OCBC again world's strongest bank

Singapore bank tops Bloomberg ranking for 2nd straight year

By Magdalen Ng, The Straits Times, 4 May 2012

OCBC Bank has been named by a leading financial magazine as the world's strongest bank for the second year running.

OCBC, Singapore's second largest lender, emerged tops from a pool of 78 global banks with total assets of US$100 billion (S$126 billion) or more as of mid-March.

In second spot was the Bank Of China (Hong Kong), up strongly from 10th spot last year. Canada's Imperial Bank of Commerce was third in the ranking by Bloomberg Markets magazine.

OCBC chief executive Samuel Tsien said in a statement that the ranking was an affirmation of the strength of its customer franchise that had been 'built on product innovation, quality and differentiated customer experience'.

Other key factors were the bank's disciplined credit management practices and robust risk management capabilities, he said.

He added: 'The solid foundation that we have established puts us in good stead to reach an even higher level of accomplishment.'

Singapore's other two banks fared worse than a year ago.

United Overseas Bank (UOB) took seventh place, down from sixth last year, and DBS Bank slid three spots from fifth to eighth.

Bloomberg Markets ranked the banks based on five criteria, the most important being the Tier 1 capital ratio, which accounts for 40 per cent of the score.

This ratio is a core measure of a bank's financial strength.

The other criteria were the ratio of non-performing assets to total assets, ratio of reserves for loan losses to non-performing assets, ratio of deposits to funding, and 'efficiency' ratio.

These measure the prudence of a bank's lending policies, and how conservative a bank is in setting aside funds for bad loans.

Phillip Securities Research banking analyst Ken Ang noted OCBC had the highest Tier 1 ratio at 14.5 per cent, followed by UOB (13.5 per cent) and DBS (12.9 per cent). Also, OCBC had the lowest non-performing loans ratio - the ratio of loans in default or close to being in default to the bank's total loans.

Mr Ang said: 'DBS and UOB may have slipped due to factors such as a year-on-year decrease in Tier 1 capital ratios. This is however not a cause for concern as current levels are healthy and meet requirements set by both Basel III and the MAS (Monetary Authority of Singapore).'

This year's rankings

1. (1) OCBC Bank (Singapore)

2. (10) Bank Of China (Hong Kong) Holdings

3. (4) Canadian Imperial Bank of Commerce

4. (12) Toronto-Dominion Bank

5. (3) National Bank of Canada

6. (17) Royal Bank of Canada

7. (6) United Overseas Bank (Singapore)

8. (5) DBS Group Holdings (Singapore)

9. (18) Hang Seng Bank (Hong Kong)

10. (2) Svenska Handelsbanken (Sweden)

Source: Bloomberg Markets