The World's Most Profitable Banks
Ever since the global financial crisis started in 2008, banks have been in the spotlight for their triumphs and tragic downfalls. A tiny handful have persevered through this trying time, emerging as the world's most profitable banks, and subsequently shaking up the entire financial sector. Understanding what the successful banks did correctly during this critical time can help broaden your business knowledge and find out where the safest places are for your money. Here's a look at the banks that are currently on top in terms of sheer profits.
Most Profitable Banks in the United States
The United States remains a finance capitol of the world, and a major driver of developments throughout the global economy. Two banks clearly led the pack at the close of 2011, and unsurprisingly, they were both large institutions that made it through the financial meltdown relatively unscathed. JP Morgan Chase continues its long held domination thanks to its size and steady following, but Wells Fargo nearly closed the gap.
JP Morgan, like other institutions, was rocked by the terrible disruptions in the housing sector, and later in the markets. As a major investment bank, its profits nosedived, yet this never seemed to threaten the integrity of the institution. Since 2009, the bank has made persistent efforts to unload toxic investments and alter its business in a positive manner. Although JP Morgan cut its profit margins in late 2011, it continued to buy foreign investments at a discount, which may create explosive new growth as the markets head north.
By comparison, Wells Fargo's success lay primarily in its domestic lending programs. Ever since the housing crisis, Wells Fargo has been at the forefront of making healthier, more intelligent loans to consumers and businesses. The slight increase in confidence experienced recently has only benefited Wells Fargo's lending. It also lacks the exposure to foreign stocks that banks like JP Morgan have, which shielded its profits from the strong headwinds generated by the ongoing European debt crises.
Most Profitable Institutions Abroad
Unless you've been in a bubble, you know that China is a rising economic powerhouse, and its recent success extends to the financial sector as well. China is home to three of the five most profitable banks in the world. The China Construction Bank and Bank of China led Asia in profits thanks to a robust domestic business supported by the Chinese government, along with an increase in foreign investments abroad.
Meanwhile, despite recent tremors emanating from burdensome debt, Europe carries on a tradition of highly profitable banks too. The UK based HSBC Holdings piled on billions in profits, on top of the nearly two trillion it currently holds in assets. This bank has leveraged its international arm adeptly to generate lending profits even when foreign investments go sour. Regional institutions such as Deutsch Bank fared relatively well too, though its recent profits may lessen due to its involvement with bailouts in troubled countries to the south of Germany.
Overall, the global banking outlook remains highly profitable with these trusted mega-banks, despite a few dark clouds on the horizon. Their size, experience, and diversified holdings mean that they are positioned correctly to snatch more profits in the near term, no matter what the broad economic trends say.
