World’s Safest Banks 2023—Global 50

The debacles of 2023 clearly illustrated that a bank’s financial stability must never be taken for granted.

For banks worldwide, the campaign by the world’s central banks to rein in inflation by way of successive interest rate hikes has been a double-edged sword. Higher rates bolstered profitability by expanding net interest margins, but this benefit is expected to diminish as funding costs continue to increase. Additionally, the rapid rate increases have led to valuation losses in some banks’ investment portfolios, creating asset-liability imbalances.

Inflation, happily, is moderating. In July, the International Monetary Fund (IMF) projected global inflation to fall to 6.8% in 2023, from 8.7% last year, and 5.2% in 2024. By comparison, the US inflation rate peaked at 9.1% in June 2022 and fell to 3.7% in August.

Although many central banks mull the end of their tightening cycle, any prolongation runs the risk of creating a global recession. The outlook for global growth is already weak: The IMF forecasts GDP for advanced economies at 1.5% this year and 1.4% in 2024. As geopolitical risks persist from the war in Ukraine and China’s weakening economy and its trade tensions with the US, the banks gird for asset-quality deterioration and ongoing pressure on profitability.

Against this backdrop, Global Finance’s rankings of the World’s Safest Banks 2023 provide an important perspective on the sector.

Many banks, fortunately, have strengthened their balance sheet and boosted their reserves for loan losses in anticipation of a rise in impaired loans.

At the same time, loan portfolio growth will suffer as higher interest rates and more-conservative loan-underwriting standards slow credit demand. Additionally, given the outlook for slowing GDP growth, more banks expect asset quality to deteriorate due to weakness in loans to small and midsize enterprises. Exposure to commercial real estate remains of particular concern as shrinking demand for office space weighs down the asset class.

On an optimistic note, stable business lines such as payments, treasury and cash management services still underpin corporate banking. Market volatility is expected to keep mergers and acquisitions and also securities underwriting cyclical, but also presents trading and market-making opportunities.

THE GLOBAL TOP 50

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 29 entries overall. Notable shifts include UBS falling 11 places to No. 48 following its takeover of Credit Suisse. Caisse des Depots et Consignations fell one place due to a Fitch downgrade while Deutsche Apotheker- und Aerztebank fell out of the rankings this year due to Moody withdrawing its ratings.

Others enjoyed happier ratings results. SFIL benefited from a Moody’s upgrade, raising it six places from its rank last year. Institutions domiciled in France placed the most banks in this year’s rankings, with seven names in the global top 50 including three new entrants: Credit Agricole, Banque Federative du Credit Mutuel and HSBC Continental Europe. Led by Singapore’s three big banks—DBS, Oversea-Chinese Banking Corp. and United Overseas Bank—the Asia region placed eight banks in the rankings again; while Australasia placed five with the addition of Kiwibank, which benefited from a Fitch upgrade. In North America, Canadian bank RBC is among the top 10; while in the US, CoBank, AgFirst, and Farm Credit Bank of Texas dropped  following Fitch’s August downgrade of US sovereign debt.

Methodology: Behind the Rankings

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.

WORLD’S SAFEST BANKS 2023—TOP 10 BY REGION