As the world enters the third year of the Covid-19 pandemic, its long-term impact on society and the banking industry at large are yet to be determined. However, after two consecutive years of aggregate brand value contraction in The Banker’s Top 500 Banking Brands ranking, 2022 sees a healthy 8.7% increase, from $1.27tn in 2021 to $1.38tn.
The increase is partly attributable to economic rebounds and adjustments as countries have continued to adapt to the impacts of Covid-19, says Declan Ahern, valuations director at Brand Finance, which conducts the research for the ranking. “Given the well-documented manner in which banks have supported the real economy, our research data is showing improving reputational scores across the banking industry,” he adds.
The total global brand value in the 2022 ranking rose to $1.38tn. From a regional perspective, all areas except Latin America experienced an increase in brand value. Asia-Pacific banks dominate the ranking, with a total value of $621.8bn. However, the region only saw a 2.5% increase, of $15.1bn, compared to 2021’s aggregate value. While maintaining second place in the regional table, North America added around $46.9bn, or 13.8%, to reach a total brand value of $386.7bn.
Europe is not far behind, adding 5.7%, or $14.8bn, to reach $272.7bn for 2022. Both the Middle East and Africa saw modest gains in absolute total value, with the Middle East adding $1.6bn, or 4.1%, to $40.2bn and Africa adding $2.3bn to reach $12bn for 2022. However, this was a 24.1% jump in aggregate brand value for Africa — the biggest increase among the regions. Latin America saw the only decrease — $2.4bn or 7.6% — for a total brand value in 2022 of $28.5bn.
While overall brand value is on the rise, the dominance of not only the top 10, but top 50 banks, has increased. The top 10 brands increased their aggregate value by 8% year-on-year, while brands ranked from 11th to 50th grew their total value by 10%.
Banks from China and the US maintained their tight hold at the top of the ranking with Industrial and Commercial Bank of China (ICBC) coming in first again. The top 10 banks in the ranking remain unchanged from 2021 to 2022, outside of Chase taking seventh place from Wells Fargo.
The 10th ranked bank, China Merchants Bank, widened the gap between itself and the 11th ranked bank, which this year is Royal Bank of Canada. The Canadian bank increased its brand value by 20% over the past year and moved up two places, overtaking HSBC and compatriot TD.
China versus US
As in recent years, Chinese and US banks have topped the ranking, each with five banks in the top 10. However, Chinese banks once again took the top four spots: ICBC, China Construction Bank, Agricultural Bank of China and Bank of China.
China has maintained its lead in the country table, growing its aggregate brand value by 5%, to $438.7bn. This can be attributed to a healthy bounce back from any pandemic-hit performance from last year, according to Mr Ahern. “Additionally, relatively early (and continued) investment into digitisation and the acceleration of digital development as a result of the virus has enabled Chinese banks to engage with customers with relatively little disruption,” he adds.
A spokesperson for ICBC attributes the bank’s premier position to “always sticking to excellent business strategies” and “always maintaining strong business advantages”. In addition, the bank points to the importance of brand value in a competitive marketplace, as well as part of its “solemn commitment to fulfilling its social responsibilities as a large bank”.
In 2021, the bank launched several brand initiatives to address social receptibility. On the digital side, the bank has also launched Cloud ICBC to increase the supply of intelligent, efficient online–offline integrated services.
The other five banks in the top 10 are from the US, with Bank of America (BofA) leading the cohort in fifth place. It also comes in first for North America, fourth in investment banking, and seventh in both retail and commercial banking.
According to David Tyrie, chief digital officer and head of global marketing at BofA, the bank “quickly determined” early in the pandemic that this was a critical time to step up its efforts in serving clients and communities.
“We were the first bank to stand up an online portal so we could start providing financial relief to small business clients through the Paycheck Protect Program (PPP), committing $250m in capital to community development financial institutions by funding loans through the PPP,” he says.
Social media remains a priority channel for BofA to connect with customers. “Given that 82% of Americans have a social account, and with the average time spent in social media being about 2.5 hours a day [according to statistics from Statista, Pew, the US Bureau of Labor and Statistics, and Broadband Search the US], it’s no wonder that’s the case,” he adds. “If you stretch out this time spent to one’s lifetime, the average user would spend six years, eight months using social … almost double the amount of time spent eating or drinking over one’s lifetime,” he adds.
Rising through the ranks
In contrast to the lack of diversity in the top 10 brands, the group of banks which experienced the steepest climb by brand value rank are much more varied. Banks from central and eastern Asia, eastern Europe and Africa saw big jumps in their rankings for 2022, with banks from Poland and Vietnam each taking three spots in the top 20 fastest climbers by rank table for this year.
India’s Indian Bank rose the most number of places, 134, to reach 293th, primarily a result of a successful integration of Allahabad Bank post acquisition, according to Mr Ahern. Other notable climbers include Kenya Commercial Bank in Kenya, which rose 88 places to 366th; BTG Pactual in Brazil which rose 79 spots to 270th; and OP Bank in Finland rising 70 places to 221th.
From Vietnam, MB Bank rose 127 places to 247th, marking an 113% increase in brand value. Other Vietnamese banks performing well include Asian Commercial Bank, which climbed 86 spots to 311th, and Techcombank, which gained 74 places to reach 196th position.
Poland’s mBank saw a rise of 90 places to 192th, which is an increase of 105% in brand value. According to Iwona Ryniewicz, communication and marketing strategy director at mBank, the bank has been synonymous with innovative banking solutions “for years”.
“We were the first fully internet-based bank in Poland,” she says. “We set the direction of the mobile and online banking development. We communicate our offer and value proposition precisely responding to the needs that arise at different phases of the customer life.”
Ms Ryniewicz goes on to say that social responsibility is an important part of mBank’s communication and social media plays a key role in everyday communication with clients. “Successful organic mBank growth is the best key performance indicator of our business model and marketing communication,” she adds.
Other Polish banks have also performed well, including, Millennium Bank, which jumped 80 places to 289th, and Alior Bank, which had a 73-place rise to 357th.
The strong growth in the Vietnamese banking sector, which saw an aggregate increase of 49%, also saw two banks break into table for the first time — HDBank, which ranks 430th, and Saigon Hanoi Bank, which debuts at 456th.
Similarly, Polish banks saw a 40% increase in total brand value, with the inclusion of new equity research in the market, as well as an increase in profitability because of interest rate increases imposed by the central bank, says Mr Ahern.
In all, there were 30 banks who are new to the Top 500 Banking Brands ranking in 2022. Of that group, only the Saudi National Bank broke the top 100, coming in at 94. However, two new banks, Cadence Bank in the US and Mercantile Discount Bank in Israel, both experienced triple-digit percentage growth in brand value in 2022. Cadence Bank, ranked 329th, registered a 181% increase in brand value and Mercantile Discount Bank, ranked 486th, saw an increase of 148%.
Missing from the top 500 in 2021, Metro Bank returns to the ranking in 469th place. “Being back on The Banker’s list is a fantastic achievement, and continues to show just how far Metro Bank has come in the past 11 years,” says a spokesperson from the UK high street bank. “Ultimately, it’s another step forward towards reaching our goal of being the UK’s best community bank.” Metro Bank runs a network of 78 bank branches in the UK and is an active user of social media channels to engage with customers.
“Social media allows us to build and connect with our [customers],” the spokesperson continues. “As a community bank, social media is a key part of our brand strategy and a perfect platform for us to engage with and have two-way conversations.”
The 70-year-old Brazilian bank BNDES also was new to the ranking in 2022. The state-owned bank is currently repositioning its role as a development bank and has started using the name Brazilian Sustainable Development Bank internationally.
“One must recognise that the dynamics of marketing within our specific industry — national development banks — carries some similarities, but many different challenges to major commercial and investment banks, especially due to the transversal role across the economy and all complexity that derives from having a very broad stakeholders scope,” says a BNDES spokesperson.
Because much public debate now occurs via social media, those channels affect a state-owned bank more than a traditional bank, says the spokesperson. “For being 100%-state owned, social media represents much more than a platform to advertise and connect, but also a means to actively listen to citizen demands and to promote awareness of relevant progress in the transparency and governance agendas.”
Also new in 2022 is US bank Northwest Savings, coming in at 499th. “In recent years, significant enhancements in technology have dramatically changed customer behaviour and expectations,” says Shawn O Walker, executive vice-president of marketing and communications at Northwest Bank. “This shift, and the additional challenges posed by Covid-19, has led to a decline in face-to-face interaction and elevated the role of brand communications and marketing. In the ‘sea of sameness’, apparent across financial services, building a personal connection with customers and messaging, in a meaningful and timely way, has never been more important to growing and sustaining relationships and ultimately driving revenue for the bank.”
Strength versus value
While the Top 500 Banking Brands ranking is dominated by large traditional banks, the list is thin on newer, digital-first banks, normally referred to as challenger banks, which rely heavily on marketing and brand recognition as part of their growth strategies. Nubank in Brazil, which enters the 2022 ranking at 286th, and Tinkoff Bank in Russia, rising 44 places to 254th, can be described as challenger banks.
According to Mr Ahern, many global challenger banks are not large enough to make the list. However, he adds that many of these new banking entrants figure high on a brand strength measurement where Brand Finance measures the emotional connection with the brand rather than the financial value.
“As an example, Monzo reported revenues of $107m in 2021, while Tinkoff reported revenues of $850m. Therefore, Tinkoff has a much larger scale and the brand is worth more. However, this does not necessarily make Tinkoff a stronger brand,” says Mr Ahern.
He goes on to explain the difference between brand strength and value, using the example of car manufacturers Toyota and Ferrari. “Ferrari is rated as one of the strongest brands in the world by our Brand Strength Index, and nearly everyone would like to own a Ferrari. The strength of the brand commands a significant price premium above other ‘normal’ car brands,” he says. “However, Toyota is a much larger brand and business than Ferrari, selling hundreds of thousands of more cars than Ferrari does in any given year. Therefore, if someone was to try and purchase the Toyota brand (or business), they would have to pay significantly more than if they were buying Ferrari.
“Brand strength is an excellent tool for benchmarking performance against your peers. Brand value, on the other hand, is more useful for situations in which a brand is being bought, sold or licensed, or when trying to measure the financial impact of specific marketing activities (sponsorship return on investment, for example). Furthermore, it is a useful tool for communicating marketing activities to more financially minded stakeholders, such as the chief financial officer or the board.”
While Nubank started as a “small start-up in a little house in Sao Paulo in 2013, it has grown to have more than 48 million clients in Latin America, with operations in Brazil, Colombia and Mexico,” according to chief marketing officer, Arturo Nuñez.
The Brazilian challenger embarked on a complete rebrand process in April 2021 to reflect its growth towards becoming a “lifestyle brand”, says Mr Nuñez. “The rebrand took place to publicly reflect a more mature Nubank that is experiencing a new moment,” he adds.
Tinkoff, according to Alexander Lebedinsky, head of direct sales, is focused on “building an ecosystem that focuses on the client’s needs [and] making cool products for our clients”. Its artificial intelligence-led approach means that it can offer clients customised services and products “ensuring that clients only receive offers and bonuses that they really need”, he adds.
“As a neobank, we focused on contemporary, digital acquisition channels from the start. People tend to spend more and more time online, and brick-and-mortar bank branches are becoming less effective as a marketing channel,” says Mr Lebedinsky.
The top 500 ranking is broken down into nine segments, including retail banking, commercial banking, investment banking, and credit cards. Not surprisingly, retail banking topped the segment list with the highest aggregate brand value of $603.4bn, with commercial banking following at $362.5bn. Agricultural Bank of China took the top spot for retail banking, while ICBC retained the number one spot for commercial banking.
Much like the top 10 banks on the overall global list, the top 10 retail banks table is dominated by Chinese and US banks. The only outlier in the table is Spanish bank Santander, rounding out the retail banking group at number 10. The bank ranks 18th in the 2022 overall ranking, dropping one place from last year.
According to Juan Manuel Cendoya, senior vice-president of communications, corporate marketing and research at Santander, the bank’s brand is a strategic asset and plays a major role in developing a global bank. “We adopted a single global brand in 2004, which allowed us to leverage the brand strength through, for example, global sponsorships in football and Formula 1,” he says. “This strategy has worked very well.”
Contributing to Santander’s high ranking in both the retail table and overall global ranking is its international footprint. Santander has a presence at scale in nine markets across Europe and the Americas. “This diversification helps us deliver very stable, predictable results through economic cycles, as well as making Santander one of the most recognisable banking brands in the world,” says Mr Cendoya.
Illustrated by the bank’s involvement with global sports sponsorships, Mr Cendoya says Santander looks at its brand as a strategic business asset that “helps us offer a coherent experience across markets that inspires confidence, trust and loyalty”. Cementing that brand awareness “is strongly linked to our culture” and starts at the top at the bank, he adds. He cites Santander’s chief executive Ana Botín, who is recognised as a top global influencer by LinkedIn, as highlighting that importance.
Investment banking is the third highest brand vale segment, valued at $225.1bn. US-based Citi sits the top of the investment banking league table. It also ranks in sixth place overall and increased its total brand value by 7%, to $34.4bn. A spokesperson for the bank credits this to a focus on “authenticity, empathy and progress”.
“Jane Fraser made history as the first female CEO of a major US bank, and she is paving the way with a new leadership style,” says the spokesperson. “On her first day as CEO, Citi committed to achieving net-zero carbon emissions by 2050.”
Citi recently launched its ‘For the love of progress’ campaign, reinforcing its mission of enabling growth and economic progress. Through its Action for Racial Equity commitment, Citi invested $1bn in strategic initiatives to help close the racial wealth gap and increase economic mobility in the US — “a goal we accomplished in the first year of a three-year target”, adds the spokesperson.
“We’ve bolstered our reputation as a company that doesn’t just lend its name to the issues of the day, but brings the breadth and full force of its business to help address the biggest challenges our society faces. For example, we recently announced that nine out of the 23 investments we have made in double-bottom-line businesses were directed to black founders through our new Citi Impact Fund.”
The full extent of the impact of the pandemic on the banking industry in 2021 will take some time to determine. However, this year’s brand ranking results have shown that strong government intervention and relatively strong economic recovery, as well as banks’ response in supporting their customers, has helped strengthen banking brands across the globe.
Brand Finance 2022 Methodology
Brand Finance employs a discounted cashflow technique to discount estimated future royalty earnings in a hypothetical situation where the brand is licensed to a third party at an appropriate rate. These discounted ‘brand earnings’ equate to the net present value of a bank’s trademark and associated intellectual property — its brand value.
The steps in this process are to:
1. Obtain brand-specific financial and revenue data. The revenue is then segmented into the following revenue streams: retail banking, wholesale/commercial banking, investment banking, asset/wealth management, Islamic banking and credit cards. This segmentation is based upon publicly available annual reports.
Three forecast periods were used:
I. If not yet reported, then financial results for 2021 were estimated using the Institutional Brokers Estimate System (IBES) consensus forecast.
II. An explicit forecast period, from base year 2021 up to 2025. This was determined using three sources: IBES, historic revenue growth and gross domestic product (GDP) growth supplied by the International Monetary Fund.
III. Perpetuity growth based on a combination of growth expectations (GDP and IBES).
2. Establish the royalty rate for each bank by:
I. Calculating the strength of each banks brand on a scale of zero to 100, according to several attributes, including asset strength, emotional connection, market share and profitability. A large portion of the calculation relies on a global market research program.
II. Determining the royalty rate for each revenue stream mentioned in step one.
III. Calculating the future royalty income stream based on the royalty rate and forecasted net revenues.
3. Calculate the discount rate specific to each bank, taking account of its size, geographical presence, reputation, gearing and brand rating.
4. Discount future royalty stream (explicit forecast and perpetuity periods) to a net present value — the brand value.
Royalty relief approach
Brand Finance uses a ‘relief from royalty’ methodology that determines the value of the brand in relation to the royalty rate that would be payable for its use were it owned by a third party. The royalty rate is applied to future revenue to determine an earnings stream that is attributable to the brand. The brand earnings stream is then discounted back to a net present value. This approach is used for two reasons: it is favoured by tax authorities and the courts because it calculates brand values by reference to documented third-party transactions; and it can be done based on publicly available financial information.
These are calculated using Brand Finance’s Brand Strength Index, which benchmarks the strength, risk and potential of a brand relative to its competitors, on a scale from AAA to D. Conceptually, it is similar to a credit rating; the data used to calculate the ratings comes from various sources including Bloomberg annual reports and Brand Finance research.
Brand ratings definitions
AAA Extremely strong
AA Very strong
Valuation date: All brand values in the report are for the year ending December 31, 2021.