Brand Finance Asia Pacific

DBS crowned ASEAN’s Most Valuable Banking Brand 2016

Press Release   •   Feb 01, 2016 17:09 SGT

No Signs of Slowdown from ASIAN Bank Brands

  • A total of 32 ASEAN banks found their way into the Banking 500 ranks this year, one more than 2015.
  • The most valuable banking brands in ASEAN were the three Singaporean Banks: DBS, OCBC and UOB respectively.
  • The strongest brands however were domestically focused banks of Indonesia and Malaysia, with strongest brands being Bank Mandiri, BCA and CIMB.
  • Despite significant growth in brand value, banks across Vietnam, Thailand and Philippines still have relatively weak brand strength.

Every year, leading brand valuation and strategy consultancy Brand Finance puts thousands of the world’s top brands to the test, evaluating which are the most powerful and valuable, publishing the top 500 banking brands in the Brand Finance Banking 500.

The Chinese bank brands have been performing well for a number of years and in 2016, more bank brands in the global top five are from China than from the US. ICBC is second, China Construction Bank third and Agricultural Bank of China (which grew in value more than any other brand) is fourth. The total value of Chinese banks in the table grew 42% to US$206.9 billion, suggesting that next year China could overtake the US. US bank brand value totalled US$225 billion in 2016.

Samir Dixit, Manging Director of Brand Finance Asia Pacific highlighted that “The ASEAN bank brands are also on a strong growth trajectory with DBS leading the ASEAN ranking for the 5th consecutive year”. Samir further added that “DBS has raised the benchmarks for all ASEAN banks by crossing the US$ 5 billion brand value mark for the first time and we will see if others follow suit and make the Brand Value an important KPI for their business and marketing initiatives”.

This strong performance in the banking results is beyond just the financial growth for the sector. “Most ASIAN banks have reached significantly high brand strength scores making them extremely competitive both regionally and globally” said Alfredo Chandra, Director of Brand Finance Asia Pacific. “This clearly shows that the brands are driving the business and not the business driving the brand”, he added.

The ASEAN’s most valuable Banking Brands (Top 10)

Rank 2016Rank 2015BrandDomicileBrand Value 2016 (USDm)Brand Value/Market Cap (%)Brand Rating 2016Brand Value Change (%)Brand Value 2015 (USDm)Brand Rating 2015
4856DBSSingapore5,31418%AAA-20%4,416AAA-
6774OCBC BankSingapore3,29313%AA+18%2,787AA+
7984UOBSingapore2,76212%AA15%2,404AA
10191MaybankMalaysia2,05012%AA+-9%2,243AA+
106107Bank MandiriIndonesia1,83412%AAA5%1,738AAA-
110101CIMBMalaysia1,71619%AAA--13%1,964AAA-
117134Bank Rakyat IndonesiaIndonesia1,5888%AA+22%1,302AA
123108Kasikornba nkThailand1,46714%AA--12%1,667AA-
139133Siam Commercial BankThailand1,22010%AA--7%1,307AA-
144147BCAIndonesia1,1415%AAA3%1,111AA+

The World’s Most Valuable Banking Brands (Top 10)

Rank 2016Rank 2015BrandDomicile Brand Value 2016 (USDm)Brand Value/Market Cap (%)Brand Rating 2016Brand Value Change (%)Brand Value 2015 (USDm)Brand Rating 2015
11Wells FargoUS44,17016%AAA-26%34,925AAA-
22ICBCChina36,33415%AA+32%27,459AA+
34China Construction BankChina35,39421%AAA34%26,417AAA-
48Agricultural Bank of ChinaChina32,26420%AAA42%22,714AA+
57ChaseUS30,60324%AAA-31%23,392AA
69Bank of ChinaChina27,73516%AAA36%20,392AAA-
76Bank of AmericaUS26,92818%AA5%25,713AA+
85CitiUS26,03117%AA+-1%26,210AA+
93HSBCUK24,17417%AAA--11%27,280AAA
1013BarclaysUK16,23630%AA14%14,206AA


While DBS held on to its #1 ASEAN position for the 5th consecutive year, globally Wells Fargo has held onto the top spot for the fourth year in succession, thanks to an impressive 26% rise in brand value to US$44.2 billion. It is also the most valuable brand within retail banking, second place in asset management (up from fifth last year) and retains its fifth place position in commercial banking. Its master brand-strategy allows all business lines to benefit from the strength of the Wells Fargo brand.

The UK is third in terms of total banking brand value, its total of US$76 billion is up 5.1% on 2015. Fourth placed Canada has had a poor year by comparison, with total brand values falling 11.9% as a result in large part of the declining oil price affecting the value of the Canadian dollar. France completes top five, with 2.7% bringing its total to US$40.6 billion.

In ASEAN, Singapore banks led the rankings with DBS also making it to the top 50 Bank brands globally, currently ranked 48th. OCBC also crossed the US$ 3 bn mark.

Malaysian banks lost some value due to the weaker ringgit and slowing economy however the brand value had a positive growth when using the local currency based values which don’t get impacted by the weaker ringgit.

In Indonesia, Bank Mandiri remained the most valuable Indonesian bank brand with BRI on its heels which had a 22% surge in brand value this year. Bank Mandiri also replaced CIMB to be in the Top 5 Most Valuable Banking Brands.

“The strong showing of Indonesian banks in terms of growth in brand value and brand strength is an excellent indicator of the barriers-to-entry domestic banks have been able to generate by leveraging their strong presence and brand equity within the fast growing market”, commented Jake Ng, the analyst at Brand Finance Asia Pacific.

Banks is Thailand remained just outside of the top 100 brands with Kasikornbank being the highest valued Thai Bank this year and featured at 123 in the Global Banking 500. Bank of Ayudhya grew the most in Brand Value among Thai Banks this year, at 16%.

Hiten Bhatia, Analyst at Brand Finance Asia Pacific highlighted that, “In Vietnam and Philippines, despite their significant growth this year, Philippine and Vietnamese banks remain susceptible to foreign banks expanding their presence in these marketsUK”. Hiten further added that “This was largely due to their low brand strengths”

Bank for Investment and Development of Vietnam (BIDV), ranked 413, entered the Global Banking 500 rankings for the first time and overtook Vietcombank. “This shows that the market is getting more brand focused and the is moving to exploit the brand advantage over price and product differentiation alone”, said Samir Dixit .

About Brand Finance

Brand Finance is the world’s leading brand valuation and strategy consultancy, with offices in over 15 countries. We provide clarity to marketers, brand owners and investors by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax and intellectual property, Brand Finance helps clients make the right decisions to maximise brand and business value and bridges the gap between marketing and finance.

Methodology

Definition of Brand

In the very broadest sense, a brand is the focus for all the expectations and opinions held by customers, staff and other stakeholders about an organisation and its products and services. However when looking at brands as business assets that can be bought, sold and licensed, a more technical definition is required. Brand Finance helped to craft the internationally recognised standard on Brand Valuation, ISO 10668. That defines a brand as “a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos and designs, or a combination of these, intended to identify goods, services or entities, or a combination of these, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits/value.”

However, a brand makes a contribution to a company beyond that which can be sold to a third party. ‘Brand Contribution’ refers to the total economic benefit that a business derives from its brand, from volume and price premiums over generic products to cost savings over less well-branded competitors.

Brand Strength

Brand Strength is the part of our analysis most directly and easily influenced by those responsible for marketing and brand management. In order to determine the strength of a brand we have developed the Brand Strength Index (BSI). We analyse marketing investment, brand equity (the goodwill accumulated with customers, staff and other stakeholders) and finally the impact of those on business performance. Following this analysis, each brand is assigned a BSI score out of 100, which is fed into the brand value calculation. Based on the score, each brand in the league table is assigned a rating between AAA+ and D in a format similar to a credit rating. AAA+ brands are exceptionally strong and well managed while a failing brand would be assigned a D grade.

Approach

Brand Finance calculates the values of the brands in its league tables using the ‘Royalty Relief approach’. This approach involves estimating the likely future sales that are attributable to a brand and calculating a royalty rate that would be charged for the use of the brand, i.e. what the owner would have to pay for the use of the brand—assuming it were not already owned.

The steps in this process are as follows:

1 Calculate brand strength on a scale of 0 to 100 based on a number of attributes such as emotional connection, financial performance and sustainability, among others. This score is known as the Brand Strength Index.

2 Determine the royalty rate range for the respective brand sectors. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database of license agreements and other online databases.

3 Calculate royalty rate. The brand strength score is applied to the royalty rate range to arrive at a royalty rate. For example, if the royalty rate range in a brand’s sector is 0-5% and a brand has a brand strength score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.

4 Determine brand specific revenues estimating a proportion of parent company revenues attributable to a specific brand.

5 Determine forecast brand specific revenues using a function of historic revenues, equity analyst forecasts and economic growth rates.

6 Apply the royalty rate to the forecast revenues to derive brand revenues.

7 Brand revenues are discounted post tax to a net present value which equals the brand value.