Banks from mainland China dominated S&P Global Market Intelligence's ranking of the top 50 lenders by assets in the Asia-Pacific region in 2023.

While the number of mainland China-headquartered lenders in the ranking fell to 22 from 23 in the past year, their aggregate assets rose 7.4% to $38.228 trillion in 2023, Market Intelligence data shows.

The lenders occupied the top four spots on the list, and six of the top 10 — with this dominance coming despite challenges in the property sector in Asia's biggest economy, where real estate accounts for nearly a quarter of gross domestic product.

Industrial and Commercial Bank of China Ltd. remained the biggest bank in the region and in the world at the end of 2023, with Agricultural Bank of China Ltd. moving ahead of China Construction Bank Corp. into second spot on the regional list. Bank of China Ltd. rounded out the top four. The so-called big four Chinese banks expanded their assets 10.2% to $21.905 trillion in 2023, with Agricultural Bank showing the biggest growth at 14.3%.

China Bohai Bank Co. Ltd., which took the 49th spot in the ranking in 2022, dropped out of the list in 2023. It was replaced by 48th-placed ICICI Bank Ltd., with the India-based bank the only lender in the 2023 list not to appear the year before, the data shows.

"Considering 60% of [mainland China] banking sector assets are based in lending, the fast credit growth has helped propel the expansion in assets," said Angus Lam, senior economist for global intelligence and analytics at Market Intelligence. The largest banks in mainland China typically had strong asset quality, loose liquidity positions and high capital buffers, which improved their ability to lend, Lam said.

For the latest ranking, company assets were adjusted on a best-efforts basis for pending mergers, acquisitions and divestitures, as well as M&A deals that closed after the end of the period. To be eligible for inclusion in pro forma adjustments, the amount of assets being transferred had to be at least $1 billion, unless otherwise noted. Assets reported by non-US-dollar filers were converted to dollars using period-end exchange rates. Total assets were taken on an "as-reported" basis, and no adjustments were made to account for differing accounting standards. The majority of banks were ranked by total assets as of Dec. 31, 2023. In the previous ranking, published April 20, 2023, most company assets were as of Dec. 31, 2022, and were adjusted for pending and completed M&A as of March 31, 2023.

New bank lending in mainland China rose 6.1% in 2023 to hit a record 22.75 trillion yuan, according to central bank data.

Still, some pockets of mainland China's economy are yet to recover fully from the COVID-19 pandemic. The government set a target of about 5% growth in GDP in 2024, after it slightly exceeded a similar goal for 2023, when the world's second-biggest economy expanded 5.2%. The International Monetary Fund expects mainland China's economy to grow at 4.6% in 2024.

The People's Bank of China cut its five-year loan prime rate, the benchmark for mortgage rates, in February to an all-time low of 3.95% to spur demand in the real estate sector. The nation's real estate climate index, which measures the health of the sector, also fell to an all-time low of 92.13 in February, versus 93.34 in December 2023, according to the National Bureau of Statistics.

Biggest declines

Lenders based in Japan and South Korea suffered the biggest declines in the annual ranking. Three of the eight Japanese banks in the list fell down the list, with just one registering an increase. Similarly, five of the six South Korean lenders in the ranking suffered a decline, with just one moving up.

The combined assets of Japanese lenders fell 2.5% in 2023 to $10.532 trillion, and South Korean banks had a 0.9% decline to $2.666 trillion.

The IMF expects growth in the Japanese economy to slow to 0.9% in 2024 from 1.9% last year.

"The Bank of Japan's end to its negative rate policy in March could dent the economy, drawing down loan demand, although the policy shift would improve a lending margin for Japanese banks," said Takahide Kiuchi, executive economist at Nomura Research Institute.

The central bank said March 19 that it will guide its short-term policy rate in a range of 0% to 0.1%, from the prior negative 0.1% introduced in 2016. Along with the first rate hike since 2007, the BOJ also scrapped its yield curve control policy of guiding yields on benchmark 10-year government bonds in a range of up to 1.0%.

India rising

Indian banks have been among the best-performing lenders among peers in Asia. Improvement in financial metrics, coupled with high credit growth in a robust economic environment, has boosted banks' assets in recent years. Three Indian lenders made it to the list of top 50 banks by assets in the Asia-Pacific region in 2023, up from two in 2022.

The aggregate assets of the lenders rose sharply by 50.5% to $1.510 trillion in 2023. A large part of the increase was due to the merger of HDFC Bank Ltd. with its parent Housing Development Finance Corp. Ltd. in July 2022. HDFC Bank's assets jumped 51.3% to $466.35 billion after the merger, propelling the bank up 13 places to 33 in the top 50 ranking.

Credit growth in India, currently the world's fastest-growing major economy, stood at 15.6% as of Dec. 29, 2023, versus 14.9% a year ago, according to Reserve Bank of India data. The Indian government expected the economy to grow at 7.6% in the financial year that ended March 2024, following an 8.4% GDP growth in the October-to-December quarter.

Five Australian banks appeared on the list, with combined assets rising 2.8% to $3.241 trillion. The ranking of two lenders fell, while one registered an increase. Macquarie Group Ltd. dropped five spots to 50th in the list, with assets falling 18.8% to $254.63 billion in 2023.

The aggregate assets of three Singaporean banks rose 3.7% to $1.40 trillion. In terms of ranking, DBS Group Holdings Ltd. and United Overseas Bank Ltd. moved up in the list, while Oversea-Chinese Banking Corp. Ltd. fell three places to 37.

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