Bank profits in the UK declined by more than a half over the past year, according to The Banker’s latest ranking of the top 1000 world banks.

The ranking is based on Tier 1 capital, a key measure of banking strength.

HSBC was the only European bank to appear in the global top 10 list for the 10th year running.
The bank, which is the largest in the UK, moved up one position to 8th in the global ranking.

Of the top UK banks, Lloyds Banking Group (ranked 3rd) recorded the highest percentage increase in Tier 1 capital (15.27 per cent) year-on-year, while Barclays (ranked 2nd) topped the group in asset growth (19.93 per cent).

But all five banks saw declines in pre-tax profits year-on-year. HSBC profits dropped by 24.2 per cent, Barclays by 28.72 per cent, Lloyds Banking group by 71.72 per cent, Standard Chartered by 56.56 per cent, and NatWest Group moved from profit to loss.

“The UK banking industry has faced significant headwinds over the course of the past year, with the impacts of the Covid-19 pandemic and Brexit uncertainty weighing profitability down,” said Joy Macknight, editor of The Banker. “Despite the challenging environment, the UK’s banking sector remains the fifth largest in the world, with aggregate Tier 1 capital of $437.5bn, underpinned by London’s position as a leading global financial centre.”

Western Europe as a whole had a challenging year due to low economic growth and the interest rate environment hitting the profitability of the region’s biggest lenders.

Of the largest European economies, banks’ aggregate pre-tax profits declined by 43.71 per cent in Germany, 75.72 per cent in Italy and 47.67 per cent in the Netherlands, while France experienced a more modest decline of 11.61 per cent.

Spain recorded negative pre-tax profits at an aggregate level, with two of its largest banks, Banco Santander and Bankia, moving from profit to loss in this period.

Worldwide banks added 12.7 per cent to their collective Tier 1 capital to reach the highest ever level of $9.9 trillion.

Total assets increased by 16 per cent $148.6 trillion, while the deposit base expanded by 17.1 per cent, to $93.9 trillion.

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