Banks learn the lesson and work their brand and reputation to overcome Covid-19 according to Brand Finance
- The brand value of 7 banks places Spain in the top 10 worldwide according to Brand Finance. Spain contributes 2% to the total brand value of the ranking.
- Spanish banks lose 6.3 billion euros due to Covid-19.
- Ibercaja joins the list of the most valuable Spanish banks in the world.
- Bankia is the bank that best resists COVID-19, the only one that rises in brand value and position in the ranking.
- BBVA is the strongest bank in Spain (BSI 85.2 out of 100) and the fifteenth in the world. In a year in which all Spanish brands increase their brand strength, Bankinter is the Spanish bank that does so the most (+6.1 points to 71.5 out of 100).
- While the 500 bank brands in the 2021 ranking increase their Brand Strength by an average of 1%, the 7 Spanish banks lose -0.7 points on average in 2021. With 92 points out of 100, the Russian Sber Bank is the strongest bank in the world. world.
In Madrid on February 1, 2021.- The strength of the most valuable banks in the world increases 2.2 points on average while brand value falls for the second consecutive year. In this context, seriously impacted by the pandemic, reputation is presented as the integral variable of the strength of the brand that could make them take flight according to the market study carried out for the new report that assesses the most valuable brands in the banking sector in the world. world, Brand Finance Banking 500 2021, the leading independent intangibles valuation consultancy whose rankings comply with ISO 10668 and ISO 20671 for brand valuation and evaluation respectively and which contributes with its brand value database to create one of the indicators of the Global Innovation Index (GII) of the UN.
The photo of the 9 Spanish banks that represent us in the ranking is not much more encouraging. They lose 6.3 billion among all compared to 2020 and the average brand strength also drops -0.7 points. Teresa de Lemus, Managing Director of Brand Finance Spain: “Banking brands have managed to get the positive out of Covid-19 and have wisely used it to improve their reputation, a decision that is undoubtedly correct for the future”
Abanca , which last year climbed 79 in the ranking, this year rises one position to 331 since its brand value drops -0.7%. However, its solidity is demonstrated by the 3.5 point rise in strength, which now stands at 66 points out of 100, the second largest rise behind Bankinter among Spanish companies.
Banks learn the lesson and work their brand and reputation to overcome Covid-19 ac
Bankinter has been the one that has given the starting gun presenting results on January 21. The entity led by María Dolores Dancausa has reduced its profit by 42.4% until September, to 317 million euros, after a provision of 242.5 million euros due to the pandemic. We will have to be attentive to the ‘roadmap’ for the landing on the market of its insurer, Línea Directa , which was postponed and is now scheduled for mid-2021.
It seems that CaixaBank also followed a procurement strategy. According to the results presented last Friday, it closed 2020 with a net profit of 1,381 million euros, a figure that represents a decrease of 19% compared to the previous year, due to the extraordinary provision amounting to 1,252 million that the entity has made for cope with the impact of Covid-19. Bankia, a brand that will disappear when the merger process scheduled for this first quarter of 2021 is completed, reduced its own by 57% in its last presentation of results, on January 27, the entity closed the year with 230 million euros, a 57.6% less. These will be the last results of both separately before the integration of the two banking giants. An announcement that was already taken into account in the analysis for this study and therefore is included in the brand value of this ranking.
Banco Sabadell expects that it will also show declining numbers in its next presentation of results. Chaired by Josep Oliu, it falls 18 places (position 175) in the ranking, experiencing the largest drop among Spanish banks. This is the result of the loss of brand value, -28% lower than in 2020, the biggest drop of the group of 9 national banks in the ranking.
Santander and BBV are our most international representation. Included among the 500 most valuable brands in the world in the Brand Finance Global 500 2021 ranking presented on January 26. The two largest in the sector share a loss of -23% of their brand values. However, in terms of brand strength, BBVA’s scenario is superior. Santander lost -0.5 points (74.6) and BBVA increased in strength 0.6 points to 85.2. It is the strongest Spanish bank.
We have a new member this year, Ibercaja , who with a brand strength of 57.7 is placed 424 in the ranking. The greatest decrease in this indicator is recorded by KutxaBank, which loses 3 points in strength and falls 14 places to 288.
The banking sector as a whole faces a difficult short-medium-term future.
In addition to starting from a difficult situation due to the low levels of profitability in the sector, banks are seeing increased pressure as governments and central banks around the world continue to try to stimulate economic growth: through large aid packages , the reduction of interest rates and the relaxation of regulation in the banking sector. And add to this the increasing probability of multiple credit defaults, companies and consumers struggling to get out of the pandemic.
Teresa de Lemus, Managing Director of Brand Finance Spain: “Unlike their roles as instigators in the past, banking brands could now become the saviors of the global economy helping to overcome the impact of the pandemic.”
This role change has led to a change in the perception of banking. Favorable opinions among consumers are on the rise, and industry brand reputation indicators rise significantly for the first time since the financial crisis
according to the Global Brand Equity Monitor study by Brand Finance.
This improvement in the perception of the banking sector is reflected in the Brand Strength indicator (BSI), which increases 2.2 points on average among the 67 Global 500 brands and 1 point in the current sector ranking (of the 66.5 out of 100 in 2020 to 66.4 out of 100 in 2021) among the 500 in this report despite the drop in brand value.
Banking and telecommunications brands have the lowest results in
reputation and trust in many markets, especially the latter. Although its demand increased, like other sectors during the pandemic, when connectivity became vital, mistrust has eroded considerably.
Effect of the pandemic on the banking sector
As governments struggle to stimulate economic growth in the face of the current global health crisis, profits and interest rates in the banking sector suffer. C Banks learn the lesson and work their brand and reputation to overcome Covid-19 almost two-thirds of the 500 most valuable banking brands in the world have registered losses in value d Banks learn the lesson and work their brand and reputation to overcome Covid- 19e mark, according to our latest report.
The industry has seen a dramatic recession in the last two years compared to the performance of previous years. The total value of the brands in the annual Brand Finance Banking 500 ranking increased by 10% in 2018 to 0.9 billion euros to 1 trillion euros and 15% in 2019 (1.12 billion euros), in 2020 It lost value falling to 0.8 trillion euros.
The economic impact of the COVID-19 pandemic is noticeable, and the forecast for global GDP is for a reduction of more than 4%, which would show the largest global recession since World War II.
According to our analysts, of the 100 brands that lost the most brand value during each recession, 74 were banks. On the other hand, there were also banks 30 of the 100 brands that have overcome a recession with the most success.
In addition to calculating brand equity, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics that assess marketing investment, stakeholder equity, and business performance. Along with revenue forecasts, brand strength is a crucial driver of brand equity. Banks with a Brand Strength Index (BSI) below 60 points out of 100 experienced an average decrease in brand value of 20%, while banks with a BSI score above 70, the average drop in brand value was only 8%, which shows how important it is for banking brands to have stronger brands than their competitors during an economic downturn.
Teresa de Lemus, Managing Director of Brand Finance Spain : “Financial institutions were the main culprits in the latest financial collapse; This time they present themselves as agents capable of helping people overcome the repercussions of COVID-19. “
43 of the 67 Global 500 banking brands lose value
Of the 67 most valuable banking brands in the world included in the Brand Finance Global 500, 43 have declined in brand value year over year. The sum of the brand value of all of them decreased -68,000 million euros, from 818.4 billion in 2020 to 750.4 billion in 2021. This decrease in the brand value of the banking sector reflects the situation in the that many banks are found as a direct consequence of the COVID-19 pandemic.
In particular, Sber has increased its strength and is positioned as the strongest banking brand in the world, increasing its score in the Brand Strength Index (BSI) to 92.0 out of 100. However, Sber has recently announced a change in the form in which it is positioning its brand, seeking to use the trust and reputation that it has accumulated over so many years among Russian consumers, to move into lucrative new spaces such as TV broadcasting, self-driving cars and cloud services.
In the short term, organic brand value growth can be difficult to achieve. One way to see future growth in brand equity in the industry is through mergers and acquisitions.
Many of the large multinational banks have much stronger balance sheets than during the global financial crisis and may be trying to acquire smaller or struggling brands in their struggle to increase market share at a time of simplified banking environment. We have seen it recently in Spain, first with the acquisition of Popular by Banco Santander and more recently with the merger of CaixaBank and Bankia.
Chinese banks dominate the sector
Chinese banks maintain dominance in the Brand Finance Banking 500 2021 ranking, representing a third of the total brand value and seven of the ten that have grown the most in brand value. Chinese banks have been largely impervious to the problems plaguing their competitors in other parts of the world: while two-thirds of the brands in the ranking have experienced losses, Chinese banks recorded healthy growth in average brand value 3%. This is largely due to China’s timely and effective response to COVID-19, which included regulatory policy adjustments for asset management, wealth management and interbank, as well as increased investment in digitization.
Despite a 15% drop in brand value to € 61.9 billion, ICBC remains the most valuable banking brand in the world. As the largest bank in China, ICBC continues to do well with consumers, regardless of the decline in the bank’s brand value due to the negative impact the pandemic has had on the performance of its investment portfolio. However, the brand maintains a healthy lead ahead of China Construction Bank (-10% and a value of 50.7 billion) and the Agricultural Bank of China (-8% less and a value of 45.2 billion), They occupy the second and third place in the ranking, respectively.
China Guangfa Bank is also a notable injection into the country’s portfolio, entering the Brand Finance Banking 500 2021 ranking for the first time at an impressive 84th position and valued at 2.8 billion euros. The Hong Kong Monetary Authority recently granted China Guangfa Bank a banking license, expanding its footprint outside of mainland China.
5 US banks in the top ten
US banks represent almost a quarter of the total brand value of the ranking: the sum of the brand value of the 74 banks in the country reached 233.9 billion euros. Five US brands are in the top 10: Bank of America (down -13% of the value of 27.9 billion), Citi (down -8% to 27.4 billion), Wells Fargo (down -27% and has a value of 27 billion), Chase (-13% less to 24.5 billion). Bank of America remains the most valuable banking brand in the United States and ranks fifth overall, and JP Morgan is the only brand in the top 10 that increases brand equity.
Wells Fargo currently has the lowest reputation rating score of any bank in the United States. It experienced the biggest drop in brand equity, down two spots to seventh, and third among US banks.
Citi , the third-largest U.S. bank by assets, has become the strongest retail bank in the United States with a Brand Strength Index score of 80.7 out of 100 and a AAA brand rating (versus AA + of 2020). Citi has also moved up one place in the rankings to sixth, following a rapid rebound in profits in the third quarter of last year.
Experts set their eyes on Vietnam
Vietnam’s banking sector has seen the highest growth in brand value of any nation in the ranking, with an increase of 659 million euros (from 4.1 billion in 2020 to 4.7 billion in 2021 ). Vietnam’s ability to effectively control and restrict the effects of COVID-19 has enabled it to counteract the industry trend of declining brand equity. Internal reforms have strengthened the accountability of the Vietnamese financial sector, which has had the indirect effect of increasing not only revenues, but also the reputation and trust of brands. The sum of the value of Vietnamese banks during the last 5 years shows a brand value growth of 753%, the second most important national growth in the ranking.
With an increase of 148%, Union Bank of India is the fastest growing banking brand.
The Union Bank of India experienced the largest growth of the year, growing 148% to 1,028 million euros while climbing 128 positions to 169.
The merger between Andhra Bank and Corporation Bank is primarily responsible for this growth, understood as part of a national effort to consolidate the banking space in India. This success is also reflected at the national level. Besides China, India was the only nation among the top 10 countries with the highest brand value in the ranking that has seen growth in its brand. Among all brands they are up 3% this year.
The banks that stand out
While some of the world’s largest banks have failed during the pandemic, 23 newcomers have joined the 2021 ranking, hailing from Europe, Asia, the United States and South America.
The one that joins in the highest position is Truist at position 36, with a brand value of 6.8 billion euros. Formed in 2019, as a result of the merger between BB&T and SunTrust , they were ranked 68th and 86th respectively in the 2019 rankings, with a combined brand value of € 5.9 billion ($ 7.2 billion). . Teresa de Lemus, Managing Director of Brand Finance Spain : “This merger is another example of the power of rebranding and a careful brand strategy, which shows that brands can be revitalized even in the face of a global crisis.”
Sber surpasses BCA and is crowned the strongest banking brand in the sector
Sber has grown its brand strength year over year to become the strongest brand in the Brand Finance Banking 500 2021 ranking and the third strongest brand in the world across all sectors in the Brand Finance Global 500 , with a Strength Index of Brand (BSI) of 92.0 out of 100 and a coveted AAA + rating.
As the largest bank in Russia, Sber has benefited from its brand stability and high levels of customer loyalty. Both driven by the recent brand change carried out with the aim of consolidating its melting pot of services, which includes the banking, health and logistics branches, among others. Sber is poised for further success as the company has announced that it will continue to invest in its brand in the coming year, which is likely to increase its strength score further.
In market research conducted by Brand Finance, Sber consistently outperforms its competitors in reputation and familiarity – it is widely known, always on top of mind, and well regarded. As a result, the recommendation is high. The bank offers, in the eyes of consumers, the best offer available physically and online, which are solid bases to increase the strength of the brand.
Despite this success, Sber is not exempt from the problems stemming from the COVID-19 pandemic. The decline in brand value in local currency terms has been exacerbated by increased risk in the Russian economy, following the mid-year collapse of the oil price and the subsequent weakening of the Russian ruble, which ended in a fall in the general sectoral ranking of -33% to the value of 7.9 billion euros.
As the second strongest brand in the ranking, Indonesia’s BCA has maintained its strength score of 91.6 out of 100 and is the only brand, other than Sber, that has received an elite brand strength rating of AAA +. It remains one of the largest banks in the ASEAN region and has the highest market capitalization value on the Indonesian Stock Exchange.
South Africa brings to the ranking the third strongest banking brand this year, Capitec Bank , which has maintained its BSI score of 89.2 out of 100 and AAA rating. Surpassing 15 million clients as of December 2020, Capitec has more clients than any other South African bank, thanks to its excellent customer service and personalized experience. The South African brand, First National Bank , in fourth place in the world strength ranking, is also the most valuable bank in all of Africa with a brand value of 1,136 million euros (brand value drops -22%).
Every year, Brand Finance tests 5,000 of the largest brands, assessing their strength and quantifying their value, and publishes nearly 100 reports, ranking brands across sectors and countries. The world’s 500 most valuable banking brands are included in the Brand Finance Banking 500 2021 report .
The full Brand Finance Banking 500 2021 rankings, additional ideas, tables, graphs, more information on the methodology, as well as definitions of key terms can be found in the report.
Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand on the open market. Brand strength is the effectiveness of a brand’s performance on intangible measures relative to its competitors.
About Brand Finance
Brand Finance is the leading independent, international consulting firm in brand valuation and strategy, with offices in 20 countries. We create bridges between the areas of marketing and finance. We provide clarity to marketers, brand owners and investors when quantifying the financial value of a brand. For our experience in strategy; branding; market research; Visual identity; finance; Tax aspects and intellectual property, at Brand Finance we support the client to make the right decisions that optimize the value of a brand and the entire company by building bridges between marketing and finance.
Every year, the independent brand valuation consultancy Brand Finance values the most important brands in the world. More details on the methodology and terminology, as well as the definitions of terms can be found on our Brand Finance website . Brand Finance collaborated in the development of the international standard on financial valuation of brands, ISO 10668, as well as in the recently approved standard on brand assessment, ISO 20671. Brand Finance is under the ICAEW regulations as a public accounting firm and is the first consulting firm in brand valuation to be part of the international committee on valuation standards, IVSC.
The brand is defined as an intangible asset related to marketing that includes, among others, names, terms, signs, symbols, logos and designs, intended to identify goods, services or entities, creating images and distinctive associations in the minds of the parties interested. , thus generating economic benefits.
Brand equity refers to the present value of earnings specifically related to brand reputation. Organizations own and control these profits by owning trademark rights.
All brand valuation methodologies are essentially trying to identify this, although the approach and assumptions differ. As a result, the published brand values may be different.
These differences are similar to the way that equity analysts provide business valuations that are different from each other. The only way to discover “real” value is by looking at what people actually pay.
As a result, Brand Finance always incorporates a review of what brand users actually pay for brand use in the form of brand royalty agreements, which are found in more or less every sector of the world.
This is sometimes referred to as the “Royalty Relief” methodology and is by far the most widely used approach to brand valuations as it is grounded in reality.
It is the foundation of a public ranking, but we always augment it with a real understanding of people’s perceptions and their effects on demand, from our market research database on 3,000+ brands in 30+ markets.
Brand valuation methodology
For our ratings, Brand Finance uses the simplest and easiest-to-understand method possible to help readers understand, gain confidence, and actively use brand ratings.
Brand Finance calculates the values of brands in their rankings using the Royalty Relief approach, a brand valuation method that meets the industry standards set out in ISO 10668.
Our evaluation of the Brand Strength Index or Brand Strength Index, a comprehensive scorecard of brand-related measures, also complies with ISO standards (ISO 20671) and works as a predictive tool for future changes in brand value. and a dashboard to help companies improve marketing.
We do this in the following four steps:
- Brand impact. We review what brands already pay in royalty agreements. This is augmented by an analysis of how brands impact profitability in the sector versus generic brands. This results in a range of possible royalties that could be charged in the industry by brands (for example, a range of 0% to 2% of revenue)
- Brand strength. We adjust the rate higher or lower for brands by analyzing Brand Strength. We analyze the strength of the brand by looking at three main pillars: “Income”, which are activities that support the future strength of the brand; “Fairness”, which are actual current insights from our market research and other data partners; “Product”, which are brand-related performance measures, such as market share. Each brand is assigned a Brand Strength Index (BSI) score of 100, which feeds into the calculation of brand equity. Based on the score, each brand is assigned a corresponding brand rating up to AAA + in a format similar to a credit rating.
- Brand impact x Brand strength. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
- Forecast of the calculation of the brand value. We determine brand-specific revenue as a proportion of parent company’s revenue attributable to the brand in question, and we forecast that revenue by analyzing historical revenue, capital analyst forecasts, and economic growth rates. We then apply the royalty rate to the expected revenue to derive the brand’s revenue and apply the relevant valuation assumptions to arrive at a discounted present value after tax that is equal to the brand’s value.