03 July, 2020
As an example of how economic power is shifting from the U.S. to other countries, in the 2019 Fortune Global 500, U.S.-based companies represent only 4 of the top 10 by profits and just 2 of the top 10 by revenues. Profit leaders include Apple Inc. (AAPL) in 2nd place, JPMorgan Chase & Co. (JPM) in 6th, Alphabet Inc. (GOOGL) in 7th, and Bank of America Corp. (BAC) in 9th. Apple has nearly twice the annual profits of JPMorgan Chase ($59.5 billion vs. $32.4 billion), but only about half that of Saudi Aramco ($111.0 billion).
The world's 10 most profitable companies and their profits last year are as follows, according to Fortune:
1. Saudi Aramco - $110.9 billion
2. Apple - $59.5 billion
3. Industrial & Commercial Bank of China - $45 billion
4. Samsung Electronics - $39.8 billion
5. China Construction Bank - $38.4 billion
6. JPMorgan Chase & Co. - $32.4 billion
7. Alphabet - $30.7 billion
8. Agricultural Bank of China - $30.6 billion
9. Bank of America Corp. - $28.1 billion
10. Bank of China - $27.2 billion
Saudi Aramco is Saudi Arabia's state-owned oil producer, and the major source of revenues for that country's government through taxes, royalties, and dividends. For more than 3 years, Saudi Arabia's ruler, Crown Prince Mohammed bin Salman, commonly referred to as MBS has been promoting the idea of selling a 5% equity stake through an IPO.
This deal has been delayed repeatedly, and the latest time frame suggested by the Saudi government is 2020-2021, per OilPrice.com. A key sticking point reportedly has been the Saudi government's hesitancy to make public various facts about the company's oil reserves, among other matters that have strategic importance.
Indicative of the economic growth of Asia, the top 10 by profits include 4 state-owned Chinese banks, plus South Korean conglomerate Samsung Electronics. In third place by profits, behind Saudi Aramco and Apple, is the Industrial & Commercial Bank of China. Its annual profits are $45.0 billion and it leads the 10 most profitable in assets ($4.0 trillion) and employees (449,000). By contrast, the biggest U.S. bank, JPMorgan Chase, has profits of $32.5 billion, assets of $2.6 trillion, and employs 256,000.
The heft of the Chinese banking the sector is illustrated by the combined figures for the I&C Bank plus the 3 others in the global top 10 by profits, the China Construction Bank, the Agricultural Bank of China, and the Bank of China. As a group, they generate annual profits of $141.4 billion, have assets of $13.8 trillion and employ more than 1.6 million people.
By comparison, the entire the banking sector in the U.S. has assets of $18.2 trillion and employs 2.1 million people, per 1Q 2019 data from the FDIC as reported by the American Bankers Association. Total annual profits for U.S. banks were a record $237 billion in 2018, per FDIC data reported by Bloomberg.
Walmart Inc. (WMT) is the worldwide leader in revenues, while Exxon Mobil Corp. (XOM) is 8th. The top 10 by revenue include Chinese oil companies Sinopec and China National Petroleum, Chinese electric utility State Grid, and Toyota Motor of Japan. Oil companies Royal Dutch Shell, Saudi Aramco, and BP, plus carmaker Volkswagen of Germany, round out the revenue leaders.
The planned IPO for Saudi Aramco would sell a stake of 5% to the investing public for $100 billion, setting a $2 trillion value for the entire company. That implies a P/E ratio of 18.0 times trailing earnings, expensive compared to 11.2 for Shell and 13.4 for BP, but close to the 17.4 figure for Exxon Mobil, per Yahoo Finance.