The UK’s largest bank, which has been shifting focus to areas garnering higher returns such as Asia and wealth management, moved up one position to eighth in the global ranking.
The Top 1,000 World Banks ranking is based on Tier 1 capital, a key measure of banking strength.
Of the top five UK banks, Bank of Scotland owner Lloyds Banking Group (ranked third) recorded the highest percentage increase in Tier 1 capital year-on-year, while Barclays (ranked second) topped the group in asset growth.
However, all five UK banks saw declines in pre-tax profits year-on-year. Royal Bank of Scotland parent NatWest Group, in fourth place in the country ranking, moved from profit to loss.
Joy Macknight, editor of The Banker, said: “The UK banking industry has faced significant headwinds over the course of the past year, with the impacts of the Covid-19 pandemic and Brexit uncertainty weighing profitability down.
“Despite the challenging environment, the UK’s banking sector remains the fifth largest in the world, with aggregate Tier 1 capital of $437.5 billion [£314.5bn], underpinned by London’s position as a leading global financial centre.
“Although profits have shrunk across the globe and many banks’ balance sheets are loaded with allowances for expected loan losses, the world’s banking industry has held up remarkably well and is better capitalised than ever before.”
China continues to be the engine of growth for the world’s banking industry, increasing aggregate Tier 1 capital and total assets by 18.6 per cent and 18.4 per cent, respectively.