Bank profits head east

By The Economist online

Asian banks make the lion's share of global profits

ON JULY 3rd Bob Diamond, the chief executive of Barclays, resigned, days after the bank was fined a combined $454m by authorities in America and Britain for manipulating LIBOR, a benchmark interest rate. Barclays was the 18th-most-profitable bank in the world last year, raking in $9.1 billion in pre-tax profits and accounting for 20% of western Europe's total banking profits, according to the Banker. But the region's profitability has declined markedly since the financial crisis. In 2007, banks there made $363 billion, but by 2011 this had shrunk to $44 billion as Europe's debt crisis continued. Of the world's largest 1,000 banks in 2011, 24 of the 25 biggest lossmakers were based in western Europe, losing $121 billion between them. As the chart below shows, the biggest banking profits have moved from western Europe to the Asia-Pacific region—for which read China. Four of the world's five most profitable banks in 2011 were Chinese. They made a collective profit of $130 billion in 2011, one-third of the region's total.