HSBC is the world’s biggest bank by shareholder equity – $29.4 billion in 1996 as recorded by the latest Euromoney Bank Atlas. Much more important, it is the world’s most profitable bank which is a major reason for picking it for the most prestigious of Euromoney’s awards for excellence, that of best bank. Net income was an impressive $5.86 billion last year and return on equity an impressive 19.93%.
Operating in competitive markets, the world’s most profitable bank is by definition also one of the best-managed. Legendary is HSBC’s highly disciplined, military-style culture that has kept it stable and thriving in sometimes volatile Hong Kong as well as all over the world. Such resilience has enabled it successfully to absorb Midland Bank in the UK, to continue the development of British Bank of the Middle East (known as BritishBank since last October) and to earn 12% of operating profits from the Americas, a notably tough area for foreign banks. This latter figure is likely to rise further since over the past four months HSBC has spent $2 billion acquiring stakes in banks in Argentina, Brazil, Mexico and Peru.
But in the year ahead it could be in its more familiar Hong Kong market that the bank faces its greatest challenge with the reversion of sovereignty to China and the withering away of past privileges. Whatever happens, HSBC’s role as a global bank will not be substantially undermined. Its international network comprises more than 5,000 offices in 78 countries and primary listings on the London and Hong Kong exchanges have put stock into the hands of 150,000 shareholders in 90 countries. HSBC Investment Bank plays a crucial role in adding fee and commission income to more traditional sources of bank earnings. With a commitment to strong capital ratios, the outlook for HSBC is undeniably positive.
Runner-up Citibank Citibank had a phenomenal return on equity of 18.28% last year and its net income was well above $3.7 billion. With almost 100 locations worldwide, Citibank is the only other serious contender for the mantle of truly global best bank.
