rise to $32bn”.
Emerging market woes
The Banker’s report said “Emerging markets suffered badly in this year’s ranking, underscoring the deepening concerns about the outlook for their economies. Russia’s Sberbank, which has the highest brand valuation of any non-Chinese emerging market lender, saw its valuation fall 23 per cent to $11billion. Brazil’s Bradesco and Itaú saw their valuations decline by 22 per cent and 20 per cent, respectively. Indian firms also had a glum year. The valuation of State Bank of India, the country’s biggest lender by assets and Tier 1 capital, slumped 32 per cent from $6bn to $4bn.
“One developing country that bucked the worsening trend was China. Of the BRICS – Brazil, Russia, India, China and South Africa – it was the only one to see the brand value of its banks climb. Moreover, the aggregate value of its lenders went up by a substantial amount, from $94bn to $113bn, an increase of 20%. This is likely a result of China’s economy still growing rapidly. “China seems to go from strength to strength,” says Mr Anderson.
China did not outpace every other country. One that performed even more strongly was Japan, which saw its banks’ valuation rise 60% to $59bn. This was in part due to the fact that their valuations went down heavily in the 2013 ranking amid the economic problems caused by the Fukushima nuclear accident. Bank of Tokyo-Mitsubishi UFJ’s valuation increased 51% to $17.6bn this year, while Sumitomo Mitsui Financial Group’s rose 43% to $7.8bn.
Competition heats up
“The figures from the ranking show that smaller banks are making faster progress than their larger counterparts. In 2014, the top 100 banks accounted for 78 per cent of the brand valuation of the top 500. That figure fell from 81% last year. Similarly, the top 50 banks make up 63 per cent of this year’s top 500 valuation, down from 65 per cent in 2013.
“What can be expected to happen over the next year? Mr Anderson believes that banks increasingly recognise the need to enhance the value of their brands. “Over the past year, banks have really been focusing on the customer,” he says. “They are beginning to understand that their brand is a valuable asset that needs to be managed. With the focus on customer satisfaction and competitiveness of the products they are offering, I think we will see brand strengths grow.”
