To earn a safest bank distinction in Global Finance’s 2023 Country Winners awards, an institution must differentiate itself from its in-country peers by prudently managing its franchises amid a volatile post-pandemic global economy. In addition to helping clients weather global inflationary pressures and sometimes aggressive central bank policy responses, trade and supply chain constraints, and the outlook for declining GDP growth in many parts of the world, these banks face unique challenges in their respective countries and markets.

This year, we recognize 17 new winners across the 110 countries represented in the Safest Country Winners category. While some of these changes show up for developed countries, many are from the emerging and frontier markets segments. Latin America posted five of the new winners.

Multiple factors contribute to these shifts, of which changes in ratings are the most prominent at both the bank and the sovereign level. S&P lowered Argentina’s sovereign debt rating, and subsequently the ratings of the nation’s banks, citing risks related to “pronounced economic imbalances and policy uncertainties.” Banco de Galicia y Buenos Aires emerges as the new winner, unseating Banco Patagonia. While both entities were downgraded, Banco de Galicia benefits from a Moody’s rating that boosts its score.

A Moody’s downgrade of incumbent Banco del Estado de Chile allows Scotiabank Chile, with its comparatively stable ratings profile, to emerge as the winner in Chile. In El Salvador, Banco Davivienda Salvadoreno benefits from a Fitch upgrade to outscore the previous winner, Banco Agricola. Equity Banque Commerciale du Congo notched an upgrade from Moody’s and now outscores last year’s winner, Rawbank.

In some cases, changes in ratings coverage were the key to winning. Iceland’s Arion Bank benefits from Moody’s initiating coverage last year, which raises the bank’s score enough to unseat Landsbankinn for the Safest Bank title. Meanwhile, Bolivia’s Banco Union is no longer a rated entity, allowing Banco Mercantil Santa Cruz to take the top spot in that Latin American country.

Our methodology dictates that banks wholly owned by a parent company are ineligible for consideration. In Costa Rica this year, Banco Davivienda replaces BAC Credomatic, which is now a wholly owned subsidiary. Banco Davivienda’s score also benefits from a Fitch upgrade. In Hungary, MFB Hungarian Development Bank takes the top spot, the previous winner, Erste Bank Hungary, being now 100% owned by parent Erste Group Bank. And in Italy, Intesa Sanpaolo replaces FCA Bank, which is now a wholly owned subsidiary of Credit Agricole.

Year-over-year changes in rank attributable to this important ownership feature frequently result from acquisitions and corporate restructurings. In Oman, incumbent HSBC Bank Oman was acquired by Sohar International and its ratings were withdrawn and the bank was dissolved, paving the way for Bank Muscat to take the Safest Bank title there.

The size of a bank’s balance sheet is another key methodological element, serving as a tiebreaker in cases where banks compile equal scores. This enables Advanced Bank of Asia to edge out previous winner ACLEDA Bank in Cambodia and Bank of Georgia to beat TBC Bank, last year’s winner in the Caucasian republic. Meanwhile in Ghana, Guaranty Trust Bank wins over former title holder United Bank for Africa. Eurobank replaces National Bank of Greece, and National Bank of Pakistan unseats Habib Bank.    

To be eligible for Global Finance’s Safest Banks By Country awards, institutions must rank among the world’s largest 1,000 banks by assets and carry at least one long-term foreign currency deposit or debt rating from one of the three major rating agencies. Wholly owned subsidiaries are ineligible. To identify the safest bank in each country, we have adopted broader criteria than for our global rankings, which require a position among the largest 500 banks and a rating by at least two agencies.

Overall performance of eurozone banks has been solid this year as generally well-capitalized institutions have reported sustained profitability. With the IMF forecasting GDP growth of only 0.9% for 2023 and 1.5% next year for the region, many institutions are aggressively boosting loan-loss reserves. Western Europe’s strength is reflected in our global rankings, the region claiming nine of the top 10 spots and 42 entries in the top 100 overall. France leads the region with nine.  

Notable shifts include UBS falling 11 places to No. 48 following its takeover of Credit Suisse. Caisse des Depots et Consignations fell one place thanks to a Fitch downgrade while Deutsche Apotheker- und Aerztebank fell 17 spots to No. 52 thanks to Moody withdrawing its ratings. Others enjoyed happier ratings results. SFIL benefitted from a Moody’s upgrade, raising it six places from its rank last year.  

The Asia-Pacific region is well-represented with 26 names among the World’s 100 Safest Banks. Singapore leads with three big banks—DBS, Oversea-Chinese Banking Corp. and United Overseas Bank. Australasia placed six with Kiwibank benefitting from a Fitch upgrade rising to No. 44.  

In North America, Canada tops the region with RBC at No. 10, and a total of seven banks among the 100 safest. In the United States, the Federal Farm Credit banks fell up to eight places each following Fitch’s August downgrade of the US sovereign rating. Still, they remain the highest-ranking institutions in the US, which has 10 banks on the list, the most of any one country.  

Institutions in the bottom half of the top 100 show increased regional representation.  These banks upped the tally for the Asia-Pacific region adding 18 banks, largely from China and South Korea, for an overall total of 26 institutions in the top 100, and reflects four additional UAE domiciled banks for a total of five overall.

It also includes banks in new regions notably in Central and Eastern Europe with Komercni Banka of the Czech Republic and ING Bank Slaski in Poland, and in Latin America with Scotiabank Chile.

Global Finance ranks the world’s largest 500 banks by asset size, calculated based on long-term foreign currency ratings issued by Fitch Ratings, Standard & Poor’s and Moody’s Investors Service. Where possible, ratings on holding companies rather than operating companies are used, and banks that are wholly owned by other banks are omitted. Within each rank set, banks are organized according to asset size based on data for the most recent annual reporting period provided by Fitch Solutions and Moody’s.

Ratings are reproduced with permission from the three rating agencies, with all rights reserved. A ranking is not a recommendation to purchase, sell or hold a security, and it does not comment on market price or suitability for a particular investor. All ratings in the tables were valid as of August 18, 2023.

With higher rates came benefits to the traditional banking model in the form of expanded net interest margins, and banks with asset-sensitive balance sheets fared even better as the interest rate on loans repriced faster than rates on the banks’ deposit base. However, higher rates will pressure loan growth going forward as demand for credit wanes, and overall loan portfolio asset quality remains a concern as the impacts of inflation and sustained higher interest rates weaken the repayment ability of customers. Currently, most central banks appear to be nearing the end of restrictive monetary policy and must now carefully evaluate the degree to which additional rate hikes may risk economic recession in their respective regions and jurisdictions.

The rapid and successive rate increases exposed significant asset-liability management issues at some banks in the form of growing valuation losses in the sector’s portfolio of loans and fixed income securities. The risk of these unrealized losses for some institutions contributed to fears of a looming banking crisis during the first half of 2023 and coincided with the failure of three prominent US regional banks: Silicon Valley Bank, First Republic and Signature Bank.

In Europe, meanwhile, ongoing mismanagement and financial deterioration at Credit Suisse quickly eroded depositor and investor confidence, prompting Swiss regulators to swiftly arrange a rescue plan, with UBS acquiring the bank in the largest merger since the global financial crisis. Citing execution risk from this combination, Fitch downgraded UBS in June resulting in UBS falling 10 spots in our ranking to No. 29. Additional names slipped with the August downgrade by Fitch of the United States sovereign rating, which prompted the agency to cut the ratings of the US Farm Credit banks in our rankings: each falling at least five spots. Deutsche Apotheker- und Aerztebank fell 15 places to No. 33, its score having suffered as a result of Moody’s withdrawing its ratings for the bank.

On a positive note, the rating agencies recognized the improving credit profile of a number of banks, with upgrades that boosted their positions in our rankings. This includes Kiwibank, which rose 10 spots to No. 26 following a Fitch upgrade. Citing improvements in asset quality, funding profile and capitalization, Moody’s upgraded Hana Bank in August leading to a rise in its position to 41 from 47 in our ranking. Two entities were upgraded based on improved sovereign support assumptions, a critical component in bank rating methodologies. Jumping to the No. 42 spot from No. 50 last year, Qatar National Bank benefited from an S&P upgrade of the sovereign rating of Qatar. The agency attributed the move to improvements in the government’s fiscal position and subsequently lifted the bank’s ratings based on a “high likelihood of receiving government support if needed.”

Moody’s cited the increased probability of Austrian government support for the banking sector, raising Erste Group Bank’s ratings and thereby boosting its score enough for it to become a new entrant this year at No. 50. Bank of America is another new entrant this year at No. 46, as the bank benefited from a Moody’s upgrade in May based on its improved earnings profile, strengthened capital position and restrained risk appetite.

Under the methodology for the World’s Safest Banks rankings, commercial banks that are majority state-owned or receive sponsorship by their governments or regional bodies are excluded. Institutions here may operate in the same markets as state-sponsored competitors but don’t benefit from government backing. Additionally, institutions which are wholly owned by their parent company are ineligible under our criteria.  

China again dominates Global Finance’s ranking of the Biggest Emerging Markets Banks, the Chinese institutions having benefited from decades of strong growth of the nation’s sprawling economy. Chinese banks make up the top 15 institutions in our ranking and hold half the top 50 positions.

Continuing expansion has been a challenge recently however, as Chinese economic growth slowed to 3% in 2022, and forecasts of just over 5% in 2023 are likely to be revised downward. Of those 25 banks, only 11 experienced year-over-year (YoY) growth in their balance sheets.

Middle Eastern banks, bolstered by strength in energy prices, offer a sharp contrast. Al Rajhi Bank, a new entrant at No. 43, is rapidly expanding its franchise as the No. 2 bank in Saudi Arabia, boasting 21% of system assets and average annual balance-sheet growth of 26% over the past three years. Al Rajhi is the kingdom’s leading retail bank, with a 43% share of the domestic retail market in mortgage lending, according to Fitch. In the United Arab Emirates, First Abu Dhabi Bank and Emirates NBD rose two spots to No. 35 and No. 44, respectively. The former saw its balance sheet grow by 11% and the latter by 7.9%.

South Africa’s Standard Bank dropped out of our 2023 ranking as its asset base fell 6% YoY, pushing it below the $177 billion threshold for inclusion. Other notable shifts centered in Brazil, where Itaú Unibanco, Banco do Brasil, Banco Bradesco and Caixa Economica Federal averaged just over 20% YoY balance-sheet growth, boosting each bank’s ranking at least four spots.

As China commands the emerging market roster, our 2023 report also includes a separate ranking of the biggest emerging markets banks ex-China. Taiwan stands out with nine banks in that grouping, starting with CTBC at No. 17. State Bank of India tops the list, and India places eight institutions overall; while South Korea places seven banks and Brazil six. The threshold for inclusion in the ex-China ranking was $104 billion.

50 Biggest Emerging markets Banks 2023

Global Finance’s World’s Safest Banks 2023 ranking offers a revealing snapshot of a watershed period in global banking. After years of expansion, aggregate assets of the 50 largest banks contracted 2% to $89 trillion (in most cases, our data captures year-end asset figures as of December 2022).

As many countries struggle to boost their sluggish economies, balance-sheet growth remains a challenge for their banking systems, given declining business volumes and lower demand for credit from retail and corporate clients in some jurisdictions. Underscoring the decline, the threshold for inclusion in this year’s ranking fell 3.7% to $736.5 billion, while 37 banks exceeded $1 trillion in assets, down from 40 last year.

Once again, Chinese banks take the top four spots, placing a total of 15 institutions in our ranking. The top four are all state-owned banks that facilitate Beijing’s economic policy through massive infrastructure projects and other initiatives; their balance sheets grew approximately 3% on average in 2022. The remaining 11 Chinese banks posted negative growth in aggregate, possibly reflecting China’s slowing growth rate: GDP expanded only 3% last year, well below its 5.5% stated target for 2022.

The banking sector in other countries that recorded less than 3% GDP growth, including the US, Japan, Germany and France—also felt the effects. Other banks suffering notable shifts in this year’s rankings include Italy’s Intesa Sanpaolo, which fell four places as its balance sheet contracted by 13.9% year-over-year; and the UK’s NatWest Group, which fell three spots, reflecting a 17.3% asset-base decline. BBVA is a new entrant; and Credit Suisse disappears from our ranking, reflecting its March takeover by UBS.

A robust outlook for Islamic finance, combined with strong economic growth in Gulf Cooperation Council (GCC) countries thanks to buoyant oil revenue, places the GCC’s Islamic banks on stable ground. Growth estimates for Islamic banking are greater than 10%, and demand for Shariah-compliant offerings is outpacing that for conventional products. These trends are bolstered by economic diversification initiatives and programs including Saudi Arabia’s Vision 2030. According to Moody’s Investors Service, “As of March 2023, the market penetration of Islamic banks in Saudi Arabia, which is 83%, and Bahrain, 69%, were the highest in the region; while room for growth is more significant in the UAE, with a penetration rate of 28%, Qatar, 31%, and Oman, 19%.”

Global Finance’s rankings of the safest Islamic banks in the region identify institutions that continue to develop and refine the best Shariah-compliant banking franchises. Rating agency actions reflect these trends and are the catalyst for shifts in our 2023 rankings.

Kuwait’s Boubyan Bank was upgraded by S&P, citing stronger capitalization through a “combination of balanced growth, decent earnings, and a manageable dividend payout ratio.” Asset quality is expected to remain stable, aided by the bank’s focus on providing Shariah-compliant products to affluent customers. With this upgrade, Boubyan moved up two places to No. 2 in our rankings.

S&P upgraded Saudi Arabia’s sovereign debt, reflecting the kingdom’s strengthened capacity to support its systemic banks on the back of elevated oil prices and policy choices that have improved prospects for sustained economic growth. This helped produce an upgrade for Al Rajhi Bank, which moved up three places to No. 3. Fitch, too, recognized Riyadh’s stronger fiscal balance sheet and gradual progress with economic and governance reforms. This benefited Bank AlJazira, which enters our rankings for the first time at No. 10.

Not every bank benefited from the stronger Gulf economy and the popularity of Shariah compliance. Weakening credit fundamentals at UAE-based Sharjah Islamic Bank resulted in a Moody’s downgrade as the agency noted a deterioration in asset quality coupled with modest profitability and capitalization. As a result, Sharjah Islamic Bank fell out of this year’s rankings.

No two emerging markets are ever alike—therefore, the institutions making up Global Finance’s rankings of the Safest Emerging Markets Banks face unique dynamics in each respective region. With the outlook for global growth subdued, many banks face downside risk from post-pandemic inflation, slowing business volumes, asset-quality deterioration and pressure on profitability. The impact of these challenges and of central banks’ policy responses is playing out in various ways across the globe.

While many central banks are aggressively raising interest rates to combat inflation, in the Asia-Pacific region, the People’s Bank of China is cutting rates to reverse the country’s economic deterioration. Beijing also faces significant risks from a burgeoning real estate crisis and ongoing trade tension with the US.

A significant contributor to persistent inflationary pressure globally is the energy sector, which saw OPEC+ members—specifically, Saudi Arabia and Russia—cut oil production earlier this year to boost prices. Saudi Arabia recently extended its one million-barrel-per-day output cuts to the end of the year. Given the possibility of falling demand, stemming from China’s slowing economy and a weaker overall global economic outlook, the near-term movement in oil prices remains a question mark, particularly with renewed hostilities erupting in the Middle East. But higher prices remain a source of economic stress for some emerging market countries.

Banks domiciled in the Middle East have benefited from the uptick in oil as sovereign rating upgrades in the region also lifted the banking sector—most dramatically in Saudi Arabia, whose rating S&P raised in March citing structural improvements that support GDP growth and which Fitch upgraded the following month citing the kingdom’s strong fiscal balance sheet. Saudi GDP grew 8.7% in 2022 on the strength of higher oil prices and Riyadh’s ongoing national development program, Vision 2030, which aims to overhaul the economy to boost living standards, diversify away from oil and stimulate job growth, particularly for the younger demographic.

Vision 2030 is expected to benefit the banking sector through participation in financing large infrastructure projects, expansion of mortgage lending and a drive to improve financial literacy. Saudi banks have enjoyed positive ratings moves beyond the upgrades to the sovereign, suggesting the government’s greater capacity to support the country’s banking sector. The development program was a factor as S&P upgraded Al Rajhi Bank based on its strong retail franchise and expanded corporate lending, which helped it rise 11 places over last year to No. 33 in our rankings.

Credit upgrades lifted four more Saudi banks into our ratings as new entrants this year. Riyad Bank benefited from upgrades by Fitch and S&P, vaulting it to No. 45; while Banque Saudi Fransi rose to No. 47, aided by upgrades from the two agencies based in part on strong capitalization levels. Both agencies also upgraded Arab National Bank, which enters our rankings at No. 48; while Saudi Awwal Bank (formerly the Saudi British Bank) claims the No. 50 spot following a Fitch upgrade.

Other Gulf Cooperation Council banks enjoyed ratings boosts as well. In Kuwait, S&P upgraded Boubyan Bank based on stronger capitalization levels, solid loan growth and stable asset quality. In the United Arab Emirates, Mashreqbank also earned a better report card from S&P, which cited a stronger capacity by UAE governments to support the banking sector, on the back of reforms aimed at fostering non-oil growth sectors and strengthening the states’ fiscal position.

Chilean banks are the lone Latin American representatives in our rankings. But they took a fall following a Moody’s downgrade of Chile’s sovereign rating, ascribed by the agency to deteriorating fiscal strength from limited economic diversification, growing debt levels and reduced financial buffers. Downgrades followed for Banco del Estado de Chile and Banco de Chile, both directly affected by the sovereign downgrade. Both banks fell 12 spots in our rankings, to No. 39 and No. 40, respectively. Scotiabank Chile, at No. 27, and Banco de Credito e Inversiones, at No. 46, round out the Chilean contingent in our rankings.

These issues affect the banking sector too, although the degree of exposure varies for each institution. While the country’s biggest commercial and policy banks—prominent in the top half of the Global Finance Safest Banks in China rankings—benefit from considerable stability as a result of government ownership, those in the bottom half are at higher risk given their comparatively narrower franchises and smaller balance sheets.

This year’s rankings include two new entrants: Bank of Nanjing and Bank of Chongqing, at No. 24 and No. 25, respectively. WeBank fell out of our rankings, as it is no longer a rated entity; and Fubon Bank (China) is wholly owned by its parent, making it ineligible under our criteria.

With third quarter gross domestic product (GDP) increasing to 4.9% on an annualized basis, the economy is within reach of Beijing’s 5% policy goal for 2023. 

However, significant headwinds persist, with problems in the real estate sector representing the most substantial near-term risk for both the economy and investors. At 30% of GDP, real estate is an enormous component of the economy, and the Chinese banking sector’s exposure to real estate is estimated to be upwards of 40% of total loans. 

Additionally, new home sales for China’s 100 largest property developers have plummeted, recording a 33% YoY decline as of the end of July. One of the country’s largest developers, Country Garden, is at risk of defaulting on its debts.

Exacerbating this growing crisis are structural problems, notably an aging population. Despite ending its “one child” policy the better part of a decade ago, the country’s population contracted in 2022 for the first time in 61 years. Unemployment among Chinese youth has exceeded 20% since April. Moreover, with eroding financial markets, China is experiencing record capital outflows in the billions of dollars monthly as foreign investors retreat.

These none-too-encouraging trends are reflected in rating agency outlooks. Moody’s has maintained its negative outlook on Chinese banks, citing a deteriorating operating environment along with asset quality and profitability pressures related to the country’s slow recovery.

Adding to the challenges, August data showed exports falling 8.8% and imports declining 7.3% YoY. More troubling is an expanding tech war with the US, which recently said that it would continue to restrict shipments of artificial intelligence chips and chipmaking equipment. This represents a coordinated effort by the US, the Netherlands, and Japan, which control these components, to keep them out of Chinese hands.

Policy response to these challenges has been limited to date. To support the economy and provide additional liquidity to the banking sector, the People’s Bank of China cut its benchmark loan prime rate a modest 10 basis points to 3.55% in June and again to 3.45 in August. In September, the central bank cut its reserve requirement by 25 basis points, having made a similar cut in March.

Chinese authorities have enacted additional relief and stimulus measures. The People’s Bank has extended loan repayment terms for property developers and is cutting mortgage rates for first-time home buyers, with favorable terms extending through 2024. Boosting persistently weak levels of consumer spending represents a critical component of a sustained recovery—though retail sales enjoyed only a small bump from the “Golden Week” holiday in early October—and the government has accordingly launched initiatives including favorable loans to boost consumption in autos, housing, consumer electronics, and the service industries.

These measures may not be enough to reverse the country’s economic woes, however. Chinese authorities’ reluctance to add to already high levels of government debt stands in sharp contrast to other countries’ policy responses, which have centered on a heavy dose of fiscal and monetary stimulus, frequently taking the form of large government-led infrastructure projects.

The scoring methodology for the Safest Chinese Banks follows that used in our other Safest Banks rankings. A rating of AAA is assigned a score of 10 points, AA+ receives nine points, down to BBB- worth one point and BB+ worth -1 point, and so on. When a bank has only two ratings, an implied score for the third rating is calculated by taking the average of the other two and deducting one point. When a bank has only one rating, an implied score for the second rating is calculated by deducting one point from the actual rating, and an implied score for the third rating is calculated by deducting two points from the actual rating.