NEW DELHI: They may not be bankers to the world yet, but Indian banks have clearly set their eyes on that. In a year that saw the worst recession
The State Bank of India (SBI) became the first Indian bank to break into the world’s Top 50 list, according to the Brand Finance study that saw HSBC retain its top slot for the third year in a row.
The study, released on Sunday and made exclusively available to ET in India, used discounted cash flow methodology to arrive at a net present value (NPV) of the trademark and associated intellectual property: the brand value. SBI’s brand value more than tripled to $4,551 million, up from $1,448 million in 2009 helping it grab the 36th spot in the list. ICICI Bank, the country’s largest private bank, joined it in the Top 100 list with a 130% jump in its brand value at $2,164 million.
Other big gainers in brand value include IDBI Bank (190%), Bank of Baroda (162%) and Union Bank of India (148%). The cumulative brand value of 20 Indian banks stood at $13,053 million. The 15 Indian banks that figured in last year’s list saw a whopping 130% rise in their combined brand value.
The number of Indian banks in the global list had more than tripled last year to 19 from six in 2007. Differentiation through strong brand and customer base value is becoming a key economic lever for Indian banks. This is as true in financial services as in consumer products.
“Indian banks need to recognise their inherent brand value potential and SBI’s remarkable performance by breaking into the top 50 financial services brands offers a lesson for others,” said Unni Krishnan, MD of Brand Finance India. SBI seems to be fast transforming into a brand-led business, with a broader, more holistic and sophisticated approach to managing the brand and stakeholder relationships.
“Brands act as a common glue that binds all the business functions, especially in financial services firms, resulting in greater coherence of strategy, service excellence and sustained business performance,” said Unni Krishnan, MD of Brand Finance India.
Asian aura shows Over all, HSBC remained the biggest bank brand for the third year in a row with its brand value rising 12% to $28,472 million. This must have been a relief to the bank that saw its brand value erode by 28% in 2009 league table.
The study notes that global banking sector has begun to show tangible signs of recovery, with the world’s 500 most valuable banking groups growing by 62% in terms of market capitalisation and their brand values cumulatively increasing by 49%.
“This year’s BrandFinance® Global Banking 500 shows how significant the recovery of global banking brands has been,” said David Haigh, CEO of Brand Finance plc. The total brand value of the Top 500 banks stands at $716 billion, up 49% over 2009 and 4% higher than in 2008, prior to the crisis.
“There has been a significant shift in the balance of power globally away from the US and towards banks in emerging markets,” said Mr Haigh.
The Asia region contributed 17% to the total global brand value, logging 31% growth in 2010. However, the number of Asian banks in the global 500 has dropped to 102 in 2010 from 120 the previous year.
Almost all banks in the Asian Top 10 have increased in brand value. However, this rise is not as strong as witnessed in more developed regions like Europe and North America, as they recover from the crisis.
Although the number of banks reported in the Top 500 from Asia has decreased, many banks in the region tend to be well capitalised and in countries such as India, banks have become far more competitive.
As such, the normalisation of markets has not had such a relatively profound increase in brand value in the Asian region. As was the case last year, the Asian Top 10 is dominated by Chinese banks with the gap between the major Chinese banks and the rest widening.
The biggest movement in the league table was made by SBI, which has seen its brand value more than triple to sixth biggest bank brand in Asia.
Another notable entrant is Standard Chartered, which has stepped up its Asian presence in recent years, saw a robust 59% growth in its brand value.
While the brand value increased, market capitalisation of the top 500 came down by 20% since 2008.
The US dominance of global banking has declined further with a decrease in the number in the global 500 down to 85 from 95 in 2009. The number of European banks in the list increased from 170 to 197, while that from the UK decreased from 24 to 22.
This suggests that the recovery on the European continent in particular France, Spain, and Switzerland has left British banks standing. The league table also notes that bank brands in emerging markets are slowly closing the gap. The top 20 bank brands in 2010, originate from nine countries, one more than 2009. It is for the first time that a Russian bank has made the top 20 (Sberbank) which has seen significant growth.
The Middle East has seen a 117% growth in brand value, based on high demand for Islamic banking products and services. On the other hand, Central America has seen a 40% decline in brand value. European bank brands have recovered significantly compared to the North American and Asian markets (78%, 30% and 26% growth, respectively).
Banks in the Pacific, including Australia and New Zealand have seen a recovery with growth of 58%.
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Counter-view: While intermediate trends can last up to 12-14 weeks, they can also exhaust quickly if they are running counter to the long-term trend. This is the case here, assuming the long-term trend hasn't reversed. So, there is a chance the intermediate trend will exhaust soon. If the 4,650 level holds, all is well. On the upside, the market needs to break past resistance at 4,950 to suggest a new intermediate uptrend. This would only be confirmed if it hits a new high beyond 5,310.
