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Afghanistan
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Euromoney has never before given an award in Afghanistan, but the story of Azizi Bank is compelling. Formed by an ethnic business group in 2006 and owned by Dubai’s Azizi Group, it took over the Development Bank of Afghanistan from the central bank in 2009, then India’s Punjab National Bank in 2014. It is Afghanistan’s largest commercial bank, with more than 140 branches and a million customers, and employs 2,300 people, 17% of them women, which does not sound a lot but matters in Afghanistan.
It is the sense of ambition and possibility that marks out Azizi Bank. It has just launched the country’s first fully fledged Islamic bank by converting a subsidiary, Bakhtar. It is the leader in the country in using point-of-sale devices, it uses social media and, in addition to saving and lending products, it is a leader in trade finance. Its corporate and social responsibility role in local education is also important.
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Australia
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In previous years we have considered Macquarie in the investment banking category. But pinning down Macquarie to any sort of definition is difficult, for nothing else looks much like it. These days only about 30% of its profits come from market-facing businesses such as Macquarie Capital; it is chiefly an annuity-style income shop, making its money from stable assets in anything from infrastructure to mortgages, aircraft leasing to energy.
Whatever we call it, it is doing extremely well and has reinvented itself completely under Nicholas Moore’s watch since he took on the CEO job in the middle of the global financial crisis. Its 2017 full-year result, which coincides with the awards period, delivered record profits of A$2.217 billion ($1.672 billion) after tax with a 15.2% return on equity. Everything Macquarie gets into it does well, supporting its staff with confidence and capital and trusting them to do exceptional things with the opportunity.
Considering Macquarie in the bank category allows us to focus on pure investment banks in this section, and it is the Swiss, UBS and Credit Suisse, that have impressed most over the last year.
UBS had the strongest year in equities, raising A$6.4 billion through 42 deals during our review period, including two of the bigger IPOs, Charter Hall Long Wale real-estate investment trust and Inghams Group. An M&A highlight was the A$20.7 billion long-term lease of Ausgrid, as well as the A$12.2 billion acquisition of Asciano. UBS has also long excelled in debt, from government to corporate deals, both domestically and in Swiss francs and US dollars.
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Bangladesh
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Although City Bank is usually the first Bangladesh bank one thinks of in terms of international standards, the fact is that EBL (Eastern Bank Limited) has the better numbers. The banking industry in Bangladesh has non-performing loans around the 10% mark – at EBL it was 2.69% in 2016, and the target is to get it below 2%. Return on equity soared from 10.95% to 13.55% in 2016 and post-tax profits climbed 25.73% for the year.
The bank is impressive for a wide range of consumer, treasury, corporate and SME offerings, and launched 10 new retail products in 2016 alone. It has a list of smart and achievable ambitions, from the current and savings account (Casa)/fixed-deposit ratio to fee-based income and digital banking, and it enjoyed a healthy range of corporate deals during the awards period from syndicated lending and project finance to cash management initiatives. It is well-positioned for public-sector investment in infrastructure and it is expanding in Hong Kong.
Though Sri Lankan-owned, NDB Capital’s merchant bank operation in Bangladesh is the finest in the country. It has retained its leadership in commercial paper, raising nearly Tk11 billion ($136 million) in 2016 for clients including national leaders in steel, dairy, textiles and power.
It was adviser and arranger of Bangladesh’s first-ever credit-card securitization for ACI Logistics, the country’s largest superstore chain. This was a landmark for Bangladesh. Other highlights included bringing in a Sri Lankan investor to take a 51% stake in Alliance Leasing and Finance, an issue of zero coupon bonds for Nasir Glass Industries and a sell-side M&A mandate for a local pharmaceutical leader.
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Cambodia
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ABA Bank is not the largest bank in Cambodia – in fact, it is only this year that it has cracked the top five – but it continues to stand out for its high standards, bolstered by the growing participation of the National Bank of Canada. Having reached a period of great momentum in recent years, ABA’s numbers are extremely good, tied to Cambodia’s economic growth. ABA’s net profit increased by 81.4% year on year in 2016, while total assets crossed $1 billion, with 63% growth in the loan portfolio and 31% in deposits. NPLs stand at just 0.2% of the portfolio. All of this has been achieved with 25% return on equity.
It is little surprise that ABA has been pushing technological development in Cambodian banking. Its Smart Banking platform has been improved and its mobile banking app is the most popular in the country.
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China
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A bank of quality in China must master several different themes of the day: loan book quality, including the systematic resolution of impaired loans; the Belt and Road Initiative, and the opportunities (and possibly millstones) that come with it; and using technology to reach out to a customer base that, on the consumer side in particular, is exceptionally well-served by startups such as Ant Financial, Lufax and Tencent.
ICBC, CCB and Bank of China all demonstrate strength across the three themes, but ICBC is most convincing when its senior management talk through their priorities and ideas.
ICBC’s numbers are good – net profit for 2016 of Rmb279.1 billion ($41 billion), modestly up during a highly challenging year and NPLs up slightly at 1.62% – but the award is more a reflection that its management understands the challenges facing Chinese banks and is doing something about them.
Engage people like president Gu Shu in conversation and the first thing they bring to your attention is what they are doing about asset impairment.
So, for example, the bank bites the bullet and shifts bad loans rather than waiting in hope that they might resolve themselves. It moved on Rmb200 billion of NPLs last year, mainly packaging and selling them cheaply, knowing that if it did not do so it could be looking at a 7% burden. New delinquencies are slowing anyway thanks to changed policies concerning lending to oversupplied sectors.
Conversations around Belt and Road are always a little vague – it can feel like any project anywhere in the world can be linked to Belt and Road if banks find it expedient to do so – but ICBC is undeniably active, committing $23.5 billion to Belt and Road countries and regions in 2016.
It has the most developed network among those countries and so far claims to have been involved in 212 projects in the area with financing facilities of over $67 billion. It is expecting to be involved in 400 more with hundreds of billions of dollars of funding, but insists it will only do so on sustainable commercial terms.
ICBC’s technological engagement numbers are starting to get towards the eye-watering levels of the country’s fintechs. ICBC Mobile has 253 million customers now and the ICBC Mall e-commerce platform transacted Rmb1.27 trillion in 2016.
In previous years, the best investment bank award has tended to go to international investment banks that are skilled at bringing Chinese companies to overseas markets or guiding international capital into the mainland.
But the scale of the domestic markets in China can no longer be ignored and, unfair though it may be, that remains the preserve of home-grown banks as a matter of policy.
The pick of them in recent years has been Citic Securities. Although not quite the top-ranked bond underwriter in the country – that was China Securities – it nevertheless raised $55 billion across almost 200 issues during the review period and has impressed by bringing the market forward as well as showing scale.
Its Rmb6 billion two-tranche bond for China Three Gorges was China’s largest green corporate bond to date. Its Rmb800 million exchangeable bond for Hebei Yiling Pharmaceutical was the first exchangeable publicly issued for qualified investors and the first of its kind to be issued on the Shenzhen Stock Exchange.
Its A-share equity financing grew by 50% year on year in 2016, while its strength in domestic M&A is growing.
It was financial adviser on two of the five biggest M&A deals in Greater China during 2016, as well as one of the most interesting, the acquisition of hydropower company Chuanyun by China Yangtze Power through a combination of shares and cash.
Does best practice exist in Chinese domestic brokerage and investment banking? Not by global standards, but Citic Securities, which owns CLSA, is involved in big, ground-breaking deals that take the market forward.
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Hong Kong
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HSBC is by some distance the most powerful and able bank in Hong Kong, particularly when subsidiary Hang Seng is taken into account. The Hong Kong operations of HSBC created HK$166 billion ($21.3 billion) of revenues in 2016. Although net profit was down, to HK$87.8 billion, it still dwarfed any comparable institution, and did so at a return on equity of 13%.
Key developments over the last 12 months have come in the retail and wealth management area, where the bank has continued to invest in digital and mobile channels, offering Apple Pay and Android Pay during the year. New mutual funds, structured products and wealth insurance have been developed, some of them leveraging on the bank’s leadership in renminbi bond investments.
The bank’s traditional commercial banking strengths are as robust as ever and Hong Kong is the heart of HSBC’s private banking offering for the region, accounting for 80% of Asia’s pre-tax profits for the division. Hong Kong is also the home of the bank’s trade finance strength, where renminbi internationalization is providing a spur to new business.
HSBC’s investment banking strength in the region is anchored by its Hong Kong-based debt capital markets dominance. It is easily the number one G3 bookrunner for Greater China and Hong Kong issuers, and obviously the leader for Hong Kong dollar bonds.
But it is more than just a debt factory. Interesting deals in the awards period have included perpetual hybrids for Li & Fung and Road King Infrastructure, green bonds for MTR and a sukuk for the Hong Kong government. HSBC is not a leader in equity capital markets in the region but nevertheless raised $14 billion for clients in the Hong Kong ECM, with senior (if not the most senior) roles on the IPOs of Postal Savings Bank of China, Guotai Junan, CR Pharmaceutical and, on the equity-linked side, Haitong International.
Big M&A mandates in Hong Kong included the acquisition of Citic Group’s property portfolio by China Overseas Land & Investment and the privatization of New World China Land.
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India
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Few banking sectors in the world are more vulnerable to disruption than India’s. Wallet and lifestyle fintechs like PayTM are not so much making strides as taking leaps and bounds, and the national infrastructure for payments systems and ID cards creates an environment in which visionary banks will flourish and staid incumbents are endangered.
HDFC has so far put itself within the category of banks that will benefit from change. Its numbers still look very good: net revenues were up 18.5% in the year to March 31 and net profit up 18.3%. Deposits grew 17.8%, despite there being more useful places that money can go; meanwhile the balance sheet is healthy and NPLs, in stark contrast to those in the state-owned banking sector, are just 1.05%.
HDFC knows that to stay ahead it needs to more than hold its own in digital technology. Recent innovations include the 10-second personal loan for pre-approved customers using digital applications and a recharge-on-missed-call feature for prepaid mobile phones.
Citi had a strong year across the board in investment banking in India, but nowhere more so than in M&A. It dominated the field during our review period, as it has for several years. It appeared on many important deals, among them the sale of Telenor India to Bharti Airtel, the sale of Lafarge’s India business to Nirma, HDFC Life’s merger with Max Life and, in private equity, the sale of a 60% stake in Mphasis to Blackstone.
India has been a lively (if not lucrative) market for IPOs lately, and Citi got itself onto several of them, including Endurance Technologies, L&T Infotech, RBL and Mahanagar Gas. Perhaps more important were the many block trades it led, as well as the largest qualified institutional placement offering in metals and mining, a $500 million offer by Hindalco.
In debt, highlights included Vedanta’s corporate liability management programme and $1 billion bond issue, as well as an inaugural dollar additional tier-1 issue for State Bank of India and a first green bond for Axis Bank.
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Indonesia
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Word is spreading about BCA (Bank Central Asia), not only the best-run bank in Indonesia but considered one of the best home-grown houses in Asia, led by Jahja Setiaatmadja.
The numbers speak for themselves. When the top five banks in Indonesia experience a 1.9% drop in net income, BCA sees it go up by 14.4%. When the top five have gross NPLs of 3.1%, BCA stands at 1.3%; BCA’s return on equity of 20.5% and return on assets of 4% both lead the industry as well. Part of the reason is prudence. The one figure where BCA lags the industry is loan growth, and that is deliberate.
There is nothing particularly earth-shattering about the strategy: keep the lending prudent, use low-cost Casa funds as a funding base and make the capital structure solid. The bank has excelled in electronic transaction banking and has built volumes by doing the simple things well, including consumer lending on mortgages and vehicle financing.
Even the most one-eyed of competitors concede that Credit Suisse has the most powerful investment banking franchise in Indonesia.
There was a gap this year – big sovereign debt issues – but in every other respect, it had a good year. In M&A, it was on everything, including being sole sell-side adviser on the Chevron Geothermal $3 billion acquisition and an accompanying $650 million acquisition loan to Star Energy. In equity, it handled the PT Prodia Widyahusada IPO, a rights issue for XL Axiata and two large block trades. And its 14 debt transactions in the review period carried a combined $1.5 billion of value.
It is an open secret that much of Credit Suisse’s strength in this market is in private deals that never see a league table; also that the business is lucrative, dominating Dealogic’s share-of-wallet rankings even without those private deals. It has been here so long and clearly built such comfort with client risk, that it appears local in many ways; having Indonesian Helman Sitohang as Asia CEO does not hurt either.
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Japan
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There is not much to choose between Japan’s three big domestic banks, but in the awards period Sumitomo Mitsui Financial Group (SMFG) was the only one to have increased its net profit to parent and shareholders (to March 31, 2017). These are grim times in Japanese banking, with negative interest rates and weak economic growth, but SMFG still managed to increase profit by ¥59.8 billion ($544 million) to ¥706.5 billion.
The two main contributors were revenue growth in the SMBC Nikko business and the consolidation of SMFL Capital. The bank has tried to keep investing in technology and expanding overseas, while keeping a lid on expenses. New ventures in our review period included joint ventures with NTT Data, Doan and NEC for technology initiatives, and the opening of branches in Dalian and Myanmar, as well as a new collaboration for retail in Indonesia. And NPLs have fallen steadily, from 2.27% to 1% since March 2013 on a non-consolidated basis, or from 1.6% to 0.65% consolidated.
None of this appears particularly exciting, but this is an environment in which standing still, in terms of profitability, is an achievement. The trajectory of numbers in bank-securities collaboration, in both asset management and investment banking volumes, is a positive sign for the future, as is the balance of investment products sold to retail. But the most sturdy upward-trending lines come in international businesses, in both overseas loan and deposit balances and this may prove to be the next driver of growth for the bank.
Morgan Stanley is represented in investment banking through two joint ventures with MUFG, which have baffled everybody in the industry by working remarkably well.
Across the board the ventures performed during the review period. There was nothing of the scale of the previous year’s Japan Post IPO, but the Kyushu Railway $4 billion global privatization and the $1.1 billion dual TSE and NYSE listing of Line, were big deals, both of which Morgan Stanley appeared on at a senior level.
It was an interesting year for Japanese M&A, and again Morgan Stanley was instrumental in the big deals. It advised Supercell in its sale by Softbank to Tencent, Endurance Specialty on its sale to Sompo Japan Nipponkoa, Canon on its potentially transformative acquisition of Toshiba Medical Systems and KKR on its purchase of Calsonic Kansei.
A debt market highlight was Starbucks’ ¥85 billion inaugural yen-denominated bond, a sustainability bond that set a number of firsts in Japan. There were also interesting perpetuals and hybrids for Dai-Ichi Life, Mitsubishi and Hitachi Capital.
It looks unassailable now, but competitors like Bank of America Merrill Lynch will have taken heart from the fact that on the second round of the Japan Post sale, which will happen in our next review period, BAML will appear alongside Morgan Stanley on the second tier of coordinators.
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Korea
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Shinhan is by common opinion the strongest bank in South Korea. It is the biggest by market capitalization, the most profitable and has the lowest NPL ratio, at just 0.65%. It is safe but it is growing appropriately, increasing both loans and deposits by over 5% in 2016 despite a lingering economic downturn in South Korea.
With slim pickings at home, Korea’s banks are looking outwards, and Shinhan now operates through 150 channels in 20 countries. The awards period brought new branches in Sydney and Yangon, as well as the acquisition of two local banks in Indonesia. Net income contribution from global operations was over 12% in 2016.
Shinhan has always been among the leaders in digital banking. We wrote last year about the launch of Sunny Bank, its mobile banking platform; the product has now become embedded and is winning customers. Shinhan Future’s Lab, a fintech startup accelerator programme, is also gathering momentum: 23 startups participated in the system in 2015 and 2016 and one has been launched in Vietnam to nurture fintech startups there.
Competition is fierce among international investment banks in Korea and fees can be threadbare, but Credit Suisse has a model that works, logging more net income than any other foreign brokerage house in fiscal 2016, according to data from the Financial Supervisory Service.
Credit Suisse showed particular strength in M&A during our review period. It was exclusive financial adviser to the shareholders’ committee of Kumho Tire in the sale of a stake to Doublestar and the exclusive financial adviser to LG on its sale of a 51% stake in LG Siltron to SK Holdings. Both were politically charged and delicate situations. Separately, the bank advised SK Networks on two deals and two arms of the Doosan group on divestments.
In the capital markets, the deal that mattered most was the Samsung Biologics $2 billion IPO, on which Credit Suisse was a joint bookrunner; it was also on the second-time-lucky $790 million IPO of Bobcat, with most of the flak for the first attempt having gone the way of JPMorgan. Big debt deals included issues for Korea Development Bank SBC and Korea Gas Corporation.
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Malaysia
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“Growing from strength to strength.” That’s how DBS’s latest report views Hong Leong Bank, an institution that is often overlooked in favour of bigger Public Bank or more outwardly dynamic CIMB and Maybank.
But we should not ignore Hong Leong, because, like Public Bank, it is thriving on doing the simple things well. While CIMB and Maybank battle loan impairments in their Asean businesses, Public and Hong Leong have both been able to keep bad loan ratios below 1%, and allowance coverage over 100%. Public is still bigger, but Hong Leong has in many respects been more impressive during the awards period, raising profitability as almost all others have declined in a miserable domestic environment in Malaysia.
Alongside a sensible conservatism comes a willingness to push technology. Hong Leong launched its artificial intelligence chat service in December 2016, following a tie-up with IBM Watson’s cognitive computing technology; they claim the resulting service is the first of its kind in the world and it is joined by the Watson Explorer app that predicts customer call intentions and a robotic concierge service. Some of this looks gimmicky, but the HLB Launchpad, a developmental programme to nurture Malaysian fintech startups, should have a lasting impact on the industry.
Since acquiring Kim Eng Holdings in 2011, Maybank has out-CIMB’d CIMB, turning itself into a full service regional investment bank across Asean and beyond. Led by CEO John Chong, it has done so impressively, and, by some metrics, has handled more volume in Asean investment banking and advisory than any competitor, multinationals and DBS included.
This award reflects the bank’s presence in Malaysia, which includes leadership in equity capital markets. It was on the Eco World International IPO, the biggest in Malaysia for two years; it handled Sime Darby’s M$2.36 billion ($553 million) primary placement, the biggest in Malaysia since 2014; and the largest ever Reit placement in Malaysia for MRCB-Quill. In DCM, it is among the leaders, from bonds and sukuk to loan syndication, while M&A highlights included MISC’s acquisition of Gumusut-Kakap during a difficult time for oil businesses.
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Mongolia
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These are difficult times for Mongolian banks, with the whole economy having been hit by the end of the commodity boom, but Trade and Development Bank (TDB) is coming out of the situation in the best shape.
Primarily a commercial bank, it holds 43.3% of the corporate lending sector in Mongolia, including a strong position in micro and SME lending. It has also built dominant positions in the domestic money market, foreign exchange and gold.
Like every bank in Mongolia, TDB’s numbers have struggled over the last two years, but it did manage to increase net profit in 2016 over 2015, and the bank’s return on equity of 8.9% is more than decent in the circumstances. A capital adequacy ratio of 14.6% is among the best in the industry – and this is no time for a bank to have anything less than robust capital positions.
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Myanmar
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The clear banking leader as Myanmar begins to fulfil its potential after years of stagnation, KBZ is growing fast. In the year to March 31, KBZ’s revenues were up 34.3%, assets up 20.9%, deposits 37.5% and loans 26.1%. By assets, KBZ is three times bigger than nearest competitor Aya Bank and it is putting its scale to work. There is plenty to do as the country grows.
The bank has been investing heavily in technology and international partnerships. During the awards period, it introduced internationally branded credit cards to Myanmar, building on a leadership position that has already seen it put 1 million cards into circulation in the country.
Risk management is vital in Myanmar, with exceptional growth in a country where credit assessment remains in its infancy and where there is no culture of mortgages and credit history. KBZ’s work in this area will be vital and much investment has taken place over the last 12 months.
What really impresses about KBZ is the impression of sustainable, dynamic growth one gets when talking to the bank’s senior leadership. Senior managing director Nyo Myint and his deputy Zaw Lin Aung oversee a strong organization. It is the bank that appears best placed to take advantage of the country’s enormous opportunity without blowing it along the way.
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Nepal
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Standard Chartered’s performance belies a moribund national economy in Nepal. The bank has inevitably gone backwards in revenues, profits and return on equity, but in a country that experienced only 0.7% GDP growth in 2015-2016, still delivered return on equity of over 17%.
Locally Standard Chartered conducted a secondary public offering to raise $32 million, oversubscribed 11 times, much of it from Nepal’s general public. It is active in new products and ideas, including education loans and mortgage refinancing, upgrading of cards, tie-ups with hotels and restaurants, linking personal loan clients to solar energy solutions and developing bancassurance.
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New Zealand
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The New Zealand operations of ANZ represent the best bank in the country. While home-grown Bank of New Zealand saw net profit down, ANZ’s climbed; revenue was up slightly to NZ$1.7 billion ($1.22 billion), cash profit 2% to $717 million, deposits were up 8%, customer lending up 4% and net customer growth was 60,000.
ANZ has 1.3 million digitally active customers in New Zealand, a fair chunk of the national population, and saw digital sales grow 12% in the 2016/17 financial year. Around 80% of value transactions are now completed via digital means.
Deutsche Craigs is the one bank that appeared across all product lines in New Zealand investment banking during our review period. It held a top-four position in volume terms in M&A, debt and equity capital markets, the only bank about to achieve this.
The bank was the sole financial adviser to Allnex in its acquisition of Nuplex, to ANZ on its divestment of UDC Finance and to PEP on the acquisition of ACG. It was a joint lead manager on New Zealand’s largest IPO in 2016, Tegel, and arranged seven DCM deals during the awards period, including the Trustpower NZ$394 million issue that was the country’s largest-ever unrated deal.
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Pakistan
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Being big is not enough to win a Euromoney award, but this was a year when biggest was also best. As well as leading the country in deposits, assets, branches, customers and net profits, HBL (Habib Bank) is also the one with its numbers heading in the right direction, with after-tax profit increasing while it is declining at rival lenders.
Asset quality has been an issue at HBL for a while, but has been steadily improving since 2012 and continued to do so in the first quarter of 2017, while coverage ratios have consistently risen and the balance sheet has strengthened.
HBL boasts an impressive investment banking presence too – indeed, the winners of the best bank and best investment bank in Pakistan could justifiably have been swapped – and the bank executed numerous transactions in M&A, capital markets and project finance during our review period.
MCB, a regular winner of our best bank award, is favoured this year for its investment banking expertise. The bank handled PRs200 billion ($2 billion) of transactions during the awards period.
There are bigger players, but MCB stands out for efficiency and focus, handling important deals with a modest team. In particular, it has aligned itself to the China-Pakistan Economic Corridor. It has been involved in financing the construction or rehabilitation of the Lahore-Islamabad and Karachi-Hyderabad motorways, among other expressways and carriageways, and has handled several power projects, among them several based on bagasse (sugar-cane waste) and some other renewable projects.
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Philippines
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Euromoney’s award returns to BDO Unibank this year, the biggest bank in the country and one in excellent health.
In 2016, it delivered the highest profits ever in the industry – P26.1 billion ($526 million) – and did so with a 15% rise in net interest income, 16% expansion of the loan portfolio, 15% increase in total deposits and a 15% rise in fee-based income. What few dark spots there are – declines in trading and FX gains – were more than compensated for by everything else, from increased Casa deposits to growing insurance premia.
BDO Unibank already had one of the stronger capital bases in the industry, but bolstered it during the review period with a P60 billion rights issue, the largest common equity capital markets transaction by a Philippine corporate to date. Now the bank boasts a capital adequacy ratio of 15.6% and common equity tier-1 ratio of 14%.
The administration of president Rodrigo Duterte, nerve-wracking though it is, has turned out to be a good environment to grow in, and BDO has sought new niches and markets. Key imperatives are reaching more remote parts of the Philippines and supporting micro enterprises all over the country. Life insurance is growing after the assumption of full control over the bank’s joint venture with Generali Asia. Wealth management has great potential through a joint venture with Nomura and there is progress in auto financing and digital infrastructure.
JPMorgan ranked strongly across all areas of Philippine investment banking during our review period. In M&A, it advised on the PLDT/Globe Telecom acquisition of Vega Telecom, the telecommunications assets of the San Miguel Corporation, in the year’s biggest and most important deal.
In debt capital markets, it was the go-to bookrunner for the Asian Development Bank, and in equities it handled deals for Cemex Holdings Philippines and Pilipinas Shell Petroleum Corp. No other bank appeared so strongly in all three disciplines.
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Singapore
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Singapore’s domestic banks did not have a great year, hit by loan impairments in the offshore oil and gas service sector and, in DBS’s case, by the Swiber collapse and Monetary Authority of Singapore penalties over 1MDB.
But in any competitive environment, Citi’s Singapore business would have shone over the last 12 months. There is a sense that the long-term goals Citi’s Asia CEO, Francisco Aristeguieta, is aiming for in Asia have already been reached in Singapore, particularly in consumer; so much of what is good about the bank’s regional offering, from treasury and trade to markets and securities services, private banking to investment banking, is based here.
The three legal entities that represent Citi’s Singapore businesses delivered a net income of S$811 million ($586 million) in 2016. Revenues climbed across all three businesses, while the bank kept NPLs in Singapore below 1%, having apparently sold out of many of the exposures that got Singaporean lenders into trouble some time ago.
There is consistent strength and innovation across Citi’s Singapore businesses. Many of the digital partnerships that have set the bank apart over the last 12 months have been here, including the tie-ups with Grab (and a novel pay-with-points initiative) and Lazada.
The new Global API Developer Portal is another interesting digital step, while the new digital wallet systems are gaining traction. The innovation lab launched in Singapore provides solutions that appear in Citi offerings worldwide. Along the way, many businesses are going from strength to strength: Citi Commercial Bank Singapore beat its own revenue estimates for 2016 by 20%, FX revenue grew 51% year on year and new client acquisitions were up 55% in that business.
Credit Suisse took on bigger competitors in investment banking and won in our awards period. It handled 28 public deals, the most among internationals and behind only the debt machine of DBS, but the devil was in the detail.
For example, the bank has been enormously impressive in repeat business, better even than DBS on the grand marques of Singapore. Credit Suisse handled four deals for Temasek during the period under review (from its proposed acquisition of SMRT Corp to a four-tranche fixed-rate issue for Astrea III and a block placement in SATS), four for Olam International, three for UOB and two for OUE.
Secondly – and reflecting a business that knows how to make a profit – it repeatedly talked its way into sole mandates, none more extraordinary than its perpetual issue for Fullerton Health, having previously been on an axed IPO.
It has been active in everything from cross-border M&A to rights issues, blocks and the Manulife US Reit IPO, and in debt from investment-grade to asset-backed and perpetuals.
Finally, it has done very well on one of the key themes of the year, the privatization of listed companies. In our review period, it was involved in OUE’s public takeover of IHC Healthway, Temasek’s of SMRT, Fincantieri’s of Vard Holdings, the complex Eu Yan Sang International take-private and the sale of a stake in CWT to HNA. Other key mandates included the OCBC acquisition of Barclays’ wealth management business and Alibaba acquisition of Lazada.
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Sri Lanka
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Sampath Bank is not the biggest bank in Sri Lanka, but it is the one making the most dynamic progress. Revenues and pre-tax profits grew dramatically in 2016: profits by 48.8% and dividends by 44.2%, while assets were up 25.4%. Yet this growth has been prudently managed, with NPLs of just 1.61%, the lowest in the industry. The whole lot has come with a return on average equity of 23.47%.
Beyond the numbers, the bank seeks to do new things in Sri Lanka. In 2016, it introduced the Ladies First Savings account to encourage women to save and invest, and the Visa PayWave card was launched using near-field communication technology to enable faster processing of payments. Several new electronic and internet-enabled products were launched during the year.
Sampath’s numbers are supported by a strong focus on costs, risk assessment and corporate responsibility. Its CSR strategy is also widely admired.
NDB Investment Bank retains its best investment bank award both in Sri Lanka and Bangladesh from last year. It was not a vintage year for investment banking in Sri Lanka, but the bank was active across both debt and equity markets with new structures and products. For example, it structured the IPO of RIL Property, which contains a cornerstone tranche for the first time in Sri Lanka and is handling the IPO of the Maldivian subsidiary of telco Ooredoo, which should be a rare dual listing between the Maldives and the Colombo Stock Exchange.
Other highlights have included structured loan facilities for LAUGFS Group and People’s Leasing Company, SLR31.5 billion ($207 million) of listed debentures, the restructuring of the Silvermill Group of companies and the acquisition of E-Channelling by Mobitel.
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Taiwan
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Cathay United is the biggest financial services group in the country by assets and market capitalization, but wins this award more for its trajectory and sense of a plan.
The most compelling chart you can see for Cathay United is the improvement in its fee income over the last five years, a relentless upward-pointing line, with 11% year-on-year growth in financial 2016. The drivers are improvements in cards and wealth management in particular, and the result is that where fees account for 23% of income in the banking industry in Taiwan generally, at Cathay United the figure is 30%. The return on equity, at 12%, also beats the industry, as does the perplexingly low NPL ratio of just 0.14% and the almost absurd coverage ratio of 1,083%.
With cut-throat competition in Taiwanese financial services, several banks are looking overseas. Cathay United has 67 overseas units of one sort or another covering Asean, Shanghai and Hong Kong. It is, for example, Taiwan’s leading bank in Vietnam and one of its most eye-catching transactions in our review period was a $200 million syndicated loan to Bank of Lao in Laos.
Yuanta Securities was characteristically busy during the awards period, participating in 38 domestic IPOs and SPOs, seven completed M&A deals and slew of other transactions.
Highlights included underwriting the IPO of Dr.Wu, Taiwan’s first listed cosmetics company; convertible corporate bonds for Taiwan Mobile; preferred shares for Cathay Financial Holding; and European convertible bonds for Silergy Corporation.
On the M&A side, important deals included advising on Micron Technology’s acquisition of Inotera and Ta Chong Securities on its merger with Taishin Securities.
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Thailand
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Siam Commercial Bank (SCB) has the best metrics in Thailand. Its return on equity, at 14.8%, leads the industry, gross NPLs, at 2.67%, are the lowest and net profits, at Bt47.6 billion ($1.4 billion), the highest.
Distinctively the bank believes its numbers are down to employee engagement as much as customer engagement and has invested heavily in research on how to improve its own relations with its people. SCB’s latest bank-wide programme aims to make it “the most admired bank” for all its constituents, which includes staff as much as shareholders and customers.
SCB is a tech leader in Thailand, the first to invest in blockchain technology and an investor in Ripple, a leading payment solution service provider from the US. In 2016, it founded Digital Ventures Company to invest in and research financial innovation. It is also an investor in the Golden Gate Ventures Fund, specializing in southeast Asia fintechs.
Morgan Stanley had an outstanding year of investment banking in Thailand. It was on half of all completed M&A involving the country by value. It advised TCC Group on its acquisition of Big C Supercenter and was sole financial adviser to Shell on the sale of a 22% stake in Bongkot to KUFPEC.
Very little happened in the equity markets, but Morgan Stanley was the joint global coordinator for Star Petroleum Refining on its IPO and worked on the IPO of Jasmine Infrastructure Funds.
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Vietnam
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Vietcombank’s development as a universal bank continues to impress those who deal with it. Working to two mottos, ‘speed – efficiency – sustainability’ and ‘innovative – disciplined – responsible’, it is succeeding in its efforts to build a full-service institution on prudent foundations. With 14.69% return on equity in 2016, it is easy to see why Singapore’s GIC sovereign wealth fund took a 7.73% stake in the bank in August.
During 2016, assets increased by 16.83%, deposits 19.28%, and while the loan balance increased by 18.85%, loan quality improved at the same time. Special mentioned loans – those in some distress – decreased by 15.5% in 2016, while the NPL ratio stands at 1.46%, well down on the previous year.
Management of bad loans is a point of distinction for Vietcombank. It was the first in the country to take back all the NPLs it had sold to the VAMC asset management company and to fully book provisions for them.
In terms of the business lines, there is particular growth in international payment and trade finance, FX trading and services, remittances, bank cards and mobile banking.
Just as it has in frontier markets such as Pakistan and Sri Lanka, Credit Suisse has been dedicated to investment banking in Vietnam for years, committing capital and actively developing the market.
Three deals were important in the awards period: it was adviser and placement agent to Vietcombank on its sale of a stake to GIC through a private placement; it arranged a $300 million syndicated loan for Vingroup made up of a $240 million initial deal completed in difficult market conditions around Brexit, followed by a $60 million increase, making it the largest-ever loan to a non-state owned Vietnamese corporate; finally, it also arranged a $100 million maiden international syndicated loan for FE Credit.
