The Top 10 Banks in India Based on Assets

The Top 10 Indian Banks based on Assets held as of Dec 31,2008 are listed below. Similar to Brazil, China and other countries, there are both private and state-owned banks in India.

The Top 10 Indian Banks based on Assets

[TABLE=228]

Source: BankScope

The largest bank in India is the state-owned State Bank of India, which stood at 113 in world ranking of banks by assets. The two highly successful private sector banks in the list are ICICI Bank (IBN) and HDFC Bank (HDB). ICICI ranked second based on assets at the end of 2008. None of the other banks in the list trade in the US markets.

India-focused ETFs and ETNs:

Powershares India Portfolio (PIN)
WisdomTree India Earnings Fund (EPI)
iPath MSCI India Index ETN (INP)

Can Emerging Markets Replace USA as China’s Main Exports Destination?

After the credit crisis last year, China is increasingly focusing more on developing markets for growth. Chinese companies have been making large investments especially in developing resource-rich Middle East and Africa.

An interesting article in the Der Spiegel titled Reluctant Partners – Global Crisis Makes US More Dependent on China than Ever discusses the trade relationship between the USA and China and the rising power of China.

From the article:

When US President Barack Obama visits China this weekend, he will encounter a rival that sees the financial crisis as more of an opportunity than a threat. America, on the other hand, has been fundamentally weakened by the global crunch — and is more dependent on the goodwill of the rising superpower than ever.

The scientists at the National University of Defense Technology in Changsha, China, had plenty to celebrate: They had developed a supercomputer that could perform more than a quadrillion calculations per second.

The announcement, released just in time for US President Barack Obama’s visit to China this weekend, had symbolic value: With their new computer, dubbed “Tianhe” (“Milky Way”), the Chinese claim they will be the first country to become a direct rival to the superpower.

China is bursting with self-confidence. The new world power sees itself as a winner in the financial crisis, with its economy growing by an impressive 9 percent in the third quarter, while the economies of the West struggle to recover from a deep recession. And while the Americans are focused on their own problems, China is expanding its influence, both in Asia and among resource-rich African countries.”

Writing about the American consumption of Chinese goods the authors write:

“Suddenly the crisis hit China, whose economy had been oriented almost completely toward the United States. In Dongguan, home to one low-wage factory after the next, entire neighborhoods have died out. “We have lost a third of our orders,” says Li Zhaoyuan, who owns Dongguan Singyan, a company that makes metal parts. He has laid off 40 percent of his workforce.

The remaining workers sit at outdated machines on the two floors of the plant, punching and pressing pieces of metal into objects like fishhooks and housings for Motorola mobile phones. “We used to work 24 hours a day,” says Li, “but now one eight-hour shift is enough.” He doesn’t believe that American consumers will soon be buying Chinese products as enthusiastically as they did before the crisis. He prefers to follow the advice of the strategists in Beijing, namely to focus on new markets in Asia, the Middle East and Africa.”

I agree with Mr.Li 100%. The once free-spending American consumer will not be going back to old ways any time soon with real wages in the private sector going down and rising unemployment levels. The American consumer is in belt-tightening mode now. Most of the Chinese made cheap goods were bought with credit. As consumer shop less credit growth has slowed for many months consecutively. China’s strategists have clearly understood that they need to rely less on America as the main export destination and focus more on emerging markets.

Chart – Key Economic Figures Comparison between China and USA

Click to Expand

China-USA-Economy-Compare

Chart – China and USA GDP Growth

China-USA-GDP-Growth

Source: Der Spiegel

While China’s economic growth since 1990 is astonishing, China has a long way to go before it can beat or overtake the US economy. Despite the strong growth the Chinese economy still is relatively small compared to the US economy. So in that sense it may be premature to call China as the rising superpower.

Emerging markets in Asia, Africa, etc. may not be able consume as much of the Chinese goods as the US did simple because consumers in those markets do not have the purchasing power as Americans do. For example, it would be wrong to assume that many Asians such as Indonesians, Indians, Vietnamese, etc. would spend as frivolously as Americans did in buying Chinese products. So the answer to my title question is that is too early to tell whether China will be able to successfully replace USA with new markets in Asia, Africa and the Middle East as its main exports destination.

Components of the AEX High Dividend Index

The AEX High Dividend Index (AEXHD) consists of 12 Dutch stocks with the highest dividend yields. The selection of stocks is based on the past calendar year dividends. The eligibility criteria is that all these stocks must be part of the AEX Index, the main blue chip index of the Dutch stock market.

The weighting is based on the dividend yield and is capped at 15%. This inception date of this index was 3/4/2008. Last year the index was down 46%.

In backtesting the index performed as follows:
2003 = 2.06%
2004 = 8.91%
2005 = 31.94%
2006 = 18.83%
2007 = 5.30%

The Components of the AEX High Dividend Index are:

1. Aegon (AEG)
Current Dividend Yield = No regular dividends paid

2. Air France – KLM (OTC: AFLYY)
Current Dividend Yield = 5.19%

3. BAM Groep KON
4. Corio
5. DSM KON

6. ING Groep (ING)
Current Dividend Yield = No regular dividends paid
7. KPN KON
8. Randstad

9. Royal Dutch Shell A (RDS.A)
Current Dividend Yield = 5.40%

10. TNT (OTC: TNTTY)
Current Dividend Yield = 1.76%

1. Unibail – Rodamco
12. Wereldhave

Many of the above stocks do not trade in the US markets. Some of them have suspended or reduced dividends due to the global economic downturn and government bailouts last year.

China’s 10 Most Profitable Banks

We reviewed China’s largest banks by 2008 assets on November 9th.Today lets take a look at some of the most profitable banks.

China’s 10 Most Profitable Banks based on Net Income in 2008:

[TABLE=227]

Source: BankScope

Industrial & Commercial Bank of China (ICBC) is the most profitable bank in China based on Net Income in 2008. ICBC is a state-owned AAA-rated bank. ICBC is also the world’s most profitable bank according to The Banker magazine.

As the name implies, Agricultural Bank of China mainly lends to farmers and rural businesses.

China Construction Bank, Bank of China Limited, Agricultural Bank of China
and Bank of Communications also appear in the The Banker magazine’s 25 most profitable global banks based on 2008 earnings.

The Top Ten Chinese Banks by Assets

The Chinese banking sector showed strong growth last year despite the global economic downturn. Interest rate cuts, reduced reserve requirements and the massive $585 B infrastructure focused program helped Chinese banks achieve high growth. It will be interesting to see if Chinese banks are able repeat this performance in 2010.

The Top 10 Chinese Banks based on Assets held as of Dec 31,2008 are listed below:

[TABLE=226]

Source: BankScope

The top three banks are Industrial & Commercial Bank of China,China Construction Bank Corp and Agricultural Bank of China. Industrial & Commercial Bank of China (ICBC) is the top ranked bank in the country. In the world ranking of banks, it comes in at number 17.  It trades on the OTC market with ticker IDCBY. Currently ICBC offers a 2.90% dividend yield.

China Construction Bank Corp (OTC:CICHY) has a $20B market cap and has a 1.415 yield. In 3rd quarter, net profit totaled 30.31 billion yuan ($4.4 billion), compared to 25.27 billion yuan a year earlier. Since the start of the year its loan book grew by 24%. Bank of America (BAC) owns 10% of CCB.

The post office run China Postal Savings Bank is ranked number seven in this list which is very good.  In many countries such as Japan, India, etc. post offices offer savings banking facilities.

Related links:

Top Ten Banks of China 2007

China’s banks hit new heights: Top 50 Chinese Banks