New York might be the financial capital of the world, but China is home to the planet’s mightiest banks.
The top four banks in the world are from China, according to the latest annual rankings by S&P Global Market Intelligence.
The list is led by Industrial & Commercial Bank of China, which retained its title as the world’s biggest bank. ICBC is the only lender that has amassed more than $4 trillion in assets — or roughly the size of Citigroup (C) and Wells Fargo (WFC) combined.
The next three biggest Chinese banks are each north of $3 trillion: China Construction Bank, Agricultural Bank of China and Bank of China. All four banks are state-owned.
American banks have only gotten bigger since the financial crisis, but they’ve still got some growing to do to catch up to their peers in China.
Just two US banks — JPMorgan Chase (JPM) and Bank of America (BAC) — crack the top 10 in S&P’s rankings of the world’s largest banks. JPMorgan, which sports $2.6 trillion in assets, cemented its role as the king of American banks Friday by posting record profit and revenue.
Wells Fargo, on the other hand, continues to struggle to move past two-and-a-half years of scandal. Citigroup (C) has surpassed Wells Fargo to become the No. 3 bank in the United States by assets.
Big banks will be in the spotlight again this week as earnings season continues.
Goldman Sachs (GS) and Morgan Stanley (MS) are under pressure to show their trading arms withstood the tranquility in global financial markets that started 2019.
While excess volatility like the storms that struck Wall Street in late 2018 can punish investment banks, a lack of turbulence can hurt as well. Stock trading often dries up when volatility vanishes, sapping Wall Street firms of lucrative trading fees.
Consumer banks, on the other hand, are navigating two other forces.
The big positive is the health of American households. JPMorgan CEO Jamie Dimon credited “robust” consumer spending with driving his bank’s record quarter. Loans and deposits grew at JPMorgan and Dimon cheered rising employment and wages.
Spending by consumers should pad the results of Citi, Bank of America, US Bancorp (USB), BB&T (BBT) and M&T Bank (MTB), all of which are set to report earnings this week.
But investors will be listening nervously for signs that banks are getting hurt by the gyrations of interest rates.
Wells Fargo spooked Wall Street on Friday by warning of a drop in net interest income — how much banks make from lending minus what they pay on interest. That key source of profitability falls when the yield curve flattens.
The yield curve, the gap between long and short-term rates, evaporated in recent months because of global growth worries and bets that the Federal Reserve will have to cut interest rates.