Pakistani banks dominated a ranking of Asia-Pacific lenders with the best-performing stocks in 2024, as several banks based in the region's developing economies performed better on the metric of total returns than those in traditional powerhouse nations.
Four Pakistan-based lenders, led by United Bank Ltd., made the top 10, according to S&P Global Market Intelligence data. United Bank, which has a market capitalization of $1.68 billion, recorded a total stock return of 159.7% to place second in a ranking of the region's best-performing bank stocks. It trailed behind Indonesia's PT Bank Artha Graha Internasional Tbk, which has a market cap of $270 million and made total returns of 193.2% in the year, the data shows.
Japan was the only country with multiple lenders in the top 10 best performers, while the remaining spots were taken by one bank each from Indonesia, Vietnam, Bangladesh and the Philippines.
The ranking looked at Asia-Pacific lenders with market caps of more than $100 million as of Dec. 31. Small cap banks dominated the list, according to the data, with only six of the 15 best-performing lenders exceeding a market cap of $1 billion.
Many Pakistani banks recovered from an earlier share price slump that came amid the nation's weakening economy and surging inflation, among other factors. Pakistan's economy recovered in the second half of 2024, helped by a funding program by the International Monetary Fund.
The government's adoption of tight fiscal and monetary policies under the umbrella of the IMF, alongside timely external payments amid a smooth transition of government, led to a rebound in the local stock market, Awais Ashraf, director of research at AKD Securities Ltd., previously told Market Intelligence.
Nonetheless, reform implementation remains critical for continued economic recovery and poverty reduction, the World Bank said Oct. 10, 2024.
Japan's SBI Sumishin Net Bank Ltd. ranked third among banks in the region with the highest total returns, while Rakuten Bank Ltd. was seventh, the Market Intelligence data shows. Japanese companies, including banks, have benefited from monetary policy normalization after the nation's central bank's experiment with negative interest rates ended in March 2024.
Meanwhile, relatively slow economic growth in China and India weighed on the share prices of banks in Asia-Pacific's two major growth engines. No lenders in mainland China or India made the top 15 best-performers list.
Mainland China's Jilin Jiutai Rural Commercial Bank Corp. Ltd. had the worst performance by total returns in 2024, dropping 52.9%, according to Market Intelligence data. Following it on the worst-performers list were Indonesia's PT Bank Neo Commerce Tbk, which had a 50% fall, and PT Allo Bank Indonesia Tbk, with a 45.7% decline.
India's RBL Bank Ltd., IndusInd Bank Ltd., Ujjivan Small Finance Bank Ltd., Equitas Small Finance Bank Ltd. and ESAF Small Finance Bank were among the 10 biggest losers, with total returns down between 43.1% and 38.0%, data show.
Indian banks are expected to face continued earnings pressure amid headwinds such as subdued credit growth and the country's economic slowdown. The Reserve Bank of India projects its GDP growth rate at 6.6% for the fiscal year 2024–25, compared to 8.2% in the prior fiscal year.