Most banks in India and mainland China grew their leverage ratios in the quarter ended June 30, according to S&P Global Market Intelligence data on a sample of lenders in Asia-Pacific.
All nine banks in India and 20 out of 33 lenders in mainland China with assets of more than $100 billion posted gains in their Basel III leverage ratios, the data showed. Basel III leverage ratio measures a bank's common equity Tier 1 and additional Tier 1 capital as a percentage of total leverage exposure. The measure takes into account on-balance sheet assets and off-balance sheet exposures, and indicates a bank's capital reserves and preparedness for financial crises.
India's Axis Bank Ltd. had the largest year-over-year increase in Basel III leverage ratio among the banks on the list, jumping 86 basis points to 9.24%. Union Bank of India's leverage ratio rose 72 bps to 6.53%, placing it second among lenders with the steepest increase in leverage ratios. Bank of Baroda Ltd. ranked fourth, as its leverage ratio increased 60 bps to 7.08%, according to Market Intelligence data.
Indian banks have experienced solid credit growth amid the country's strong economic performance and higher interest rates. Credit growth remained steady at 15% in August, the same level as the previous year, data from the Reserve Bank of India showed.
Among mainland Chinese lenders, Huishang Bank Corp. Ltd. posted a 47-basis-point increase in leverage ratio to 6.71%. Bank of Jiangsu Co. Ltd. logged a leverage ratio of 6.68%, Industrial Bank Co. Ltd. had a ratio of 7.07% and China Everbright Bank Co. Ltd. had a ratio of 7.07%, each gaining 40 bps.
Meanwhile, Bank of China Ltd. posted a 5-bps decline in leverage ratio to 7.34%. The bank also saw loan growth slide in the second quarter, compared to the year-ago period, reflecting a broader trend among Chinese megabanks.
PT Bank Mandiri (Persero) Tbk had the highest leverage ratio among regional peers as of June 30. Even with a 22-bps decline year over year, the Indonesian lender posted a leverage ratio of 11.04%.
India's HDFC Bank Ltd. came in second with leverage ratio of 10.99%, a gain of 53 bps from the prior year. Korea Development Bank rounded out the top three, with a leverage ratio of 10.74%. The South Korean lender posted a 69-bps increase in the metric from a year ago.
