|
|
|
|
|
|
|
||||
|
|
|
|
|
||||
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
Bahrain Best bank: Ahli United Bank |
Ahli United is both a Bahrain powerhouse and a regional player, active in seven countries without a dependency on any one. As a group, it had a great 2014, with net profits up 31.7% year on year to $482.5 million, and operating income crossing $1 billion for the first time. Region-wide, it has $33.4 billion in assets, and has achieved growth prudently, with NPLs now down around 2% and total provision coverage of 159.4%.
Bahrain itself has not been the easiest place to do business in recent years, and it says a lot about AUB’s relative strength that it now has a rating higher than that of the sovereign itself, according to both Standard & Poor’s and Fitch. At S&P, the difference is now two notches: when the agency downgraded Bahrain to BBB- with a negative outlook in December, it kept AUB right where it was, at BBB+.
|
Egypt Best bank: CIB Best investment bank: EFG Hermes |
There are finally signs of recovery in Egypt, and no institution is better placed to benefit than CIB, the biggest private-sector bank in the country. A nation of more than 80 million people, many of them transitioning into a new consumer class, Egypt is an alluring market if the political environment allows them to thrive; little wonder that internationals from HSBC to QNB have crowded in, positioning themselves for revival.
The difference between CIB’s 2014 and 2013 numbers tells its own story. Market capitalization up 52.31%, earnings per share up 32.96%, pre-tax profits up 32.56%, total assets up 26.43%. This is not just a recovery but a transformation. It’s not totally without penalty – NPLs drifted up from 3.96% to 4.66% – but nevertheless, the momentum is impressive.
It’s true that other private banks performed well too, but in assets, CIB’s E£144 billion is a long way ahead of QNB Al Ahlia’s E£102 billion in second, and CIB ranked second in the industry on both return on equity (30.25%) and return on assets (2.87%). It has the market-leading position in both loans and deposits.
CIB’s growth has been anchored on what it calls institutional banking, a group that generated nearly 70% of group profits in 2014 as it has helped corporate clients to recover. While consumer banking is a smaller constituent of group profits, it is growing impressively too, helped by new products for households.
One of the region’s finest investment banks, EFG Hermes also dominates the field in its home market of Egypt. Many of the 13 important deals the investment banking team closed in 2014 involved Egypt.
History will probably remember the IPO of Arabian Cement Company as the most important of them: the first IPO to take place in Egypt after the 2011 revolution. It was a success, more than 13 times covered, raising $1.5 billion from a wide range of investors, 30% of them Egyptian, 40% Gulf and the rest from outside the region. Crucially, at the time of writing, it was up on the offering price by more than 20%, demonstrating to investors that it is safe to return to the market.
Other important deals in Egypt included the sale of a leading private hospital there to Dubai private equity group Abraaj, and a E£1 billion rights issue for Sixth of October Development and Investment Company, a deal that won 99% shareholder support despite being launched at a very difficult time.
|
Iran Best bank: Bank Pasargad |
Bank Pasargad is the most professionally run bank of decent scale in Iran. It is, some smaller boutiques apart, the best example of a bank that western investors in a post-sanctions environment might look at and think: well, this feels familiar.
All Pasargad’s numbers look very strong despite the intense limitations that apply to the sector because of sanctions. It experienced 18.9% year-on-year growth in its 2013-14 financial year, and 30.76% growth in revenues. It has by some distance the lowest publicly stated NPL ratio among its peers – 5.91%, when 20% or even 40% is normal in the industry – and is generating a healthy return on assets.
Behind the numbers, it has sought to maintain international best practices even through Iran’s isolation from much of the world, something that is in evidence from its supply-chain management and comparative benchmarking initiatives through to the clarity of its annual report.
Impeded though it is, Pasargad has a stated vision to more than treble its capital within three years, partly to enable growth but also to make sure that capital adequacy ratios fit within international norms. Over the last year it revised its organizational structure into departments for private banking, corporate banking, investment and participation banking, and research, development and marketing. In short, it is the Iranian bank that looks best prepared for a reintegration into the international fold – provided, of course, US Congress lets that happen.
|
Israel Best bank: Bank Hapoalim Best ECM house: Barclays |
Israel’s leading bank continues to dominate, leading the country in terms of credit, capital, retail deposits and – by a distance – net profit. It estimates it has about a third of the retail market in terms of numbers of customers, and a market share of 48% in credit cards, 37% in corporate lending and 33% in SME loans.
Shareholders like it: it enjoyed 9% return on equity in 2014 and maintained a quarterly cash dividend payout of 15% of net profit.
Hapoalim is characterised by an ability to focus on tightly defined opportunities: Israel’s Arabic population, for example, or the ultra-orthodox sector. It has built expertise in serving technology companies, and small businesses. It promotes an annual event called Small Business Day to encourage the public to support smaller enterprises. It has also been quick off the mark in mobile and online banking.
Barclays consistently appears on the big equity deals in Israel, and this year was no exception. During our review period, the bank was on the country’s five largest deals: the IPO of Mobileye, and the follow-on that came nine months later; a secondary listing for Israel Chemicals in New York; and deals for Caesarstone and CyberArk Software.
The Israel Chemicals $463.2 million IPO on the New York Stock Exchange was perhaps the most significant of the bunch, a dual listing designed to promote the liquidity of the company’s shares and broaden its investor base. It priced at just a 5.5% discount to the primary share price despite a difficult market and a number of tax regime complications.
A lot of what Barclays does is repeat business, which tells its own story. Mobileye’s fully marketed follow-on, the CyberArk Software deals (again an IPO and a quick follow-on) and the CaesarStone deal were all mandates that had followed a successful first deal through Barclays.
|
Jordan Best bank: Arab Bank |
One of the few truly pan-regional banks in the Middle East, Arab Bank is the clear leader in its home base of Jordan – even though the vast majority of the bank’s net profit ($577.2 million in 2014, up 15% year on year) comes from outside it.
At home, Arab Bank has dominant market shares in assets (20.41%), deposits (20.7%) and direct credit facilities (16.5%). Like many banks in the region, it has made great strides with a mass affluent offering called Elite within its consumer division, and it has also launched successful campaigns with its Arabi Premium programme (for mid-income executives and entrepreneurs), and for children and youth accounts. Sensibly, given its regional reach, it has also launched a campaign for Arab expats in the Gulf wishing to purchase land and secure housing loans for properties in Jordan.
Outside of the consumer segment, an interesting example on the corporate and institutional banking front was the financing of a number of solar-power projects in Jordan, alongside the IFC. These followed a previous collaboration with the IFC to finance the Al-Tafila Wind Farm. Renewable energy has clearly become a useful specialism for the bank.
|
Kuwait Best bank: NBK Best investment bank: NBL Capital |
NBK, one of the leading banks in the region, is the very clear leader in Kuwait. It is the biggest in assets, loans, profitability, asset quality, and (it says) customer satisfaction. It generally accounts for about half of banking sector profits in Kuwait.
But the bank has shown it can improve, even on such a dominant position. Net profits hit $894 million in 2014, representing 10% year-on-year growth, while total assets grew 17% to $74.4 billion. About three quarters of group profits come from Kuwait.
Secondly, the bank is innovating. NBK rolled out its new brand strategy in 2014 – it is considered the most valuable brand in Kuwait – and is still looking for ways to improve customer experience, such as a new Arabic service in mobile banking, the introduction of point-of-sale instant redemption of reward points, and new premium debit card campaigns.
NBK’s fortunes are clearly linked to those of Kuwait, and the country has begun to make progress after a difficult period, moving forward with long-awaited government projects and triggering a boost in bank lending. NBK took the lead in financing the big local corporates, and increased its already large market share of trade finance. It grew assets impressively, too, in private banking and made progress in cash management and treasury.
As corporate and capital market transactions have started to return to Kuwait, NBK Capital has been ubiquitous.
There was only one important listing on the Kuwait Stock Exchange in the review period: Viva, the Kuwait Telecommunication Company, which listed in December to considerable fanfare. Volume on its first day of trading represented 28% of the total value traded on the market, and by the end of the day the company had a market capitalization equivalent to $1.1 billion. NBK Capital was the exclusive financial adviser.
The key debt capital markets transaction was a $700 million tier-1 perpetual non-call 6 from National Bank of Kuwait, which it says was the largest bond issuance ever from the country and the first rated perpetual security offering in the Middle East. It was certainly another milestone for bank capital in the region. Granted, NBK is NBK Capital’s parent so the mandate was assured, but the deal still had to be done; it priced competitively at 5.75%, was twice oversubscribed and attracted a broad base of local and international money.
M&A was represented by local conglomerate Meezan’s acquisition of Red Bull’s distributor in the UAE, in which NBK Capital advised Meezan.
|
Lebanon Best bank: Audi Bank |
There are few tougher awards to decide upon than the best bank in Lebanon, always a battle between Bank Audi and Blom Bank. This year, the title returns to Bank Audi.
The common argument against Audi is that much of its might is from its operations outside Lebanon, particularly Turkey, and it’s true that a direct comparison of assets ($41.96 billion at Audi, $27.98 billion at Blom), deposits ($35.82 billion at Audi, $24.01 billion at Blom) and loans ($17.1 billion at Audi, $6.9 billion at Blom) does not tell the full story. But even looking at market share within Lebanon only, Audi still leads in both deposits and loans, and its rates of growth through 2014 – 15% in net profits, 15.93% in total assets, 15.21% in total deposits and 16.82% in loans – cannot be ignored just because much of it comes from Turkey or Egypt.
Blom looks marginally better on net income and return on equity; Audi has the better non-performing loan ratio and coverage ratio (though this can be difficult to measure given the prevalence of collateral coverage in Lebanon). Both are well capitalised. Audi also points out its strength in the foreign currency side of the balance sheet, noting that it operates in a dollarized environment.
Audi successfully completed a $300 million capital raising in 2014, a vote of confidence in the bank in what is a relentlessly difficult operating environment: a rights issue, it attracted 92% positive response from shareholders. Lebanon is an intensely challenging place to turn a profit and it is a tribute to Audi, and indeed to Blom and the other Lebanese banks, that they are able to grow.
|
Oman Best bank: Bank Muscat |
This is one of the easier awards to decide upon. Bank Muscat has 38% of the assets in the Omani banking sector, yet continues to grow at a heady pace. It posted an 8.9% year-on-year increase in first-quarter profit, and a 7.3% increase in full-year profit in 2014 to $422.76 million.
It has long been dominant in consumer banking, tailoring its offering to the youth-dominated Sultanate’s population with electronic payments and technology products, but this year has been notable for the strides it has made in international partnerships for insurance. It signed two separate bancassurance alliances during our review period, one making AIG the exclusive provider of non-life insurance products to Bank Muscat customers in Oman, and one with Axa to provide life products.
|
Palestinian Territories Best bank: Bank of Palestine |
Operating in Palestine is challenging at the best of times, but 2014 was particularly difficult, starting with the 50-day war on the Gaza strip. In the circumstances it was an achievement that net profit fell only slightly to $40.22 million from $40.4 million the previous year; indeed, the figure would have grown were it not for the Palestine Monetary Authority’s newly established deposit insurance scheme, which – while admirable – put a $4.76 million burden on the bank’s operational expenses for the first time.
Bank of Palestine is instrumental to the provision of finance in the territories, with its 54 branches making up around a quarter of all branches in Palestine. It’s still growing – six were opened in 2014. Despite obvious challenges, the bank is making a decent fist of building electronic banking, sometimes taking some unorthodox methods to doing so, such as installing solar energy systems for ATMs when electricity is cut off.
The bank has long focused on micro, small and medium-sized enterprises, which makes sense, since they account for 90% of the Palestinian economy. It is also developing a full banking programme for women – it became a member of the Global Banking Alliance for Women last year – and has made continued headway with its Al-Wasata Securities arm.
|
Qatar Best bank: QNB Best investment bank: QInvest |
This is one of the easier awards to give. By far the largest bank in Qatar, with around 45% of national banking assets, it is not only big but growing. In the first quarter of 2015, QNB‘s QR2.7 billion ($742 million) net profit was better than the 2014 full-year number for all but a handful of the region’s banks. It has over QR500 billion of assets now, thanks to an 8.9% year-on-year increase in loans and advances to QR345 billion.
Apart from its sheer size, it is also as diverse as it is possible to be in this small country. The service offering in personal banking, in private wealth, in asset management and investment banking are all sophisticated, and the QNB First premium service is now entrenched, mirroring similar offerings elsewhere in the region.
Qatar really is a useful place to be dominant (and to be state-backed, half owned by the Qatar Investment Authority and half by the private sector). PwC reckons real GDP has increased by 10.7% annually since 2008, GDP per capita exceeds $100,000 at PPP exchange rates (very handy for premium banking services). The infrastructure spending is well documented and even with an energy price slump the country is expected to grow by 7% this year. There is plenty for a bank to lend to, plenty for it to advise on, and plenty of increasingly wealthy people to assist.
QInvest is at the stage of its development where growth figures, from a low base, are dramatic. When revenues are up 134% in the course of the year and net profit is up eightfold, you know things are moving in the right direction.
QInvest’s three-pronged approach envisages roughly equal contributions from investment banking, principal investments and asset management, but for the moment it is the investment banking bit that’s still driving revenues. The bank’s management decided early on to focus on sukuk, and it says it completed transactions in 2014 worth $3.5 billion, or 20% of the international sukuk market. The client base was far broader than one might expect of a partly state-backed Qatari institution: indeed, if anything the Qataris were conspicuous by their absence among the Hong Kong and Luxembourg governments, Kuveyt Turk, Goldman Sachs, Turkiye Finans and so on.
The same division says it was also responsible for closing over $200 million of structured finance transactions in 2014, and handled $3.1 billion of M&A.
Principal investments clearly take longer to develop and longer still to pay out, but the unit has already exited two investments in India, for example, while it is moving into higher yielding asset-backed real estate around the world.
Asset management began to roll out with the launch of an in-house managed sukuk fund, among other developments; the division also bought out the former Qatar Islamic Bank UK asset management unit, which allows it to offer clients a Luxembourg-domiciled EFH fund series.
|
Saudi Arabia Best bank: National Commercial Bank Best investment bank: HSBC Saudi Arabia |
It is difficult to look past NCB in Saudi Arabia in any year, but its landmark IPO makes it an unarguable winner despite an extremely strong year – again – from Saudi British Bank and also a strong showing from Samba Financial Group.
NCB is the biggest bank in the country on every important metric: net loans, deposits, assets, equity and net income. But that’s not enough of a reason to win the award. It is also the best in terms of return on equity, at 20.1% in 2013, and among the leaders in return on assets. So as well as being big, it is increasingly efficient.
Net income in 2014, at SR8.66 billion ($2.3 billion), was a record for the bank by a considerable distance, and represented 10.2% year-on-year growth. It achieved this through diversification of finance and investment products. It remains conservative, as big Saudi institutions tend to be, and maintains an A+ rating from S&P and Fitch.
Still, it’s the capacity to raise $6 billion from a purely domestic IPO, and to be 23 times oversubscribed within that market, that indicates how much the Saudi people want to participate in the NCB story. It would have been interesting to see how such a deal would have gone a little while down the track when foreign investors will find it easier to participate in Saudi IPOs. One suspects it would have been almost as popular in London or New York as in Riyadh.
HSBC Saudi Arabia is the clear leader in investment banking in the kingdom. It always dominates in debt capital markets, but this year achieved a clean sweep of excellence across all disciplines.
The National Commercial Bank IPO, the biggest ever from the Middle East and the second largest in the world all year, is the obvious highlight. It was considered as great a success for the country as for the bank, but was, in fact, not HSBC’s only landmark equity deal that year: somewhat overshadowed by NCB was a $1.5 billion-equivalent rights issue from the Saudi Arabian mining company Ma’aden. This was the largest rights issue since a new tradable rights mechanism was introduced in Saudi Arabia. Since then, in early 2015 the bank has also served as a lead manager on another IPO, SACO, the first hardware retail company to list.
As always, one is spoiled for choice looking at HSBC debt deals here. In dollars, the $2.5 billion 10- and 30-year sukuk from Saudi Electricity Company took the headlines, but the bulk of HSBC’s activity was in riyals, often in innovative or debut deals. Examples were the SR1 billion Advanced Petrochemical Company raised in a debut deal; a SR3.4 billion syndicated murabaha facility for Saudia Aerospace Engineering Industries; acquisition financing for Takween Advanced Industries; mandated lead arranger on a syndication for Tasnee (another petrochemical company) – and numerous others.
|
UAE Best bank: Emirates NBD Best debt house: NBAD Best equity house: HSBC Best M&A house: BAML |
Emirates NBD, the biggest bank in the UAE by loans, has been overlooked in this category in recent years, for two reasons: one, the growing strength of National Bank of Abu Dhabi (still slightly bigger in assets), and two, Emirates NBD’s problems with NPLs.
The bank’s bad debts stood at just under 14% as recently as the fourth quarter of 2013, a function of Dubai’s problems and legacy issues from the merger of Emirates Bank International and National Bank of Dubai. But today they stand at 7.8% – still higher than the big Abu Dhabi institutions, but a step in the right direction that is so dramatic it warrants rewarding.
Although much of the improvement has to do with a reclassification of Dubai World as a performing asset following a restructuring, that’s not the whole story. Considerable effort has been made to sort out bad debts across the book, and the overall enterprise is becoming healthier and more streamlined. At the same time, coverage, at one stage worryingly lacklustre, is well over 100%.
That means we can look afresh at the strength of the overall franchise, which is very good indeed. The flagship bank for the Dubai government, its fortunes will always ebb and flow with the city in a way that banks in Abu Dhabi, backed by the peerlessly oil-rich government there, will never do. But right now, Dubai is a good place to be. Emirates NBD estimates it has 14% of the UAE’s personal loans business, 15% of auto loans, 17% of credit cards and 24% of debit cards, and dominates all of these categories within Dubai. It has a full service offering with particular momentum in private banking, global markets, asset management, investment banking and (through a linked business) Islamic finance.
National Bank of Abu Dhabi, HSBC and Standard Chartered largely shared the spoils in UAE debt capital markets in our review period, and there was plenty to share: NBAD, at the top of the league tables, was bookrunner on $2.94 billion of transactions in that time, spread between 15 deals, according to Dealogic.
NBAD was among the bookrunners on the €3.1 billion multi-tranche, multi-currency deal for Etisalat, the largest-ever corporate issue from the Middle East with the largest order book ever seen from a non-sovereign. It handled a $1 billion hybrid capital issue for Dubai Islamic Bank, a $1 billion bond for the government of Ras Al Khaimah, and was on the bookrunner team for the $913 million sukuk for Emirates Airlines, the first sukuk to be guaranteed by an export credit agency. Add a $750 million issue for Emaar Malls, and sovereign issues for the governments of Dubai and Sharjah, and a self-led MTN programme – NBAD was on eight of the nine largest deals from the UAE in our review period.
Debt capital markets is a focus for NBAD, and the dedicated team is making a lot of headway.
HSBC dominated the UAE’s league tables for equity capital markets during our review period, with a mixture of IPOs, follow-ons and convertibles that demonstrated the bank’s versatility.
The biggest was the IPO of Emaar Malls Group, a $1.6 billion issue that became the largest new listing on Dubai Financial Market, and, unusually, executed through a bookbuild process. That deal – 27 times oversubscribed – demonstrated the liquidity for the right deal, and the $700 million IPO of Dubai and Dubai Parks and Resorts was even more oversubscribed, according to HSBC. Yet perhaps the most interesting was the smallest, a $185 million dual listing in Cairo and on Nasdaq Dubai for Orascom Construction.
Alongside this came a $120 million rights issue from UAE oil and gas services firm Lamprell, and a $1 billion convertible for DP World, the region’s largest convertible since 2008.
The UAE enjoyed a lively year for M&A during our review period, and Bank of America Merrill Lynch benefited most. It was on four deals that involved the UAE in one way or another.
When Orascom Construction demerged from OCI and listed on Nasdaq Dubai, BAML was an adviser both on the demerger and the UAE listing. A more classic M&A role came with the sale of Wajeez Development Company, a district cooling utility on Abu Dhabi’s Al Maryah Island, to Mubadala Infrastructure Partners and Tabreed for the equivalent of $286 million. BAML was exclusive financial adviser to Mubadala.
Up the road in Dubai, it advised Dubai International Capital on its sale of Mauser Group, a manufacturer of industrial packaging products, to US private equity firm Clayton, Dubilier & Rice for about $1.7 billion. And BAML was also involved the €4.1 billion sale of Maroc Telecom to Etisalat by France’s Vivendi.
