• Led by ICBC as the world’s most valuable banking brand (US$79.8 billion), China’s banks dominate top four spots of the ranking
• Chinese banks grow 28%, achieving US$407 billion in total brand value, over US$100 billion more than US banks
• All US banks, with the exception of Wells Fargo (-9%), Chase (-7%), and BankUnited (-6%), improve their brand value
• Growth of European banks is pedestrian, with German banks losing 24% of value
• Islamic banking sees 20% boost, led by Middles Eastern banks, with QNB the most valuable brand in the region
• Sberbank of Russia claims the title of the world’s strongest banking brand, with a score of 93.1 out of 100 and an AAA+ rating

China’s major banks dominate the top spots in the Brand Finance Banking 500 2019 ranking, published by The Banker magazine today. The Industrial and Commercial Bank of China (ICBC) leads as the world’s most valuable banking brand, growing 35% to US$79.8 billion. It also fared well in brand strength as one of only three banks this year with an elite AAA+ rating. China Construction Banking comes in 2^ndplace (US$69.7 billion) with Agricultural Bank of China (US$55.0 billion), and Bank of China (US$51.0 billion) in 3^rd and 4^th respectively.

ICBC continued to expand beyond China with growth initiatives across Asia and entered into a joint venture with Standard Chartered around sustainable banking. With increased competition from financial technology firms, ICBC responded by establishing innovation labs and strengthening its “Smart Bank”, focusing on operations, IT management and technology research.

Brian Caplen, editor of The Banker, said:

"Banks defied the general economic gloom to grow their total brand value by 15% to US$1357 billion, overtaking last year's 10% increase. Chinese banks led the way and now hold four of the top five positions in the ranking. By contrast European banks fared less well and Germany saw a 24% drop in brand value." 

The growth trajectory of China’s banks, against a backdrop of trade friction and currency concerns, remains strong, thanks to a growing middle class and government support. China’s overall brand value growth was 28%, double the United States’ total growth. Furthermore, China’s presence and growth rate is underlined by the country’s total brand value of US$406.9 billion, more than US$100 billion higher than the United States’ total brand value (US$297.0 billion).

China drove Asia’s growth rate of 26%. The other regions trail Asia, with North America growing by 15% and Europe rising by just 4%. The United States, benefitting from strong fundamentals, has 81 brands in the Brand Finance Banking 500 versus China’s 48, and continued to grow, albeit less vigorously. All but three US banks saw their brand value rise, but two of those three are among the country’s largest brands.

US Banks Perception Woes

Wells Fargo, which experienced a number of challenges around reputation, is the highest-placed US bank in 5^th place, although brand value declined 9% to US$39.9 billion. Wells Fargo leads a cluster of US banks in the top 10, including Chase, the only other large US bank to decline (down 7% to US$36.3 billion).

Despite being in a healthier state due to early regulatory intervention in the global financial crisis, many US banks are hampered by perception issues. Proprietary consumer research conducted by Brand Finance revealed US banks fare badly in terms of reputation and providing value for money.

European Banks Struggle to Grow

While US banks have recovered, the European banking system is now experiencing significant hurdles due to a less active approach to the financial crisis. As a result, brand values have fallen and customer satisfaction is at an all-time low.

Germany, for example, has seen its banks lose 24% of overall brand value, with Deutsche Bank being the only German brand to make the top 100. The bank dropped from 47^th to 70^th and lost 30% of brand value to US$4.3 billion, due to sustained losses and management volatility. The plight of Germany’s banks is underlined by three of the country’s leading financial institutions languishing among the fastest declining brands by strength – Nord LB (-23%), Bayerische Landesbank (-19%) and Deutsche Bank (-13%). All three banks scored lowly for innovation, quality, value for money and reputation, although in the area of customer loyalty, Deutsche Bank and Nord LB retain relatively high scores of 58.13% and 55.79%, respectively. All three banks also dropped significantly in brand value.

Alex Haigh, Director of Brand Finance, commented:

“While the US has seen the benefit of a robust regulatory response to the financial crisis, in Europe we are now only seeing the full implications of a less proactive reaction by governing bodies. As a result, Europe’s leading banks are losing ground and brand value, notably in Germany, where Deutsche Bank has declined by 30% and fallen down the rankings.”

The UK banking landscape, with the added complication and long-term uncertainty around the country’s forthcoming departure from the European Union, is stagnant. A decade after the bail-out of the UK banking system, RBS lost 32% of its brand value dropping 52 spots to 234^th. Among the larger banks, the RBS subsidiary, NatWest, provides grounds for optimism, with brand value rising 19% to US$7.7 billion.

Islamic Banking Experiences Boost

In the Middle East, Qatar’s QNB is the leading bank by brand value, rising 19% to US$5.0 billion, while Emirates NBD is up 14% to US$4.0 billion and First Abu Dhabi, the fastest-growing among Middle Eastern banks, rose 25% to US$3.9 billion. The Middle East has played a pivotal role in Islamic banking, as the segment enjoyed a 20% growth in brand value this year. According to consumer research conducted by Brand Finance, the region is also the best-performing for banking services in terms of reputation and quality.

Russia’s Sberbank becomes banking industry’s strongest brand

Apart from calculating brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. According to these criteria, Moscow-headquartered Sberbank has claimed the title of the world’s strongest banking brand for the first time this year, with a score of 93.1 and the elite AAA+ rating. With over 14,000 branches, assets of US$446 billion and 45% of all deposits in Russia, Sberbank’s brand enjoys phenomenal success in the country. The bank boasts high scores across familiarity (92.9%), loyalty (94.6%) and consideration (92.7%). Importantly, in an age when many banks fare poorly in reputation rankings, Sberbank achieves a remarkable 7.99 (out of 10) score and also a relatively high score (3.93 out of 5) for quality.

Majority-owned by the Russian Central Bank, Sberbank’s position in the Russian financial system is unrivalled. The bank has around 2.5 million corporate customers and is building an ecosystem through which its customers are able to access e-commerce, e-government, e-trade, and other professional, mass digital, and offline services.

David Haigh, CEO of Brand Finance, commented:

“Sberbank’s high-quality services and products create the kind of loyalty that results in long-term customer relationships. Unparalleled within Russia, the bank can deepen its relationship with customers and extend into new products, services and even industries.”