Magazine article Global Finance

The Best Emerging Market Banks 2009

Magazine article Global Finance

The Best Emerging Market Banks 2009

Article excerpt

BEST EMERGING MARKET BANKS

In our 16th annual survey of top banking performers in emerging markets, we name those banks that are consistently providing high levels of service in fast-evolving markets.

The results of the best emerging market banks varied tremendously in the past 12 months, with some banks requiring government bailouts and others posting record profits. The performances largely reflected the varying economic conditions in the countries and regions in which particular banks are located.

In Central and Eastern Europe, for example, the past year was an extraordinarily difficult one, with rising loan losses and falling currencies taking a toll on even the best banks. In Africa the picture was kaleidoscopic, with neighboring countries experiencing vastly different results. Some banks benefited handsomely from fast economic growth in the region, while avoiding the pitfalls. Many banks in the Middle East remained profitable, although some were caught up in the excesses of real estate and stock market lending.

In Asia the bigger economies, such as China and India, performed well, as growing domestic demand offset some of the effects of the global economic downturn. Many banks in the region continued to post very sizable increases in earnings and strong growth in loan portfolios.

The International Monetary Fund warns that corporate and banking sector vulnerabilities are becoming mutually reinforcing in several emerging economies, particularly in the CEE region and the Commonwealth of Independent States. Relatively high requirements to roll over debt could rise further as some debt claims are accelerated due to breaches in original covenants, the IMF says. Defaults in the corporate sector are widely expected to rise, it says, which could further strain bank balance sheets. Many banks are already curtailing credit growth, exacerbating the financial constraints for companies and businesses, according to the IMF. …

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