As governments scramble to stimulate economic growth in the face of the ongoing global health crisis, and profits and interest rates take a hit, nearly two-thirds of the world’s 500 most valuable banking brands have recorded brand value losses, according to the latest report by Brand Finance – the world’s leading brand valuation consultancy.
The industry has seen a dramatic downturn in the past two years when compared with previous year-on-year performance. The total brand value in the annual Brand Finance Banking 500 ranking increased by 10% in 2018 (from US$1.07 trillion to US$1.18 trillion) and again by 15% in 2019 (US$1.36 trillion) but decreased in total brand value by 2% and 5% in 2020 (US$1.33 trillion) and 2021 (US$1.27 trillion), respectively.
The economic impacts of the COVID-19 pandemic are difficult to ignore, with global GDP forecasted to shrink by over 4%, which would signal the largest global recession since the Second World War.
Analyses conducted by Brand Finance on the world’s most valuable brands over three recessionary periods indicate that, on average, of the 100 brands that lost the most brand value during each recession, 74 of them were banks. On the other hand, of the 100 most successful brands during the recessions, 30 were banks.
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation. Alongside revenue forecasts, brand strength is a crucial driver of brand value. Banks with a Brand Strength Index (BSI) score below 60 out of 100 experienced an average decline in brand value of 20%, whereas of the banks with a BSI score above 70, the average fall in brand value was only 8% – proving just how important it is for banks to have stronger brands than their competitors during an economic downturn.
“Banking institutions were the main culprit in the last financial crash; this time around they are a large part of helping people overcome the repercussions of COVID-19. Brand Finance research shows that banks’ responses to the global pandemic has led to a year-on-year increase in overall reputation scores among consumers, which no doubt could result in an uptick in brand values in the coming year.”
David Haigh, CEO, Brand Finance
Chinese banks maintain dominance
Chinese banks maintain dominance of the ranking, accounting for 33% of total brand value and seven of the ten top climbers. Chinese banks have been largely impervious to the issues plaguing their western counterparts – where 60% of brands in the ranking have experienced losses – recording a healthy 8% average brand value growth. This is largely attributable to the banking sector’s role in China’s timely and effective response to COVID-19, which included regulatory policy adjustments for asset management, wealth management, and inter-banking, as well as increased investment into digitalisation.
Despite a 10% drop in brand value to US$72.8 billion, ICBC remains the world’s most valuable banking brand. As the biggest bank in China, ICBC continues to fare well with consumers, regardless of the bank’s depreciating brand value due to the pandemic’s negative impact on its investment portfolio return. Nonetheless, the brand maintains a healthy lead ahead of China Construction Bank (down 5% to US$59.6 billion) and Agricultural Bank of China (down 3% to US$53.1 billion), which come in at 2nd and 3rd place in the ranking, respectively.
China Guangfa Bank is also a remarkable addition to the country’s portfolio, entering the ranking for the first time at an impressive 84th position and valued at US$3.3 billion. The Hong Kong Monetary Authority recently granted China Guangfa Bank a banking licence, widening its footprint outside of mainland China.
Chinese banks have scored extremely well in Brand Finance’s research this year, ranking highly for attributes such as recommendation. This is undoubtedly an effect of China’s management of the COVID-19 pandemic, which has allowed its economy to continue functioning relatively unscathed, allowing space for banks to grow further.
David Haigh, CEO, Brand Finance
US banks five spots in top ten
US banks account for almost a quarter of the total brand value in the ranking - the nation’s 74 banks reaching a cumulative brand value of US$274.8 billion. Five US brands feature in the top 10: Bank of America (down 7% to US$33 billion), Citi (down 3%to US$32 billion), Wells Fargo (down 22% to US$32 billion), Chase (down 8% to US$29 billion), and JP Morgan (up 3% to US$24 billion). Bank of America remains the most valuable banking brand in the US, placing fifth overall, and JP Morgan is the only brand in the top ten to record a positive value change.
Currently holding the lowest reputation score among all banks in the US, Wells Fargo experienced the largest drop in brand value – falling two places to seventh overall, and third in the US – the result of failing to rebuild favour among consumers in the wake of several past scandals.
Citi, the third largest US bank by assets, has emerged as the strongest retail bank in the US with a BSI score of 80.7 out of 100 and AAA- rating (up from AA+ in 2020). Citi has also climbed one place in the ranking to 6th position, following a rapid rebound in its profits in the third quarter of last year.
Spotlight on Vietnam
Vietnam’s banking sector has seen the greatest year-on-year brand value growth compared to any other nation in the ranking, standing at 23%. Vietnam’s ability to effectively control and constrain COVID-19 has allowed it to buck the sector-wide trend of declining brand value. Internal reforms have strengthened accountability of the Vietnamese financial sector, which has had the knock-on effect of boosting not just revenues, but brand reputation and trust. Vietnam’s banking sector has also recorded a 753% 5-year cumulative brand value growth, the second fastest national growth in the ranking.
Union Bank of India cashes in, up 163%
The Union Bank of India saw the fastest year-on-year growth of any bank globally, growing by 163% to US$1.2 billion and simultaneously soaring 128 places to claim 169th spot.
The amalgamation between Andhra Bank and Corporation Bank is primarily responsible for this growth - borne as part of a nationwide effort to consolidate India’s banking space – and now the nation’s 5th largest public sector bank by assets. This success is also mirrored at the national level. Apart from China, India was the only nation in the top 10 countries by total brand value to see growth. China again claims top spot, with a 1% increase in cumulative brand value, whilst India retains its seat at 8th, with its cumulative brand value up 3% this year.
Ones to watch
While some of the world’s largest banks have floundered during the pandemic, 23 insurgent newcomers have joined the ranking, hailing from Europe, Asia, the US and South America.
The highest new entrant is Truist at 36th position, with a brand value of US$8.0 billion. Formed in 2019 – a result of a merger between BB&T and SunTrust, which sat in 68th and 86th in the 2019 iteration of the Brand Finance Banking 500 ranking, respectively. This merger is testament to the power of rebranding and a revised strategy, demonstrating that brands can be reinvigorated even in the face of a global crisis.
Sber bank overtakes BCA as sector’s strongest
Sber bank has been increasing in brand strength year-on-year to become the strongest brand in the ranking, with a Brand Strength Index (BSI) score of 92.0 out of 100 and a coveted AAA+ brand strength rating.
As the largest bank in Russia, Sber bank has benefitted from its stable brand and good levels of customer loyalty. These have only been boosted by its recent rebranding to consolidate its ecosystem of services – encompassing banking, health, and logistics, among others – around the Sber brand. Sber bank is poised for further success, as the bank’s pledge to spend more on its brand in the coming year is likely to further boost its BSI score.
Despite this success, Sber bank is not divorced from the wider issues plaguing the banking industry, with the COVID-19 pandemic poorly reflecting on the bank’s brand value, which has dropped by 29% to US$2.5 billion. Sber bank’s brand value drop has been exacerbated by the year-on-year increase in Russian weighted cost of capital, risk in the market, and weaking of the Russian ruble caused by collapsing oil prices and global economic uncertainty.
As the second strongest brand in the ranking, BCA has maintained its BSI score of 91.6 out of 100 and is the only brand aside from Sber bank to have been awarded an elite brand strength rating of AAA+. The brand remains one of the biggest banks in the ASEAN region and has the largest market capitalisation value on the Indonesian Stock Exchange.
South Africa provides the third strongest banking brand this year, Capitec Bank, which has maintained its BSI score of 89.2 out of 100 and corresponding AAA rating. Surpassing the 15 million client mark in December 2020, Capitec has more customers than any other South African bank, benefiting from its excellent customer service and personalised banking experience. Fellow South African bank, First National Bank, is the most valuable bank in Africa with a brand value of US$1.4 billion.
Few sectors have been as detrimentally affected by the COVID-19 pandemic as the banking industry, reflected in the overall brand value decline this year. Within this context, Sber bank, BCA, and Capitec Bank have fared extremely well, retaining their elite brand strength ratings through positive reputations and consumer perceptions of their brands.
David Haigh, CEO, Brand Finance