AfE 2016 logo-196 135 Regional awards Press release View full 2016 results
Argentina Argentina Bolivia Bolivia Brazil Brazil Chile Chile Colombia Colombia Costa Rica Costa Rica Dominician Republic Dominican Republic Ecuador Ecuador El Salvador El Salvador Guatemala Guatemala honduras.gif Honduras Mexico Mexico Nicaragua Nicaragua Panama Panama Paraguay Paraguay Peru Peru Puerto Rico . Puerto Rico trinidad-tobago.gif Trinidad & Tobago Uruguay Uruguay venezuela.gif Venezuela
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Argentina Best bank: Santander Río Best investment bank: Citi |
Banking in Argentina has been challenging in recent years. Increasingly stringent regulation has required banks to lend to certain segments at capped interest rates, while high inflation has complicated other transactional business. The banking system has, by and large, coped well with the poor business environment, and now (in private) bankers are optimistic about the money to be made in the country – from mortgages and retail lending to corporate loans, securitizations and capital markets.
Bank valuations have risen in Argentina but Enrique Cristofani, chairman and CEO at Santander Río, will not be seeking the IPO that was proposed in 2011 and then pulled as the nation’s fortunes crumbled. Senior management confirmed to Euromoney that the bank has no plans to list any further businesses. Instead, Cristofani will be tasked with making the best bank in Argentina even better and satisfying the holding group’s expectations for a healthy growth in earnings sent back to HQ.
Santander Río is certainly well positioned to do so. The challenges in repatriating earnings in the last few years led to big investments in the bank’s infrastructure and a large proportion of future revenues should flow into the profit column as a result. The bank already has scale. It is the private sector’s leader in terms of market share of loans to the private sector (10.0%), deposits (10.3%), commercial loans (10.1%), consumer loans (10.8%) and is second to Banco Galicia in terms of mutual funds (7.4%). That dominance is being extended; in the last year Santander gained 94 basis points in loans market share and 79bp in deposits. Return on equity (35.2%), growth in revenues (29%) and net income (30%) are bloated by the country’s high inflation. The key for Santander Río’s future will be its good efficiency ranking (47.8%) and its network of 393 branches that give it access to more than 200,000 small and medium-sized enterprises, 1,500 corporations and a retail franchise with over 2.7 million customers.
The first award for best investment bank in Argentina for many years was given in 2015 to Citi as activity began to ramp up in anticipation of Argentina’s re-entry to the international financial markets. This duly came, on time but just outside the qualification for this year’s awards. But Citi, which retains the award this year, got on that $16.5 billion ticket and chalked up an impressive deal history in the preceding 12 months. International bond deals for the Province of Buenos Aires and IRSA Propiedades Comerciales and a smattering of local bonds (including Rombo) put Citi in a strong position to capitalize on the coming flow. It won notable M&A advisory mandates for Skanska in its sale of its Argentine subsidiary and NII in its joint venture with Grupo Clarin and had a prominent role in the Globant follow-on equity deal. These, coupled with the bank’s growing treasury and cash management services, mean that Citi is in pole position to take advantage of the surge of fees that is expected from the region’s most exciting economy.
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Bolivia Best bank: Banco Mercantil Santa Cruz |
Banco Mercantil Santa Cruz BMSC is by far the strongest bank in Bolivia and is becoming constrained by its small economy and a financial system that has been limited by the unfriendly financial services law in 2014. But the economy is growing (if more slowly); GDP growth was 4.1% last year (down from 5.5% in 2014). BMSC has re-entered growth mode after a couple of years of regulatory-enforced slowdown and that investment has hit this year’s profitability (down by over 40% in dollar terms) on a 9.7% increase in revenues, but its fundamentals remain strong and next year should see a rebound as the bank reaps the rewards of its ambitious plan to expand and upgrade its market-leading franchise.
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Brazil Best bank: Bradesco Best investment bank: Bradesco BBI |
Brazil’s banking system remains remarkably robust and profitable given the economy is well into its deepest recession for over 70 years and keeps posting quarter-on-quarter falls across almost all economic indicators. The resilience of the banking sector is being tested and cracks are beginning to appear; non-performing loans are growing and provisions against bad loans are damaging profitability.
The country’s leading banks are benefiting from real, positive interest rates and the ability to set APRs that are the envy of most of the rest of the banking world – a result of the rampant inflation that preceded the real plan. The private-sector banks have been pulling back from lending. The share of credit from the public-sector banks has been growing as the government sought to use their lending portfolios as a countercyclical fiscal tool; part of the toxic mix that has led to president Dilma Rousseff’s suspension and impeachment trial.
However, problem portfolios are not limited to the public-sector banks. The private-sector banks have been reporting that they have been rolling-over credit to prevent companies from becoming insolvent. Kicking the can down the road might work – the new Temer government brings fresh hope that growth will return – but at typical rates of 20% a year for corporate loans it could also be building up a spectacular bust. Bradesco looks best placed to either weather a storm or benefit from a return to growth. In the former case, analysts report less concern about pockets of potential bad debt and Bradesco has wider sources of income (such as an insurance subsidiary) than its main competitors. Also, as growth returns it looks best set to further extend profitability. Its investment in technology and its more rational branch network looks more solid than its natural competitor Itaú (which still retains a large concentration of branches in Sao Paulo following its merger with Unibanco). The bank’s efficiency ratio hit 37.5%, the best ever recorded by the bank and comfortably better than Itaú’s reported 44%.
Bradesco is also the momentum story, following its acquisition last year of HSBC Brasil. This deal reportedly delighted the bank’s senior management, not least CEO Luis Trabuco, as much for the additional human capital as the additional high net worth-heavy client list.
The investment banking unit, Bradesco BBI, headed by Leandro Miranda, also takes the award for best investment bank. In a close call, the bank convinces with its strong performance at the bottom of the cycle and its strategic call of the market. Bradesco BBI invested in certain areas that clearly paid off, such as local tax-free products and securitizations. In the latter, the market fell by 54% in volume terms, while Bradesco increased its market share by 13 basis points. It was the same in M&A, the market shrank by 43% but Bradesco increased market share by 22bp to claim the leadership of the M&A league table.
The bank also continued its strength in local debt capital markets (with international issuance severely depressed) and even continued to secure wins in a very quiet equity market, such as its role as global coordinator of Metalurgica Gerdau’s $900 million follow-on deal in November 2015. It was the lead coordinator and bookrunner in the only IPO of the year, Par Corretora. The HSBC acquisition also addresses Bradesco BBI’s structural weaknesses in research and secondary trading.
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Chile Best bank: Santander Chile Best investment bank: JPMorgan |
Chile’s banking sector has seen a fall in net interest margins, from 4.41% in 2014 to 3.91% in 2015, as the sector is positively correlated to inflation. The winner of the best bank in the country, Santander Chile, also saw a corresponding drop in its NIM from 5.6% to 4.8%. However, the bank had prepared for this challenge and reacted by improving its risk-adjusted profitability at client level to target its core metric of client NIM net of provisions. Despite a decelerating economy, the better loan mix resulted in an improvement in its asset quality, with NPLs falling from 2.8% in 2014 to 2.5% in 2015, while coverage increased from 109% to 117.6%. This enabled the bank to report stable client NIM net of provisions of 3.2% despite the deteriorating external situation – and it would have hit 3.33% had it not been for a one-off pre-tax voluntary provision.
The best investment bank in Chile is once again JPMorgan. The bank’s onshore platform in the country is regarded by many domestic and multinational clients as the best and, once again, activity in the qualification period backs up the reputation. Investment banking deal activity was low in Chile last year, but JPMorgan won the lion’s share of the big mandates. The bank was exclusive financial adviser to Grupo Socofar in the sale of a 60% equity stake to Femsa and to the Penta Group for the two-stage sale of its wholly owned bank Banco Penta.
In debt markets, the bank topped the international league tables with its leading role for deals for blue-chip issues such as Latam Airlines and Codelco. It also helped the Republic of Chile achieve the lowest-ever all-in yield for a 10-year deal when Chile re-tapped its 2025 notes (and included a retap of the outstanding 2030s).
The bank, led by Alfonso Eyzaguirre, managing director and senior country officer at JPMorgan Chile, also continues to invest in its treasury and markets business to expand revenue generation away from advisory and underwriting fees.
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Colombia Best bank: Banco de Bogotá Best investment bank: BBVA Colombia |
Banco de Bogotá did what many banks in Latin America did in the last 12 months: it reacted to slowing economic growth and questions about credit quality by concentrating on the risk management of existing business. While this strategy did not set the bank apart from its peers, its ability to execute did. The NPL ratio improved from 1.7% to 1.5%, while the coverage ratio improved to 154.3%.
Meanwhile, the bank also kept its eye on organic growth and managed to grow assets and its loan portfolio by 27.3% and 29.5% respectively, although these numbers are flattered by the devaluation in the Colombian peso; without the FX effect they grew 13.6% and 15.4%.
The bank reported a market-leading return on assets of 1.9% (main rivals Davivienda and Bancolombia reported 1.6% and 1.5% respectively) and return on equity of 16.1%, again higher than Davivienda (15.3%) and Bancolombia (13.6%). It also managed to grow its share of total net income to 23.8% from 19.0% in 2014. Banco de Bogotá also improved its efficiency ratio (from 46.5% in 2014 to 42.4% in 2014), in part thanks to increasing its loan portfolio by 13.7% and deposits by 8.4%.
Under the leadership of CEO Alejandro Figueroa the bank also continues to pursue an important expansion in central America. In 2015 its subsidiary BAC had captured the leading market share in terms of assets, loans and deposits in Central America thanks to steady growth in six of the region’s core markets.
BBVA Colombia wins the best investment bank in the country in a quiet year for activity. However, BBVA’s presence in Colombia combined with its operations in other markets that are of interest for Colombian companies helped the bank’s local platform win important business. The bank was a leader in DCM, leading on the Republic of Colombia’s €1.375 billion 10-year bond that marked the sovereign’s return to the euro market after a 15-year absence. The bank also demonstrated leadership in M&A, acting as exclusive financial adviser to the Carvajal Group in the cross-border sale of its editorial business. The bank is also a top player in syndicated lending, project finance and trade finance, as well as being an important provider of liquidity in the derivatives market.
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Costa Rica Best bank: BAC San José |
Without doubt, the momentum story in the Costa Rican banking market is that of BAC San José – not just in the past 12 months but over the past five years. Its annual growth rate since 2012 has been eye-catching; assets 17.4%, loans 17.9% and deposits 17.6%. However, the bank can lay claim to this year’s award purely on recent performance.
It claimed 25% of the sector’s net income (the highest) and reported market-leading return on equity (15.5%) and efficiency (38%), despite not having the heft of its competitors. BAC is ranked fourth in terms of total assets, with a 12% market share, and total loans (13.2%) and third in deposits (12.2%). This growth and solid profitability have led to the bank being the country’s only private bank to be awarded an investment-grade rating from Fitch.
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Dominican Republic Best bank: BanReservas |
The Dominican Republic’s economy is on a roll and, unusually for the island nation, coming presidential elections have not led to any discernible loss in economic momentum. With president Danilo Medina likely to be comfortably re-elected there has been no drop in investor or business confidence and, critically, no fiscal expansion from the incumbent in the run-up to the elections.
In 2015 the economy grew by 7% and the winner of the award for best bank, BanReservas, can claim to have been, in part, a driver of this growth as well as benefiting from it. The state bank has shaken up the banking sector with a new, integrated retail banking strategy that rests on improving efficiency and customer satisfaction presenting serious competition for the private sector.
BanReservas’ new management team, assembled by CEO Enrique Ramirez, has finally put its lower cost of funding to good use, and investments in technology are also paying off. The bank increased total revenues by 13.1%, assets by 11.9% and deposits by 10.6%. The loan portfolio grew by 4.9% and the bank reported a return on equity of 24.8% in 2015.
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Ecuador Best bank: Banco Pichincha |
Ecuador’s economy fell into recession last year as a result of falling oil prices. The petroleum industry accounts for more than half of export earnings and 25% of public-sector revenues. No bank was immune from the fallout – the sector’s NPL ratio rose sharply in the 12 months to 3.66%, from 2.87%. The largest banks fared better than the average thanks to a diversified client base and multiple product lines. The biggest of all is Banco Pichincha; it posted above-average performance. The bank managed to bring in positive revenue growth of 4.66%, but little else stayed in the black, with profits falling by 19.7%.
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El Salvador Best bank: Banco Agrícola Comercial de El Salvador |
Banco Agrícola Comercial de El Salvador’s strategy of low-cost coverage at home is paying off. The bank’s focus on developing financial correspondents has seen its presence expand to 83 municipalities (up from 76 in 2014) and, reinforced by ATMs and digital service, the bank has been growing revenues faster than the sector average without significantly increasing structural costs.
In 2015 Banco Agrícola maintained its leadership of the financial system despite increasing competition in the banking industry. It grew its loan portfolio to a 28.4% market share, while deposits hit 27.8%. The bank’s efficiency ratio fell to 49.6% (below the sector average of 57.6%) and the bank generated a return of equity of 13.8% (sector average 6.5%) and a return on assets of 1.8%.
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Guatemala Best bank: Banco Industrial |
Banco Industrial’s dominance of its local market continues. The bank is the leader in terms of scale (with 28.5% of total assets, 27.1% of loans and 25.7% of deposits) but has commendably focused on improving customer satisfaction, which is now rated at 89%. This lack of complacency clearly feeds into its 2015 results.
The bank grew its net income by 12.6% to $1.2 billion, well above the 7.8% reported by the sector as a whole. The bank’s conservative risk policies continue to see a lower-than-system-average non-performing loan ratio, at 0.7% and a coverage ratio of 212.2% (compared with 1.5% and 146.3% respectively).
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Honduras Best bank: Banco Ficohsa |
Banco Ficohsa reinforced its dominance of the Honduran banking market in 2015 with the acquisition of Citi Honduras, which now makes it one of the top 10 banks in Central America.
The acquisition was truly transformational for Banco Ficohsa, delivering on its objectives to increase its client base and its product offering, as well as boosting profitability with a 21% jump in net income. It also creates the dominant bank in the system, ranking first in terms of earnings, equity, total assets, loans and deposits.
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Mexico Best bank: BBVA Bancomer Best investment bank: BBVA |
Mexico is the region’s most-competitive and most-important banking market. It is unusual in that it is dominated by international banks, and it is one of those foreign entities that this year wrests the award for best bank from leading local Banorte.
BBVA Bancomer has enjoyed a breakthrough year. Its strong performance – with double-digit growth in net income – is the fruition of a transformation plan the bank launched in 2013. The plan will be completed this year, but already more than 70% of the total investment of $3.5 billion has been spent and the impact on the bank’s competitive position in Mexico has been very positive. The bank continues to be the leading franchise in the Mexican market in terms of having the largest market share of assets, loans, deposits, infrastructure (branches and ATMs) and profitability.
But now, thanks to the increase in share of wallet of existing clients and investment in its digital platform (credits granted through digital channels doubled between 2014 and 2015 and now account for 15% of all the consumer credits granted by the bank), the bank improved its efficiency ratio to 41.9% and hit a return on equity of 20%. The strong performance is even more creditable as strong competitors stumbled and BBVA is well positioned for future competition.
BBVA also wins the award for the best investment bank in Mexico. Like the retail operation, the wholesale platform has long been important in Mexico for its size. In the past 12 months BBVA has improved the quality of advice given to clients. The bank has consistently been near the top of the league tables in recent years, while this year it used the regional trend for euro-denominated transactions to its advantage, as with its €1 billion deal for Femsa. It also completed dollar-denominated deals for Cemex and Pemex and an international Mexican peso deal for Opsimex. BBVA is also the leading bank in the important local bond markets, with many corporates finding local-currency financing more efficient than international deals due to the strong liquidity and presence of international investors in the onshore market.
BBVA’s Mexican investment bank also had a strong year in equities, in the only market to see decent deal flow. It participated in nine transactions during the qualification period, including the IPOs for Cadu, Elementia, Nemak and Gicsa. In M&A, BBVA’s deal flow was bolstered by strong public-sector mandates (on the privatization of seven sugar mills). The bank also led the corporate and syndicated lending segment and continued to have a leading presence in both project and trade finance.
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Nicaragua Best bank: Banco de la Producción |
The Nicaraguan economy saw 4.9% GDP growth in 2015 – much higher than the regional average – and this positive result fed into stronger results for the banking system.
Banco de la Producción (Banpro) took full advantage of this benign environment (inflation also fell to 3% from 6.5% in 2014 due to the effects of oil prices) to grow revenues by 25.9% and net income by 25.1% (or by 19.9% and 19.1% in dollar terms).
The bank reported the highest net profits in the system, beating off strong competition from Banco Lafise and BAC, as well as having the lowest NPLs (at 0.7%). The bank’s return on equity nudged up, to 22.9% from 21.7%, and the efficiency ratio improved to 48.4% from 49.7%.
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Panama Best bank: Banco General |
Financial services have a large weighting in Panama’s economy and the past 12 months have been a volatile time for the industry. First, the economy was removed from the Financial Action Task Force’s anti-laundering grey list, but was then subsequently rocked by the WikiLeaks revelations when Mossack Fonseca’s client files were published.
However, the leading banks seem to be insulated from the reputational damage. Long-sensitive to the country’s poor reputation for money laundering they have held themselves to strict standards – and want to be seen to be following them. Banco General, Panama’s leading private-sector bank, was able to shrug off the furore and continue to build its local presence. In 2015 the bank reported net income of $328.7 million, an increase of 5.1%. Total assets grew by 11.9%, mainly attributable to an 11.4% increase in its loan portfolio (to $9.75 billion). Return on equity was 20% and return on assets hit 2.3%.
General has successfully pursued a strategy of diversifying throughout all banking segments, from retail products to corporate business. The bank also has an increasingly important capital markets division that adds both revenues and acts as a way of retaining the business of large corporates operating in Panama.
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Paraguay Best bank: Banco Itaú Paraguay |
Paraguay’s economy has stalled in large part due to the recession in neighbouring Brazil – GDP growth slowed to 3% in 2015 from 14% as recently as 2013. Ironically the subsidiary of a Brazilian bank, Banco Itaú Paraguay, is this year’s standout performer.
The bank is a clear technological leader and continues to invest in its digital platform to both win new clients and drive its existing retail base to online transactions – the bank’s efficiency rating last year was 37.2%. Despite the leadership position, the bank has revamped its digital offering again and integrated it further with joint ventures (such as with airline TAM) to increase customer loyalty and boost retention. The other three large banks in the system are far from Itaú’s level; Banco Continental reports an efficiency ratio of 42.4%, BBVA Paraguay 54.2% and Banco Regional 47.6%. This feeds into eye-popping returns for Itaú, with ROA of 4.49% and ROE of 47.7%.
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Peru Best bank: Banco de Crédito del Perú Best investment bank: Citi |
Peru’s economy shrugged off the commodities-related slowdown last year, rebounding thanks to strong fundamentals and renewed growth from infrastructure investment and efforts to diversify the economy.
The banking sector enjoyed a similar rebound, although the market characteristic of its biggest and best bank, Banco de Crédito del Perú, is an emphasis on risk controls and asset quality. Led by CEO Walter Bayly, the bank has acknowledged the limits of pure growth – the bank continues to lead the market by market share with 30.5% of direct loans and 30.6% of deposits at year-end 2015 – and is instead focusing on minimizing risk within existing credit portfolios.
The bank also continues with its efficiency programme, which has been boosted by its Centro de InnovaCXión, from which the bank rolls out its digital banking strategy. Perhaps the most important development of the past 12 months was BCP’s merger of its Mibanco and Edyficar units to produce the fifth-largest bank in the Peruvian financial system, as well as creating the largest micro-lending institution in Latin America in terms of loans. This is a sector that BCP has identified as having one of the highest rates of potential growth.
The combination of all these initiatives has been impressive; revenues grew by 19.5% and net income leapt 47%. Return on assets hit 2.3% and return on equity 25.8%.
Citi has maintained its leadership in the country’s investment banking sector. The rise in GDP in recent years has led to high growth in some of the larger Peruvian corporates. With barriers to pan-Andean capital markets being lifted, Citi’s commitment to Peru through recent years of subdued activity could pay off well for the bank. In the last 12 months Citi led on international bond deals for Cofide and a secured transaction for Lima Metro Line 2, as well as being involved in the Republic of Peru’s $1.25 billion bond.
Citi was also active in structured loans – a particular feature of the Peruvian market. Its local brokerage house also executed an open-market purchase order for Arca Continental, and Citi’s onshore presence saw the bank maintain its position as an important local counterparty for swaps and derivatives in local FX and rates.
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Puerto Rico Best bank: Santander Puerto Rico |
Puerto Rico’s sad and seemingly intractable financial problems have placed a huge weight on the island’s economy. Its banks are, therefore, having to respond with an emphasis on prudence and risk management.
Banco Santander Puerto Rico is no exception. The bank reports that it does not foresee an economic recovery in the near future, so management has placed a strategic priority on improving productivity in terms of sales efforts and rationalizing its customer-segmentation model.
In such a challenging environment it has been relatively successful in limiting the deterioration in its results compared with the banking system as a whole, with revenues falling by just 4.6%. Net income fell by 85% but remained positive – no mean feat given the distressed environment (the bank’s NPLs hit 4.87%).
Management is to be commended for implementing a proactive strategy that, since 2008, has strengthened the bank’s capital position. Its ratio of tangible common equity to risk-weighted assets of 28%, on a consolidated basis as of 31 December 2015, has proven to be sufficient to absorb current losses – and, perhaps, more to come.
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Trinidad & Tobago Best bank: First Citizens |
Trinidad and Tobago’s financial sector shrugged off the recession that hit the economy in 2015; while GDP slowed by 3%, the banking sector reported 1.8% growth. First Citizens wins best bank in Trinidad and Tobago two years after celebrating 100 years of operations. In the past 12 months the bank reported performance above the sector average, with a 35.8% profit margin (against the average of 30%), an efficiency ratio of 55.8% (56.7%), a capital adequacy ratio of 48.1% (27.6%), an NPL ratio of 3.4% (4.3%) and NPL provisions of 61.3% (52.1%).
With growth slowing (revenues rose by just 2.5% in 2015), the bank is putting greater emphasis on increasing risk controls and improving credit quality. That should see an improvement on its return on equity, which remains relatively low – although above the system average – at 10.3%.
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Uruguay Best bank: Banco Itaú Uruguay |
Itaú’s subsidiary, Banco Itaú Uruguay, enjoyed a remarkably strong year, in which it consolidated its position as the third-largest bank in the country (second largest in the private sector).
Last year Itaú’s net income of $95 million represented 70% of the banking system’s net earnings for the private sector, while its return on assets (2.3%) and return on equity (29%) were better than any other bank in the country. The bank is evolving quickly, growing its customer base by 4% to 350,000 and total assets by 6%, compared with an increase of 1.2% for the financial sector as a whole.
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Venezuela Best bank: BBVA Provincial |
Venezuela is on the edge of international default after many years of economic mismanagement.
The result is regulation and proscription for all actors in the economy – particularly financial institutions. Added to this are challenging macroeconomic conditions, particularly rampant inflation.
BBVA Provincial is one of the market leaders and has been focusing on investing in its platform in recent years as a means to optimize the use of the earnings generated that cannot be repatriated to Spain.
The bank has built an impressive digital platform (the efficiency rate is just 27%) and has been focusing on building a diversified base of SMEs, as well as investing in its physical network to maintain its dominant share of the market for a future when economic conditions are more favourable.
