HSBC Named the World’s Most Valuable Banking Brand as European Banking Brand Values Plummet
The Brand Finance Banking 500 report, released today, shows that HSBC has leapfrogged Wells Fargo and Bank of America to become the world’s most valuable banking brand in 2012. This strong performance from the London-based banking giant stood out in its region; European banks performed miserably, making up 16 of the 20 “fallers” on the table.
While Europe continues to be beset by economic uncertainty and the ongoing troubles of the Eurozone; 2011 saw the meteoric rise of the emerging economies reach a crucial tipping point. Today’s table shows brands from BRIC (Brazil, Russia, India and China) countries now outnumber their European counterparts among top 20 banking brands.
US banks continued to fare well when compared to their European counterparts, with Wells Fargo holding firm in second position and strong performances from both Citi Group and American Express in sixth and seventh place respectively. With five of the top 10 most valuable banking brands headquartered in North America, the US is recovering from the financial crisis much faster than Europe.
Commenting on this year’s report, David Haigh, CEO of Brand Finance, said: “The past 12 months have proved to be a very turbulent period for banking brands. We have seen a collective decline in brand value amongst the 500 banks in our report of $94.78bn. Despite this, the total value of the top 500 banking brands was US$746.7 billion. The size of this number – which is equivalent to the GDP of Turkey – underlines the importance of brand value to the global financial sector.”
“2012 is set to be a landmark year politically with the US election in November and polls in Germany and France too. In this context the eyes of the world will be examining the brand value of financial institutions, as an indicator of broader financial health of their respective nations.”
Brian Caplen, Editor of The Banker, says: "While European banks have found the going tough in branding terms, banks from other parts of the world have fared much better. Canadian and Chinese banks, for example, are very prominent in the table of absolute brand value winners showing that it isn't only emerging markets that are benefiting from Europe's difficulties."
The full results appear in the February 2012 issue of The Banker, go to wwww.thebanker.com.
For the complete Brand Finance Banking 500 report and further information, go to www.brandfinance.com
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes nearly 100 reports which rank brands across all sectors and countries.
Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. 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%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast 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 Discount post-tax brand revenues to a net present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.