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| © 2018 Euromoney |
| Regional awards |
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AustraliaBest bank: Macquarie Bank
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Australia’s best bank was one of the easier awards to decide this year. With the big four banks all mired in reputational quagmires from a Royal Commission and, in two cases, court proceedings about rate rigging, they could never be in contention this year.
Macquarie Bank, which was not called to give evidence in the most explosive parts of the Royal Commission on financial advice and mortgage broking, has been able to breathe easy and get on with what it is good at, which is pretty much everything.
Euromoney decided last year to start considering Macquarie in the banking rather than just the investment banking category, since Macquarie Capital and the commodities and global markets division combined account for only 32% of profit these days.
Macquarie is now, in the main, what chief executive Nicholas Moore calls an annuity-style business: a global asset manager with a focus on infrastructure, a banking and financial services arm with a A$40.6 billion ($30.1 billion) loan portfolio and A$82.5 billion of funds on its platform, and a specialist corporate and asset finance house.
Macquarie’s continuing gymnastics around its form and function are well known, but they have created a bank that saw a 15% year-on-year increase in profits to A$2.56 billion, no mean feat when the previous year was itself a record performance.
It can manage this trick partly by being global while others struggle in a torpid home economy (Macquarie gets 67% of its income from overseas) but mainly by hiring the best people and backing them to do what they are good at.
UBS remains the dominant investment bank in Australia, a clear leader in equity capital markets and M&A, while holding its own in debt capital markets.
It was not a year for landmark IPOs, but there was plenty of secondary activity, including a A$2.5 billion entitlement offer for Woodside Petroleum, a A$1.9 billion follow-on for Transurban and the A$3.5 billion selldown of Royal Dutch Shell’s holding in Woodside Petroleum. UBS was on all three.
Its M&A expertise was rewarded with roles on the record-breaking takeover of Westfield, the sale of Endeavour Energy and Tabcorp’s merger with Tatts. Debt capital markets mandates ran the gamut from Commonwealth bond issues to an inaugural print for Australian Catholic University.
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BangladeshBest bank: Eastern Bank
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Profits and key ratios going up, non-performing loans going down: Eastern Bank continues to impress with evidence of shrewd management.
Bangladesh is still considered a frontier market, but you wouldn’t know it from a bank that has a non-performing loan ratio of 1.77% – the lowest in the history of Bangladesh banking, it claims, and well below the industry figure of 9.31%. Coverage for these loans topped 200% in 2017.
At the same time, profit after tax rose 16.35% in 2017 to $38 million, return on average equity ticked up from 12.5% to 14.6%, the cost-to-income ratio stayed steady and assets and loans each grew by more than 20%.
Beneath the numbers, key themes emerge: continuing strength in retail banking, close work with multilaterals empowering a strong trade unit, recognition of the opportunities in small and medium-sized enterprise banking and a smart treasury team.
In the investment banking category, we reward a smaller name for the first time, one that is building a growing reputation. IDLC Investments, a subsidiary of non-bank financial institution IDLC Group, covers investment banking, discretionary portfolio management and margin lending.
So far it has managed nine IPOs and is working as the issue manager on a further 13, as well as a rights issue and many corporate advisory deals. Its experience here dates back to Bangladesh’s first bookbuilt IPO, for RAK Ceramics in 2010, and a corporate advisory role on the merger of Airtel (Bangladesh) with Robi Axiata. More recent examples include advising Honda in Bangladesh to raise Tk2.09 billion ($25.2 million) and the five-sided merger of Ananta Apparels.
Although modest in size by regional standards, IDLC Investments stood out for its financial performance in 2017, delivering operating income of $6.4 million equivalent, comfortably ahead of its local rivals ICB Capital, LankaBangla Investments and BRAC EPL Investments.
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CambodiaBest bank: ABA |
ABA continues to be the leader in Cambodian banking and was rewarded with a 59% year-on-year increase in profit in 2017 to $46.19 million. Total assets grew 49% to $1.64 billion and return on equity stands at 28.1%.
Backing from shareholder National Bank of Canada continues to bear fruit in guiding best practice. ABA pushes digitalization as far as is practical in Cambodia, launching its PayWay online payment gateway during our review period. The bank issued almost 100,000 new Visa, MasterCard and UPI cards in 2017 and has signed a 15-year partnership agreement with Manulife for life insurance.
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ChinaBest bank: ICBC
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China’s biggest three state-owned banks are benefiting from increased pressure on the country’s second tier of lenders, who are being squeezed by increased scrutiny on shadow financing and wealth management products. The biggest banks have asset bases of sufficient size that any change in the way shadow financing is recognized will have only a small impact on their books and their funding requirements.
Consequently it was no surprise when all three reported excellent first-quarter numbers in April. They were all candidates for this award, but ICBC edges it through clear-sighted strategy and strong numbers.
ICBC’s full-year net profit of Rmb287.5 billion ($43.9 billion) was up 3% year on year; first-quarter numbers for 2018, within our review period, were up 4%. Crucially in an environment where concerns about bad debts remain acute, its non-performing loan ratio is steady and in fact modestly down, at 1.54% at the end of March.
Solid growth and climbing deposits, with falling costs and declining risk, make a good model for the current climate. That has been achieved by a focus on serving the real economy and getting on the right side of structural reform. In a renewed focus on rural opportunity, small and micro loans grew 9% last year, while overcapacity elsewhere has been steadily reduced.
And while the domestic story has been primarily one of prudence and efficiency, the Belt and Road Initiative provides an interesting avenue for growth. ICBC issued Belt and Road green bonds in a show of support to the venture and is well placed now that the initiative is finally turning into tangible business.
The award for China’s best investment bank required Euromoney to take a view on two quite different models: international banks that help to bring international capital and advice to Chinese clients and Chinese banks that are more entrenched in the domestic markets.
Our conclusion was that the scale of China’s domestic capital markets and the progress they have made in recent years meant that a local house was appropriate.
Among those firms, Citic Securities and CICC stood out, both of them maintaining margins and market share despite a broking market that is cut-throat and not always particularly pleasant. In that environment, Citic Securities takes the award, having managed a 10.3% increase in net profit in 2017 to Rmb11.43 billion, with analysts praising a strong service culture that helps to fend off competition. First-quarter 2018 profit was better still, up 17%.
Those numbers, together with Dealogic data that shows Citic Securities as the top house for share of wallet in mainland China, suggest that no matter how commoditized domestic capital markets are, the bank is not just doing deals to gain market share. It is, however, a powerhouse: Dealogic shows it top in volume terms for China DCM and second in both ECM and M&A (behind CICC).
Citic’s international operations are conducted through CLSA, and the integration of those businesses and cultures remains a work in progress, but one could not have asked for a more ringing endorsement than the bank being appointed alongside Goldman Sachs and Morgan Stanley on the Xiaomi IPO in Hong Kong, the biggest listing anywhere since Alibaba in 2014.
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Hong KongBest bank: HSBC
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HSBC, Hong Kong’s largest bank by assets, leads the field on everything from mortgages and customer accounts to debt capital markets, trade finance and dim sum bonds. Its leadership in the special administrative region was untouchable even before China decided to make a priority of the Greater Bay Area; now it is even better placed than it already was.
HSBC also had an excellent year. Revenues in retail banking and wealth management grew 22% year on year in 2017, the bank made progress on important digital enhancements like the PayMe social peer-to-peer payment gateway and its asset management arm went from strength to strength.
The close collaboration between commercial banking and other business units continues to yield results and is now thoroughly entrenched. And HSBC is now arguably the key non-mainland player in the internationalization of the renminbi.
This year in investment banking we reward a story. Haitong International Securities Group represents an interesting middle ground in Hong Kong investment banking. International competitors see it as another member of the burgeoning fleet of mainland brokers, but it is distinct from that group. It was built out of the old Hong Kong investment firm Tai Fook and is Chinese owned but with only 20% state ownership, setting it apart from the investment banking arms of the big three state banks and the Citic family.
Lacking some of the advantages that state-owned firms bring to the table, Haitong has instead had to be nimble, and its team – many of them alumni from Cazenove and Bank of America Merrill Lynch – has steadily built a business on a foundation of small- to mid-cap corporate finance.
During our review period it handled 13 IPOs in Hong Kong at bookrunner level or above, as well as eight placements and three rights issues – numbers that, in deal total terms if not volume, put it right up with Morgan Stanley. It handled 118 G3 bond issues in Asia worth $7.3 billion, including 56 dollar high-yield deals. And in advisory it has formed a niche in Hong Kong general offer deals.
Houses like Haitong reflect a change in the investor composition of Hong Kong deals. It can bring in mainland buyers and sophisticated Hong Kong retail investors acquired in the Tai Fook days (it once got a HK$1.5 billion ticket from a single person in Mongkok), while the international background of key staff also helps keep international institutions on hand. And in a sign of future ambition, the bank handled IPOs in both Singapore and India during our review period.
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IndiaBest bank: Kotak Mahindra Bank
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Euromoney has traditionally assessed Kotak Mahindra in the investment banking category, but now its across-the-board improvement means that it warrants recognition as a full-service bank. It is 15 years since the financial services conglomerate became the first non-banking finance company in the country to convert into a bank, and today its four business units – consumer, corporate, commercial and treasury – all excel.
Under Uday Kotak’s leadership, Kotak Mahindra’s numbers over the last year tell their own story. Profit after tax was up 27% on a consolidated basis year on year in 2017, to Rs58.2 billion ($870 million); return on net worth, the local equivalent of return on equity, stands at 13.6%; capital adequacy is high and rising at 18.4% and the total assets managed or advised rose 37% during the year to Rs1.83 trillion.
During the review period the bank launched its 811 zero balance savings account, a digital and paperless account that can be opened in five minutes. Given that retail is Kotak Mahindra’s weakest suit relative to the competition, the success of this model will show us whether or not digital innovation can be used to leapfrog entrenched competitors.
The bank benefits from having a strong franchise in corporate, institutional and investment banking – all three report into the same head, KVS Manian – and integration between the three. International alliances with SMBC, Evercore and ING also help the bank’s global potential.
This award of India’s best investment bank to Deutsche Bank will surprise many, but it reflects the themes and opportunities that work for foreign banks in India today.
It is an open secret that public deals in India tend to pay fees so low they are almost funny. While Deutsche does turn up on headline deals – the IPOs of General Insurance Corporation of India and SBI Life Insurance, and the largest-ever qualified institutional placement in India for State Bank of India – it tends to make its money elsewhere, particularly in bespoke and structured private deals.
High-yield deals still pay a meaningful fee, and Deutsche was on 70% of them from India during our review period, much of it repeat business for names such as JSW Group, Motherson Group and Greenko Group. It has found a lucrative niche in sponsor-backed and corporate real estate lending deals, handling deals for Blackstone and a restructuring for the Ireo group. And it creates bespoke rupee solutions across a range of sectors.
But the clincher was that Deutsche seized the opportunities presented by public-sector bank reform, the insolvency court and renewed national efforts to get problem loans off the books of state-owned banks. Two foreign houses – Deutsche and Credit Suisse – stood out and Deutsche handled one deal that appears pioneering. It is not public but involves an asset in a capex-heavy sector that was not operational because the loans of its borrowers had been declared non-performing in the books of public-sector lenders, meaning there was no release of working capital.
Deutsche structured a senior financing to cover overdue payments to lenders and working capital for the asset, which was enough to negotiate a restructuring on other loans while the asset revives. Within two months it was running and generating revenue. India will need a lot more deals like this.
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IndonesiaBest bank: Bank Central Asia
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Bank Central Asia is an object lesson in knowing precisely what you’re good at and sticking to it with discipline. Know your customer, remain very well-capitalized, emphasize risk management and under no circumstances venture overseas.
BCA has about 600 corporate accounts and has consciously not increased the number much for several years, reasoning that it makes better business sense to stay with people the bank knows exceptionally well. While that does not sound like much of a growth story, it has proved to be exceptionally attractive to investors, who have at times pushed the bank to a price-to-book multiple of over four. Big investors include Vanguard, T Rowe Price, Fidelity, BlackRock and Aberdeen.
In 2017, an often challenging year in Indonesia, the bank grew assets and loans by over 10%, while outstripping its peers on almost every metric: 1.5% NPLs compared with 2.7% for the big five; return on equity of 19.2% versus 15.2% for its peers; and a net interest margin of 6.2% versus 5.5%.
News in our review period revolved around digital and mobile, with the launch of a new chat banking service and an e-money application for smartphones. The bank increased its penetration in SME banking, launched a successful new mortgage programme and started a new venture capital subsidiary. But mainly it carried on being a really good bank.
The importance of investment banking in Indonesia to Credit Suisse is well known, but this result was not a shoo-in and in fact presented a choice between two models.
Deutsche Bank had a strong year, including roles on big sovereign deals, strength in government bond trading and influential research; Citi’s model is similar. Credit Suisse, characteristically, couldn’t care less about sovereign or quasi-sovereign deals and instead dominated high yield, handling eight transactions worth $1.8 billion, while also getting on the few important ECM issues and the usual host of private financing deals.
High yield was one of the year’s main themes, which is one reason Credit Suisse gets the nod, with notable transactions including PT Medco Energi International and PT ABM Investama. In equities, it also led the $405 million secondary placement for PT Sarana Menara Nusantara and a rights issue for Chandra Asri Petrochemical, as well as being a placement agent for Go-Jek.
Another differentiator was the bank’s role on the difficult, technical sale of Danamon to MUFG, as well as Rio Tinto’s sale of the Kestrel mines to PT Adaro Energy and EMR Capital.
It remains to be seen what the departure of Robby Winarta to Carlyle, which happened after our review period, will mean for Credit Suisse.
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JapanBest bank: MUFG
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MUFG continues to be the standout institution in Japan, delivering solid performance at home while showing the clearest and most ambitious international strategy.
Profits attributable to the owners in fiscal 2017, at ¥989.6 billion ($9.03 billion), were up 6.8% year on year and beat a target of ¥950 billion. Return on equity of 7.53% looks modest in international terms but is a good result in Japan and was up on 2016.
The bank has come up with a medium-term business plan made up of 11 transformation initiatives that chief executive Nobuyuki Hirano and his team hope will become engines of growth over the next six years. As net interest income declines on yen loans and deposits, and regulatory compliance costs grow, the bank plans to compensate with growth in global commercial banking and consumer finance. More specific initiatives include the real estate value chain and wealth management.
In the here and now, the bank’s ambitions are best represented by the acquisition of Danamon in Indonesia, a three-stage process that should see the bank hold majority control by the end of the year. It brings emerging consumer demographics to a bank that needs that sort of growth potential.
In investment banking, we look away from the powerful MUFG-Morgan Stanley joint venture that usually wins this award. Instead Goldman Sachs is Japan’s best investment bank.
Goldman’s appearance on numerous landmark transactions was one of the talking points of Japanese banking in our review period – none more so than the bank’s work for Toshiba. Goldman not only advised the stricken company on the sale of Toshiba Memory Corp to Bain Capital and others, a highly complex deal, but then led a ¥600 billion private placement of common shares to 60 RegS investors outside Japan and did so as sole placement agent.
No deal was more talked about in Japan than this one. Detractors say that in filling the deal Goldman brought activist investors onto Toshiba’s shareholder register. Firstly, that is not automatically a bad thing, and secondly Toshiba’s need for capital was desperate and Goldman’s ability to complete the deal on its own was impressive.
Other big roles for the firm included the Japan Post $11.7 billion global follow-on, $6.05 billion of dollar and euro senior unsecured notes for Softbank and a $5 billion global bond offering for JBIC. It is true that Goldman does not have a presence in domestic debt like MUFG-Morgan Stanley, but this was a year for elephant deals in Japan – and Goldman was on them all.
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KoreaBest bank: Shinhan Bank
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Shinhan Bank is the strongest bank in Korea, with a clear sense of direction. In time, KEB Hana will no doubt be a rival for this award, but with that bank mired in a hiring controversy and still trying to make its merger work, Shinhan stands out.
Group net income was up 5.2% year on year in fiscal 2017 to W2.9 trillion ($2.6 billion), buoyed by loan growth, improving net interest margins, cost savings and income growth in banking, cards, securities and asset management.
Alongside this, the bank’s non-performing loan ratios – 0.62% for Shinhan Group and 0.55% for the bank itself – stand at their lowest-ever levels.
The bank’s Project 2020 initiative began to bear fruit during our review period, with increased income contribution from overseas, progress in digital transformation and improvements in corporate governance.
JPMorgan was the house that impressed most across the board in South Korean investment banking.
All the action is in M&A, and JPMorgan was on many of the most important deals. It advised KKR on its acquisition of a copper business from LS Mtron and a stake in LS Automotive and was sell-side adviser on the sale of LS-Nikko Copper’s stake in the Cobre Panama project to First Quantum Minerals. It also advised Santam on the sale of a stake in Kideco Jaya Agung to Indika Energy and LG Corp in its €1.1 billion acquisition of ZKW Holding.
In equities, it was alongside Credit Suisse on the Malaysian IPO of Lotte Chemical Titan, a ground-breaking deal. But where it stole a march on regular winner Credit Suisse was in hybrids, leading big issues for Kyobo Life, Heungkuk Life and Hanwha Life.
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MacauBest bank: Banco Nacional Ultramarino |
Banco Nacional Ultramarino (BNU) has been serving Macau’s community for 115 years and is the most profitable unit in the Caixa Geral de Depósitos Group. Combining that group’s European network with the bank’s own presence in China is proving useful in linking the mainland with Portuguese-speaking countries.
At home in Macau, BNU serves one third of the population with strong retail services and a thriving card business.
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MalaysiaBest bank: Public Bank
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As the Malaysian political environment gets progressively crazier, the best thing to be is a prudent and well-run bank that takes few risks and knows what it is doing.
Step forward, once again, Public Bank. It leads the market in terms of return on equity, return on assets, cost-to-income ratio, impaired loans and productivity. It is expanding modestly – gross loans, advances and financing grew 3.6% to RM304.5 billion ($75.8 billion) through 2017 and customer deposits by 3% to RM319.26 billion – and holds just under 20% of the residential property lending market in Malaysia and 35.5% of commercial property.
It has also set about embedding a number of digital initiatives, launching an enterprise-wide fintech strategy in 2017 and a three-year digital roadmap. The number of mobile banking transactions was up 50% in 2017. Cyber-resilience has also been a priority over the last 12 months.
Maybank, under investment bank head John Chong, has gone from strength to strength as a regional firm and now stands comparison with all international and regional peers in Asean investment banking and advisory. At home, where CIMB once dominated, Maybank has become a clear leader.
The bank’s highlights in M&A included SP Setia’s acquisition of I&P Group, a deal that also led to manager roles on a rights issue and primary placement and Sime Darby’s restructuring, which will turn the group into three pure-play companies with separate listings of the plantation and property arms.
Equity markets highlights were the IPOs of EcoWorld and, in Thailand, energy group TPI Polene Power; while it will have been a point of pride to get on the Singapore IPO of Sasseur real estate investment trust. Maybank also topped the league tables in ringgit sukuk and conventional bonds.
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MongoliaBest bank: Khan Bank |
After a generally dismal 2016, Mongolia’s banks returned to health in 2017, none more so than Khan Bank, which was upgraded by Moody’s following the sovereign upgrade in January.
The bank delivered a 34.88% increase in net profits while increasing tier-1 capital by 22%. Return on equity climbed to 18.29%, the cost-to-income ratio dropped below 45%, and total assets have now topped Tug7 trillion ($2.87 billion).
The only black mark is a rising non-performing loan ratio that, in common with the industry, has been climbing since 2013. Efforts to keep this in check will be crucial.
Khan Bank stands out for its digital efforts in Mongolia; it now claims a 65% market share in cashless transaction volumes. Customers in Mongolia can now pay household bills through the bank’s smartphone banking application and the bank has the most self-service banking facilities in the country.
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MyanmarBest bank: CB Bank |
CB Bank stands out for the progress it has made in digital banking in Myanmar. It was the first lender in the country to introduce cash deposit machines, contactless payment and mobile banking. In a country where only 20% of the population has access to mainstream financial services, this is crucially important. The bank is bringing banking to new places, from individuals to SMEs (small business accounts for 90% of Myanmar commerce).
CB Bank works closely with new Grab drivers, assisting them with mobile banking and new accounts, and providing them with financing for smartphones, without which they can’t get started. These drivers alone account for 10,000 customers.
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NepalBest bank: Nepal Investment Bank |
Nepal Investment Bank (NIB) was set up by Crédit Agricole Indosuez and Nepalese partners in 1996. The French bank has long since been bought out. The result is a local institution that still benefits from some of the foreign expertise of its early days.
Nepal is dramatically overbanked; NIB is the largest of 25 private-sector banks by capital and assets, which gives it stability and pricing power. The environment is not easy in Nepal – many leading houses recorded losses in 2017 – but NIB logged 8.65% growth in operating profit last year, and in its latest quarterly announcement recorded a 19.4% year-on-year increase.
In a country where remittances account for 30% of GDP, slowing flows in those remittances have had big consequences for local bank liquidity. In the circumstances, NIB’s deposit and lending base, the biggest in the country, is essential. Return on equity is 17.55%, an impressive achievement in a hard market.
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New ZealandBest bank: Bank of New Zealand
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Bank of New Zealand is enjoying strong growth at a time when rival ANZ is dealing with considerable reputational issues in Australia.
In May, it announced half-year results to March 31, showing operating revenue up 11.1% and cash earnings for New Zealand up 8.6%. The bank has achieved this while implementing a big digital overhaul that now sees 92% of transactions and 49% of sales conducted digitally.
Its priorities include small business, wealth management and community finance.
Deutsche Craigs stands out for being the only name to appear among the leaders in both equity and debt capital markets in New Zealand. In equities, it was joint lead manager on the only IPO in the country in 2017 – Oceania in May – as well as a placement for Pushpay and a convertible for Precinct.
DCM deals included a NZ$225 million ($154 million) subordinated bond for Genesis Energy. The bank also advised Livestock Improvement Corp on its restructuring.
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PakistanBest bank: Allied Bank
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With all the big banks seeing a decline in profits in a difficult year in Pakistan, this year we look away from usual winners Habib Bank and MCB to reward Pakistan’s fifth-largest lender, Allied Bank.
Although profit dropped here too in 2017, investment, advances, assets, deposits and total equity all grew strongly while non-performing loans declined from 5.87% to 4.64%. This last statistic – and the best coverage ratio in the industry at 92.6% – is the main differentiator that wins the award.
Allied Bank’s 17% return on equity stands comparison with the industry, and the bank can point to meaningful progress in its digital strategy during the review period. This is not just about new cash prepaid cards and a revamped online internet banking interface, it is technology that has bolstered the bank’s risk management to good effect. It will also help with financial inclusion, a stated priority.
Credit Suisse and Standard Chartered stand out as foreign banks that have stayed the course in Pakistan. While StanChart is notable for its trade finance work, Credit Suisse has done the most interesting things in investment banking.
It handled five big deals during the review period: an advisory role on the sale of a stake in the Hub Power Company to Kot Addu Power Company for $210 million and four structured finance deals that are classic Credit Suisse, using the balance sheet to clever effect.
Two of these were syndicated term loans for the government of Pakistan, the second of which, worth $255 million, featured Credit Suisse as sole adviser and sole managed lead arranger. It anchored the financing with the largest commitment among the syndicate banks.
The others were a $150 million facility backed by structured receivables for Pakistan International Airlines and a ground-breaking $350 million term loan to Pakistan Water and Power Development Authority, the first corporate loan in Pakistan with partial guarantees from the International Development Association and Pakistan’s ministry of finance.
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PhilippinesBest bank: BDO Unibank
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BDO Unibank leads the Philippine banking industry on almost every metric. It accounts for 17.9% of the total banking sector’s resources, 21.5% of its gross customer loans, 18.6% of its deposits and 33.5% of its assets under management. BDO has the biggest branch network and is active in every area of financial services from investment banking to credit cards, rural banking to insurance brokerage.
None of this would be anything to shout about if the bank were not also very well run. Last year brought an all-time high net income of P28.1 billion, up 7% year on year; in fact if the life insurance business, which was undergoing consolidation, was taken out of the figures, the climb in core earnings would have been 15%. The bank’s strength is underpinned by the lowest funding cost among its peers and capital adequacy levels well above the minimums.
So where is future growth going to come from? The awards review period included pilot projects for micro and SME lending in six areas in Davao and Iloilo, the launch of a research tie-up with Nomura and a biometrics-linked digital platform. Among the bank’s achievements is the rare ability to be both big and nimble.
There were many international candidates for the best investment bank award, with Bank of America Merrill Lynch at the head of the line, but Euromoney felt this was a year to reward a local player instrumental in the development of domestic debt markets, a key priority for the central bank.
BPI Capital – the investment banking arm of the Ayala-owned Bank of the Philippine Islands – has been consistently the strongest home-grown name in retail bond transactions, where its ability to place securities locally has been well proven.
These have included retail treasury bonds for the National Treasurer – which will be instrumental in president Rodrigo Duterte’s signature ‘Build! Build! Build!’ initiative – as well as innovative perpetuals for AYC Finance and a long-term negotiable certificate of deposit issue for Robinsons Bank.
Just as important for nation building, BPI Capital is a key participant in Philippine project finance, with roles on power plants for GN Power Dinginin, Atimonan One Energy and SMC Consolidated Power. It has proven placement power in equity capital markets and has handled many rights issues in the review period.
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SingaporeBest bank: DBS
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DBS under chief executive Piyush Gupta had an outstanding year and was a competitor for the region’s top award. Singapore accounted for S$7.8 billion ($5.7 billion) of total bank income of S$11.9 billion in 2017 and the bank was able to make heavy provisions against its troublesome oil and gas exposures and still generate a record S$4.39 billion in group net profit.
DBS’s strength in digital transformation, transaction services and SME banking are covered in the regional awards. In the background, DBS’s consumer banking division is doing well, growing 9% in 2017 to S$4.67 billion, most of it at home in Singapore.
The bank’s impressive wealth management business has gone from strength to strength under Tan Su Shan; it now accounts for 18% of total group income and makes good use of the bank’s digital excellence. Several enhancements were made to the DBS iWealth platform during the review period; with ANZ’s assets now incorporated, this division has critical mass and big ambitions.
It is always a sign of grudging advocacy when investment banking competitors start pitch meetings by saying: “If you count out DBS…” But why would you count out DBS? One would expect it to get on most state-related deals and its own self-led bonds, but these days the state is not the be-all and end-all of market activity. DBS’s position atop the equity and debt capital markets league tables in Singapore is at least as much through merit as convenience.
A clear leader in Singapore dollar bonds, it is an innovator too, pushing the development of the corporate perpetual securities market. It is a leader in Asean real estate investment trusts – which was almost the only active area in Singapore equities – and handled the Netlink NBN Trust IPO.
Outside capital markets, a strong advisory business has taken advantage of Singapore-China flows, and DBS has been involved in almost everything in that corridor over the last three years. It was among the advisers to the buying consortium of the Global Logistics Properties portfolio for S$15.9 billion, the region’s key advisory deal, and the sale of CWT to HNA Group. It also helped Blackstone to buy the Croesus Retail Trust.
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Sri LankaBest bank: Commercial Bank
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Commercial Bank does not just win the award by being the biggest bank, although it certainly is that, measured by market cap, income, profits, assets, deposits and loans. It does so by managing this large franchise well, with return on equity just under 18% and net non-performing loans dropping below the 1% mark during the awards period.
Achievements in 2017 included 22.5% growth in the bank’s SME portfolio, which fits with a theme of financial inclusion and rural development. A new hybrid leasing facility was launched, new cards were developed and the number of projects undertaken by the CSR Trust hit 380, ranging from education to healthcare.
Although it is one of the more predictable awards, one only has to look at NDB Investment Bank’s transaction record to see why it keeps winning. It executed 40 transactions during the review period, worth the equivalent of $360 million in total, close to a record year.
Examples included a joint lead manager role on the IPO of RIL Property, the first in Sri Lanka to have a cornerstone tranche; financial adviser for the group restructuring of Hemas Holdings; M&A roles on the acquisition of a fintech by Dialog Axiata, the country’s largest telco, and the divestiture of Unipower; and an advisory role for Sampath Bank on the first Basel III-compliant contingent convertible bond in the country. It even went cross border, becoming the first Sri Lankan investment bank to manage an overseas IPO, for Ooredoo Maldives.
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TaiwanBest bank: Citi
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Taiwan represents a useful microcosm of why Citi has won our overall award as Asia’s best bank. Taiwan is one of several countries where Citi is not only the biggest foreign bank but also a credible competitor to the local houses.
So, for example, where the average return on equity in Taiwan banking is 9%, Citi offers 12.5%, and its return on assets at 1.54% is more than double the 0.63% of the local banks.
Citi is entrenched and committed – it has 54 branches and 4,000 employees in Taiwan – but also brings into play the digital innovation it boasts regionally and worldwide. It was, for example, the first bank in Taiwan to adopt voice biometrics.
It is the leading credit-card issuer in the country, and many of its regional businesses – including the Citigold and Citi Priority arms of its wealth management offering, its markets business, its treasury and trade solutions team, and securities services – exhibit particular strength in Taiwan.
This is where it can lead even the strongest local competitors: in institutional banking it provides global banking services for clients in 45 markets and has a peerless ability to support the liquidity management and working capital needs of multinational corporate clients in dollars.
As an issuer Citi is a vital part of the formosa bond market and as an investment bank it was on five important M&A deals during our review period, including Pou Chen’s $1.4 billion privatization of Pou Sheng and the sale of Temasek’s stake in Winstek to Sigurd.
This year we reward Morgan Stanley in recognition of the bank’s work in the development of formosa financing.
Since 2014 Morgan Stanley has structured 28 dollar formosa offerings for corporates, including the first, the largest and the lowest coupon. By now it has represented issuers like Comcast and AIG four times in the sector.
During our review period, the bank handled many more from all corners of the globe, among them deals for Westpac, NAB, Abu Dhabi Commercial Bank, Comcast, AIA and Intel. It brought issuers from Mexico (CFE), Norway (KBN) and Korea (Keximbank). Nobody has done more in this market.
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ThailandBest bank: Bangkok Bank
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Bangkok Bank is not the biggest in the country, but it had the best year. Although Siam Commercial Bank continues to boast the highest overall profits in the country, they declined 9.4% year on year in 2017; at the same time, Bangkok Bank’s went up by 3.85% to Bt41.15 billion ($1.28 billion) pre-tax.
Thailand’s largest corporate lender, Bangkok Bank is well placed for the big infrastructure development that is underway in the country, a consequence both of the national shift towards high-value manufacturing and logistics and the impact of the Belt and Road Initiative.
Bangkok Bank’s InnoHub, a fintech accelerator, completed its maiden programme in 2017.
Of the eight participating startups, several are expected to develop services for the bank’s customers and one – FundRadars – has already started alongside Bualuang Funds under the bank’s asset management subsidiary.
Credit Suisse stood out for equity capital markets and M&A advisory during the awards period.
A key deal was the concurrent convertible bond and equity offering for Singha Estate, the first-ever concurrent placement in Thailand. Among several secondary placements, the pick was a $112 million overnight block in Star Petroleum Refining by PTT, placed at 76% above the IPO price.
In M&A, Credit Suisse advised on the sale of a 30% stake in Panus Poultry to NH Foods, bringing a strong international partner to a transforming local name.
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VietnamBest bank: Techcombank
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You are doing something right when you attract investment from GIC, Warburg Pincus, Fidelity and the Norwegian sovereign wealth fund. That is what Techcombank, whose IPO came just outside our review period, has achieved. It has done so for several reasons.
One, it keeps it simple and sticks to a targeted retail strategy, which investors favour as the perfect exposure to Vietnam’s consumer dynamics. Two, it is staffed by executives with a track record in western institutions – chief executive Nguyen Le Quoc Anh is ex-Wells Fargo and McKinsey and CFO Bang Trinh came from Morgan Stanley. Both have a very good idea of the business practices top institutions want to see. Third, it is also very good at what it does. Net profit after tax almost doubled in the first quarter of 2018 over a year earlier. As Anh says, it’s one thing to get names like these on the shareholder register, but they come with big expectations.
Although Vietnam is awash with large equity deals at the moment, only one fell within the review period last year (or two counting a subsequent block from the same issuer), Vincom Retail.
The listing, officially an initial equity offering rather than an IPO due to some novel quirks to get around unusual Vietnamese trading and settlement rules, was important and paved the way for bigger deals that have followed this year. At the time it was not only the largest-ever equity offering in Vietnam but also achieved the highest foreign demand for such a deal in the country.
Three banks were involved, Credit Suisse, Citi and Deutsche Bank, making the differentiator for the award what else they did in the year. Credit Suisse’s $150 million syndicated loan for FE Credit, the first international loan transaction for the borrower, was a good and upsized deal building on its previous consumer finance deals.
That tips the award from Deutsche Bank, whose claim to fame was that it was on all four of the important equity transactions in Vietnam since Vietjet, with Credit Suisse missing out on Techcombank.
