Two Indian banks, HDFC Bank and State Bank of India (SBI), now figure in a list of the top 50 global banks in terms of market capitalisation. HDFC Bank, India’s second-largest private lender in terms of asset size, ranks 45th, with a market capitalisation of $39 billion, Bloomberg data show. With a market capitalisation of $38 billion, SBI is ranked 46th.
ICICI Bank, ranked 53rd, is the only other Indian entity to figure in the list of the 100 most valued global banks.
The market capitalisation, or value, of an entity is calculated by multiplying the total number of its shares outstanding by its stock price.
The huge leap in the rankings of Indian lenders is due to a sharp rally in their stocks in the past year. During this period, shares of HDFC Bank gained 50 per cent, while those of SBI nearly doubled. ICICI Bank added about 70 per cent.
A year ago, no Indian bank featured among the 60 most valued global banks. At 65, HDFC Bank had the best ranking among Indian lenders.
The BSE Bankex, a barometer of the performance of banking stocks, has been one of the best-performing sectoral indices in the past year. It gained 75 per cent, against a 33 per cent rise in the benchmark Sensex. The rise in bank stocks was in anticipation of a revival in domestic economic growth, led by a reform push by the new government.
“Expectation that the domestic economy will revive has contributed to gains in the Indian stock market. Monetary policy action and hopes of government reforms have led to an improvement in investor sentiment,” said Vaibhav Agrawal, vice-president (research), Angel Broking.
ICICI Bank, ranked 53rd, is the only other Indian entity to figure in the list of the 100 most valued global banks.
The market capitalisation, or value, of an entity is calculated by multiplying the total number of its shares outstanding by its stock price.
The huge leap in the rankings of Indian lenders is due to a sharp rally in their stocks in the past year. During this period, shares of HDFC Bank gained 50 per cent, while those of SBI nearly doubled. ICICI Bank added about 70 per cent.
A year ago, no Indian bank featured among the 60 most valued global banks. At 65, HDFC Bank had the best ranking among Indian lenders.
The BSE Bankex, a barometer of the performance of banking stocks, has been one of the best-performing sectoral indices in the past year. It gained 75 per cent, against a 33 per cent rise in the benchmark Sensex. The rise in bank stocks was in anticipation of a revival in domestic economic growth, led by a reform push by the new government.
“Expectation that the domestic economy will revive has contributed to gains in the Indian stock market. Monetary policy action and hopes of government reforms have led to an improvement in investor sentiment,” said Vaibhav Agrawal, vice-president (research), Angel Broking.
Industrial and Commercial Bank of China (ICBC) tops the list of global banks, with a market capitalisation of $285 billion, over seven times that of HDFC Bank. Chinese banks dominate the list of the top 10 global banks, with Bank of China ($212 billion), China Construction Bank ($208.1 billion) and Agricultural Bank of China ($202 billion) also figuring in the list.
Wells Fargo ($263 billion) and JP Morgan Chase ($205 billion) are other major global banks, ranked second and fifth, respectively.
Experts say no Indian bank figures in the top 10 list because the country’s banking sector is quite fragmented, with a large number of players. “Compared to India, many Asian economies have fewer banks. China, for instance, has only four major banks. This gives an opportunity to these banks to grow in size. Also, the size of the economy is a factor. The economies of China or the US are much bigger in size than India’s,” said Ashvin Parekh, managing partner at Ashvin Parekh Advisory Services.
While the gross domestic product (GDP) of the US, the world’s largest economy, is about $17 trillion and China’s $9.2 trillion, India’s is $1.9 trillion. Analysts say typically, bank assets grow at about two times the economic growth rate.
In terms of asset size, Indian banks have a lot of catching up to do. HDFC Bank, for instance, has assets of $84 billion, only a fraction of ICBC’s $3 trillion. At $400 billion, SBI has the highest assets among Indian lenders, though it is still a far cry from $2.4 trillion, the average asset size of the top five global banks.
Wells Fargo ($263 billion) and JP Morgan Chase ($205 billion) are other major global banks, ranked second and fifth, respectively.
Experts say no Indian bank figures in the top 10 list because the country’s banking sector is quite fragmented, with a large number of players. “Compared to India, many Asian economies have fewer banks. China, for instance, has only four major banks. This gives an opportunity to these banks to grow in size. Also, the size of the economy is a factor. The economies of China or the US are much bigger in size than India’s,” said Ashvin Parekh, managing partner at Ashvin Parekh Advisory Services.
While the gross domestic product (GDP) of the US, the world’s largest economy, is about $17 trillion and China’s $9.2 trillion, India’s is $1.9 trillion. Analysts say typically, bank assets grow at about two times the economic growth rate.
In terms of asset size, Indian banks have a lot of catching up to do. HDFC Bank, for instance, has assets of $84 billion, only a fraction of ICBC’s $3 trillion. At $400 billion, SBI has the highest assets among Indian lenders, though it is still a far cry from $2.4 trillion, the average asset size of the top five global banks.
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