More than half of Asia's largest banks saw lower returns on their risk-weighted assets for the last 12 months compared to a year earlier, according to data from S&P Global Market Intelligence.
Return on risk weighted assets (RoRWA) tells investors how well a lender is generating income in terms of the risks it undertakes.
Among the 20 largest banks headquartered in Asia with data reported,Westpac saw the sharpest drop in RoRWA of 35 basis points, putting its ratio for the 12-month period ended March at 1.93 per cent.
The bank saw its net income drop 5.83 per cent year-on-year, while risk weighted assets rose 11.32 per cent.
The research showed that HSBC reported the highest RoRWA for the 12 months ended June at 3.40 per cent, up from 3.24 per cent at June 2016.
Japan-based Norinchukin Bank on the other hand, had the lowest return among the banks sampled at 0.62 per cent as of June-end, down 19 basis points.
Commonwealth Bank’s ratio was flat at about 2.40 per cent.
National Australia Bank’s ratio shot up to 1.3 reflecting the demerger of its UK operations which saw the offloading non-performing assets.
Prior to that, it would easily have the lowest return of the group, according to the chart below.
ANZ’s ratio fell from 1.70 per cent to around 1.40 reflecting pressure on bank earnings.
ANZ has not yet shed the bulk of the big ticket assets it is trying to sell - which will see its ratio climb.