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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Steve Fancy who wrote (7592)	9/6/1998 2:21:00 AM
From: djane	Read Replies (1) \| Respond to of 22640

8/98 Euromoney. EMERGING-MARKET BANKS. All set for recovery [The timing of this article is delicious...] emwl.com Times may be tough in emerging markets but strong banks are doing more than just surviving. Experienced in dealing with volatility, many banks are both withstanding the shocks and positioning themselves for the next upturn. By Brian Caplen Caplewn The most important factor in Latin America's avoidance of Asia-style problems has been the resilience of its banks. While Asian financial systems cracked under the strain of currency turmoil and capital outflows, Latin American ones held firm. With a past history of volatility, banks have discovered the hard way that cautious lending and strong capital support are essential to survival. This year's table, compiled by Fitch IBCA, brings together banks with equity bases ranging from $300 million to over $10 billion. It illustrates the relevance of healthy capital support even though many other factors such as asset quality ultimately affect performance. At the top of the table Brazilian and Chinese banks dominate. Three Brazilian banks are in the top 10 and their identities show the changing nature of Brazilian banking. In fourth place is Bradesco, the country's largest private bank, with shareholders' equity of $5,479 million, assets of $55 billion and net income of $783 million. Two places behind is the state controlled Banco do Brasil and in ninth position is Banco do Estado de Sao Paulo (Banespa) which is due to be privatized. That restructuring is going on is shown by Banco do Brasil's shift from a minus 134.58 return on equity in 1996 to 9.90 in 1997. Chinese banks are rather more difficult to unravel than Brazil's. China is in transition from a state-controlled to a market-run economy and the country's banks cannot easily be compared with others. Even so, the holding by Chinese banks of the top three positions in the table indicates a weightiness that may be seen more clearly in future. A number of Asian banks have tumbled as a result of the crisis. Even a strong bank like Thailand's Bangkok Bank has fallen from seven to 20 with equity shrinking from $4.2 billion to $2.2 billion. Thai Framers Bank has slipped from 16 to 44 with equity falling from $2.4 billion to $1.2 billion. Taiwanese banks, however, relatively unaffected by the crisis, remain in strong positions. Bank of Taiwan moves up from 10 to five in the table with equity rising from $3.6 billion to $5.5 billion. Foreign investors should be studying the list to decide which are good buys. In Latin America many banks have already gone under the hammer and with new investment are starting to perform better. In Asia the same opportunities are available for the keen-eyed bargain hunter who can see beyond the current crisis. Methodology The ranking of top 200 banks in emerging markets was compiled in conjunction with Fitch IBCA. All information was supplied by Fitch IBCA from commercial banks' annual reports and financial statements. Where possible, figures are presented in consolidated form and banks owned by other financial institutions are not listed separately. Click here for top 200 banks in emerging markets: Numbers 1-50 Numbers 51-100 Numbers 101-150 Numbers 151-200 Definitions Shareholder equity: the sum of issued common stock, capital surplus/premium, statutory reserve, legal reserve, revaluation reserve, contingency reserves (including EU "fund for general banking risk"), retained earnings, net profit for the year and minority interest. Own shares held and distributions payable are subtracted from the total. Where consolidated data are used, shareholder equity includes group equity attributable to minorities. Total assets: as reported in financial statements, net of contra accounts and of eliminations, such as deduction of own shares held. Net income: as reported in financial statement before appropriation. Return on average equity: net income divided by average shareholders' equity (as defined above) at year end. In some cases no comparative figures are available for the previous fiscal period. In these instances, this column represents return on equity at year end. Notes: Russia: only banks reporting international accounting standards are included. Taiwan: where growth rates are not shown, 1997 data were obtained from the ministry of finance, not annual reports. All material subject to strictly enforced copyright laws. 1998c Euromoney Publications PLC.