To identify the world’s strongest banks, we used Bloomberg’s Equity Screening function to obtain a list of the 78 banks with total assets of $100 billion or more as of mid-March.
The banks’ Tier 1 capital ratio, which is the ratio of a bank’s core equity capital to its risk-weighted assets, accounted for 40 percent of each bank’s score.
The ratio of nonperforming assets to total assets got a weighting of 20 percent, as did the ratio of reserves for loan losses to nonperforming assets.
The ratio of deposits to funding accounted for 15 percent of the final score. And the efficiency ratio, which compares costs with revenues, received a 5 percent weighting.
Banks were ranked on each criterion, the scores were added together and the total determined their position in the list. Banks that reported a loss for their 2011 net income and banks that failed the Federal Reserve’s latest stress test were excluded.
All data are for banks’ 2011 fiscal year, which in most cases ended Dec. 31. Banks that hadn’t reported 2011 year-end data by March 31 were not included.
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