Monday, February 25, 2008

Indian commercial banks SBI, ICICI bank beats MasterCard on brand valuation

Most of us don’t think much of homegrown financial sector brands, do you? Understand this. According to Brand Finance’s Global 500 Financial Brands Index, 2007 (GFBI) the country’s number one commercial bank, the government-owned State Bank of India (SBI) and leading private sector bank, ICICI Bank (ICICI), beat the globally renowned “There are some things money can’t buy...” brand, MasterCard, on brand valuation! SBI’s $2.852-billion and ICICI’s $2.603-billion brand value gain over MasterCard’s $2.6 billion.

Brand Finance’s GFBI 2007 integrated data from the world’s thirty-two largest stock markets. It doesn’t value or rank private companies, and for this reason another big global payments brand VISA, which is yet to go public, wasn’t included in 2007’s league table. Apart from brand value and the global ranking, the GFBI also accords each of the 500 brands a brand rating—a measure of strength, risk and future potential of the brand relative to its competitor set.

Two years ago SBI and ICICI, two Indian brands that outstandingly figured in a similar Brand Finance ranking, the Global 200 Financial Brand Index 2005, have now been joined by seven other financial sector brands from the country in GFBI 2007 rankings––HDFC Bank, Kotak, Housing Development Finance Corp, Axis Bank, IDBI Bank, LIC Housing Finance and even the troubled IFCI.

The financial sector’s visibility as an emerging powerhouse, which up till now cloaked in the routine of IT, ITeS and telecom industry, has now begin to come to the forefront. While new Indian companies have entered the Brand Finance’s GFBI 2007, two Indian in office have smartly consolidated. So much so, SBI today figures amongst the top 10 globally in terms of its brand value-to-market capitalization ratio (BMR), with a BMR of 24%. Two years back SBI has dramatically improved its brand value to $2.85-billion in 2007, up from $1.99-billion.

Similarly, ICICI’s $2.603-billion current brand value (up from $1.72-billion in 2005) has BMR of 15% which fairly high by global standards. Among the top 20 brands in GFBI 2007, American Express has one of the highest BMR at 31% and the second lowest market cap ($51.46-billion). Others with high BMR include Santander Central Hispano (31%), Capital One (26%), NICOS (25%) to name a few.

The overall ranking on the GFBI 2007 are pretty much conventional with top three—HSBC, Citibank and Bank of America—playing musical chairs amongst them. HSBC improved from its 2005 No 2 rank and displaced Citibank from the top slot, with a brand value of $35.46-billion. The subprime-crippled Citibank came in No. 2 with a brand value of $27.32-billion followed by BoA which ranked No 3 with brand value of $25.42-billion.

Interestingly, banks abode in large and rapidly emerging markets—Brazil, Russia, India and China (the BRIC countries)—continue to benefit from rapid economic growth in their regions notes the GFBI 2007 report.

For instance, Brazil has three banks among the top 60 brands—Banco Bradesco (brand value $4.11-billion), Banco do Brasil ($4.01-billion) and Banco Itau ($3.5-billion), ranked 42nd, 45th and 53rd, respectively. China has three banks—Industrial & Commercial Bank of China ($8,427-million), China Construction Bank ($7.79-billion) and Bank of China ($6.74-billion, ranked 16th, 18th and 23rd respectively, Russia has one bank—Sberbank ($3.42-billion) ranked 55th, and India’s SBI ($2,852-million) is ranked 59th.

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