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| © 2019 Euromoney |
| Regional results |
Best Investment Bank
Best Investment Bank
Best Investment Bank
Best Investment Bank
Best Investment Bank
Best Investment Bank
Best Investment Bank
Best Investment Bank
Best Investment Bank
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Bahrain
Best investment bank: SICO |
Ahli United Bank posted another set of strong results in 2018 ahead of a planned merger with Kuwait Finance House but this year’s award for best bank in Bahrain goes to smaller rival National Bank of Bahrain (NBB).
Under the leadership of new chief executive Jean-Christophe Durand, formerly head of BNP Paribas’s Middle East and Africa operations, NBB embarked in 2017 on a radical transformation programme that is already delivering impressive results. Despite substantial investment in technology, including a new internet banking platform for business customers and a full upgrade of its ATM network, the lender saw net profit rise by 14.8% to a record BHD70 million ($186 million) last year, giving a return on average equity of 15.2%. An increase in operating profit of 10.9%, more than double NBB’s long-term average of 5%, was a particularly positive sign.
As well as the launch of a three-year digitization programme, which has already sparked a raft of ground-breaking initiatives, including the use of cloud-based systems and the launch of open banking functionality, last year saw the establishment of a middle office function for corporate and SME banking as part of an overhaul of NBB’s risk management capabilities. The lender also stepped up activities in key Gulf markets, including Saudi Arabia and the United Arab Emirates (UAE), as part of a regional expansion strategy.
Founded in 1957, NBB is listed on the Bahrain Bourse and is the country’s second-largest bank by market capitalization. It is controlled by the state via the Bahrain Mumtalakat Holding Company, which owns 44.2% of the lender. A further 10.9% is held by the Social Insurance Organization, with 44.9% is owned by local private and institutional investors. At the end of December, the bank’s balance sheet stood at BHD3.2 billion.
SICO, the winner of the award for best investment bank in Bahrain, also notched another year of strong profit growth in 2018, with net income up 11.9%. Notable mandates included Bahrain’s first initial public offering (IPO) since December 2016, a $31.3 million listing of port operator AMP Terminals – an arm of a Netherlands-based subsidiary of the Maersk Group – in November. SICO acted as sole lead manager and underwriter for the deal, which was 5.4 times oversubscribed.
The Manama-based firm also comprises brokerage operations in Bahrain and Abu Dhabi, which cover more than 90% of regional equities, as well as a regional custody house and an asset management arm with more than $2 billion in assets under management.
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Egypt
Best investment bank: EFG Hermes |
Sector-beating financials, a proactive approach to balance-sheet management and an unwavering commitment to innovation make Commercial International Bank (CIB) a worth winner of this year’s award for best bank in Egypt.
In 2018, the country’s largest privately owned bank boosted consolidated net income by 27% to a record EGP9.6 billion ($572 million), equating to a return on average equity of 33.1% after profit appropriation. Interest income from high-yielding domestic government securities remained a significant contributor to the bottom line result.
CIB also used its balance sheet to support the real economy, however, growing its loan book by close to 10% in the second half of 2018 despite persistently high interest rates.
Meanwhile, a conservative risk-management strategy kept non-performing loans to 4.1% of the total and coverage at an ample 269%. On the asset side, a drive to reshape the bank’s funding mix resulted in an 18.3% increase in customer deposits. Capitalization also remained comfortable. At end-December, CIB’s overall capital adequacy ratio stood at 19.1%, well above the regulatory minimum.
Under long-standing chairman and managing director Hisham Ezz Al-Arab, the bank has also maintained its position as one of Egypt’s technology pioneers. In 2018, CIB built on its existing capabilities in distributed ledger technology to create a local blockchain network for banks and financial services providers. Other data-based projects included the launch of a digital lending programme based on transaction history, designed to improve access to credit for Egypt’s large unbanked population, and an early-warning system for business borrowers.
Last year also saw CIB upgrade several of its digital platforms, including ATMs and online banking. As a result, online banking activity hit a record 61.4%. CIB also ranks first in the nascent Egyptian mobile wallet segment, accounting for 18% of all transactions in 2018. In a sign of its commitment to further innovation, the bank intensified its engagement with the fintech sector via the launch of CVentures, Egypt’s first fintech-focused corporate venture capital firm.
Meanwhile, despite stiff competition from a growing cohort of local players, EFG Hermes retains the title of best investment bank in Egypt for 2019. As well as winning a clutch of equity capital markets mandates in regional markets including Oman, Saudi Arabia and the UAE, the firm was also tapped to lead landmark IPOs in its home market of Egypt’s largest integrated education provider, Cairo Investment and Real Estate, and agricultural firm Eastern Tobacco.
The latter was the first offering of state-owned company on the Egyptian Stock Exchange for more than a decade and marked the start of Egypt’s long-delayed privatization programme. The oversubscribed transaction raised E£1.7 billion ($101 million) for the public budget. EFG Hermes also advised on rights issues for Orange Egypt, Cleopatra Hospital Group and Alexandria Portland Cement Company.
In M&A, the firm advised Telecom Egypt on the $90 million acquisition of Mena Cables and acted as sell-side adviser to Suez Cement Group Companies on the sale of its industrial bags manufacturing plant to Mondi Industrial Bags, a global paper and packaging company.
EFG Hermes is Egypt’s largest investment banking and brokerage house, and boasts a presence in five regional markets – the UAE, Saudi Arabia, Kuwait, Oman and Jordan – as well as offices in Bangladesh, Kenya, Pakistan, the US, and the UK.
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Iran
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The renewal of US sanctions last year limited the ambitions of Iran’s cross-border banks but failed to put a dampener on domestically focused Ayandeh Bank, which takes the best bank in Iran award for the second year in succession.
The privately-owned lender posted a return on equity of 26% for year to end-March, more than double the 12% recorded in the previous 12 months, on the back of a 38% increase in total revenues. This was partly the result of a drive to replace expensive central bank loans with deposit funding. Total client accounts increased by 29% to 5.4 million during the awards period while retail deposits rose 51%, boosting Ayandeh’s share of total sector deposits by four percentage points to 21%.
Cross-selling of wealth management products to the bank’s new retail customers also contributed to improved profitability, as did an expansion of its loan book by 35% during the year. Growth in lending to retail and SME customers was particularly impressive at 125%. Asset quality remained healthy, with non-performing loans accounting for just 2.8% of the total at end-March, down 0.8 percentage points on the year. Capitalization also remained comfortable, thanks to a rights issue that boosted tier one capital by 47%.
Ayandeh Bank was established in 2013 through the merging of 10 credit cooperatives and two credit institutes with a private-sector bank.
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Israel
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Israeli market leader Bank Leumi put more clear water between itself and closest rival Bank Hapoalim during the awards period as the latter again failed to reach a settlement with US authorities over alleged tax evasion offences.
The momentum player in the market, however, and the winner of this year’s country award for best bank is Israel Discount Bank (IDB). With total assets of NIS36.2 billion ($417 million) at end-2018, the lender is half the size of Bank Leumi but last year posted a return on equity of 9.3%, just 0.2 percentage points below that of the market leader.
IDB’s profitability has been on a steady upward trajectory since 2014, as has its net income, which last year increased 19.5% to a record NIS 1.5 billion. Credit growth of 10.8% was well-balanced across segments, with household loans rising 10.5%, mortgages 13.9%, and lending to micro and small enterprises 9.0%. Loans to large corporates were up 13.6%, while on the liabilities side deposits rose by 7.8%.
Meanwhile NPLs fell to just 0.61% of outstanding lending and IDB’s common equity tier 1 ratio improved by 24 basis points to 10.24%.
These impressive results were achieved despite ongoing investment in innovation as part of a five-year digital transformation programme that started in 2015. New for last year were updated online and mobile platforms for business customers, and a ground-breaking mobile-based customer support and advice service.
The latter offers three layers of support: push insights based on artificial intelligence (AI) analysis of customers’ data; and in-app chatbot that can conduct free-speech conversations; and an instant message platform for consultation with human bankers that allows for direct transfer of files. The service, which was brought to market in 11 months at a cost of less than $500 million, is the first ever AI-based banking bot launched in Israel.
For investment banking, the country award for Israel goes to Barclays again this year.
More than 10 years after opening in Tel Aviv, the UK house remains the key international player in the market with an unrivalled debt capital markets business and a strong advisory franchise.
Once again, Barclays was the go-to house for Israeli sovereign eurobonds, acting on the country’s largest ever international issue – a €2.5 billion dual-tranche deal in January – as well as a €250 million private placement to Asia. The bank also acted for Israel Chemicals on a $600 million bond issue and tender in May 2018.
Notable equity capital markets mandates included October’s $81 million IPO of LogicBio, a $64 million block trade for Kornit Digital and ADO Properties’ €165 million convertible bond offering.
Meanwhile in M&A, Barclays acted as exclusive financial adviser to long-standing client Orbotech on the electronics producer’s $230 million acquisition of Frontline from Siemens, as well as its own $3.4 billion merger with KLA Corporation. The bank also maintained its leading role in Israel’s oil and gas sector, advising Ithaca Energy on its $358mm acquisition of licences and infrastructure interests in the North Sea.
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Jordan
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Arab Bank’s solid financials, improved profitability and rapid advances in technology made it an easy winner of this year’s best bank in Jordan award. A 53.9% increase in net income last year to $821 million helped boost the Jordanian group’s return on equity by 3.2 percentage points to a multi-year high of 9.5%, while a bottom line result of $232 million in the first quarter made for a promising start to 2019.
More than two-thirds of Arab Bank’s revenues derive from its regional operations, which comprise branches in nine countries across the Middle East and North Africa (MENA) as well as an offshore banking unit in Bahrain. Nevertheless, under the leadership of chief executive Nemeh Sabbagh, the lender remains committed to its home market, which accounts for 32% of group loans and 36% of deposits.
Arab Bank’s corporate and investment banking arm is heavily involved in financing renewable energy projects in Jordan, working with the local government and international financial institutions, as well as private-sector firms.
The lender also continues to set the pace of digitalization in the Jordanian banking sector. Last year saw the roll-out of a new internet banking platform for corporates, ArabiConnect, while retail customers benefited from the introduction of an upgraded version of Arab Bank’s mobile banking app and the opening of Jordan’s first self-service branch.
Other retail initiatives during the awards period included a revamp of the Shabab programme aimed at younger customers and the launch of a wealth management service in partnership with AB. Last year also saw an end to legal challenges in the US that had dogged Arab Bank for 14 years. In April, the country’s Supreme Court blocked a final attempt by non-US plaintiffs to revive claims against the lender relating to terrorist financing.
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Kuwait
Best investment bank: NBK Capital |
Kuwait Finance House (KFH) takes the country award in its home market this year ahead of larger rival National Bank of Kuwait (NBK) by virtue of its superior profitability, commitment to innovation and dynamic expansion strategy.
In 2018, a 23.5% increase in net profit to KD227 million ($747 million) boosted KFH’s return on equity to 12.4%, up 2.2 percentage points year-on-year. A capital adequacy ratio of 17.5% at end-December was well above the regulatory minimum, while total operating expenses fell 4.1% despite substantial investment in technology.
Last year saw the launch of a plethora of pioneering digital initiatives, including Kuwait’s first fully-automated 24/7 bank branch, ATMs offering cash withdrawals via QR code, a mobile wallet based on Mastercard’s MDES platform, and an instant remittance service using RippleNet’s blockchain technology.
On the corporate side, KFH maintained its position as a leader in the global sukuk market and a key player in domestic and international project finance.
One of the world’s largest Islamic finance institutions, the group already boasts commercial banking operations in Turkey, Bahrain, Malaysia and Germany. Its shareholders – led by Kuwait Investment Authority and the Kuwaiti government, which together hold 34.6% of the bank – have plans for still more ambitious international expansion. In January, they announced the acquisition of Bahrain’s Ahli United Bank, a $92 billion merger that will create the Gulf’s sixth-largest lender.
Meanwhile, NBK Capital’s lead role in the country’s only IPO, in an otherwise lacklustre year for local capital markets activity, helped earn it the title of best investment bank in Kuwait. Part of the NBK group, the firm brought oil and gas services provider Integrated Holding Company to market in June 2018 in a $200 million offering that was 230% oversubscribed. Other mandates in the sector included advising on KIPIC’s KD290 million term loan and several large corporate bond issues.
NBK Capital was also active in the financial sector, advising Burgan Bank on a ground-breaking KD100 million senior bond issue, as well as expanding its investment banking offering with the launch of a new financing advisory business unit.
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Lebanon
Best investment bank: Broadgate Advisers |
Lebanon remains one of the Middle East’s most competitive banking markets, particularly at the top where Bank Audi and Blom Bank continue to battle it out for supremacy.
For the past three years, Euromoney’s Awards for Excellence have recognized the superior financial metrics of Blom Bank. In the current awards period, the number two lender again had the edge in terms of profitability and efficiency over its larger rival – however, it is Bank Audi that wins best bank in Lebanon for its improving metrics, proactive approach to balance-sheet management and far-sighted infrastructure-focused growth strategy.
In response to challenging operating environments in its home market and Turkey, the group’s management, led by chief executive Samir Hanna, reduced lending and refocused on core client relationships. Despite the continuing drag on profitability from Turkish subsidiary Odea Bank, however, Bank Audi managed to boost return on average common equity by 0.6 percentage points to 14.0% last year. Combined with a $81 million decline in consolidated operating expenses, this brought the group’s cost-income ratio down to 46.3% from 51.2% in 2017.
This reduction was achieved despite further investment in technology, which last year included the replacement of Bank Audi’s core banking system in Lebanon, an upgrade to its mobile banking app for business customers, and an overhaul and expansion of its ATM and ITM networks.
Other notable developments last year included Bank Audi’s partnership with the European Bank for Reconstruction and Development (EBRD), which saw the latter launch its Lebanese operations by taking a 2.5% equity stake in the group. This also represented a statement of intent from Bank Audi, which has positioned itself to play a leading role in the $17 billion infrastructure development programme promised by Lebanon’s new government.
The bank is already actively involved in the sector, notching a mandate as lead arranger for a ground-breaking public-private partnership (PPP) wind farm project in North Lebanon.
Another local player well-placed to benefit from the government’s Capital Investment Programme (CIP) is Broadgate Advisers, the winner of this year’s country award for best investment bank.
In 2018, the Beirut-based firm expanded its resources to include an infrastructure specialist team and began raising a dedicated fund – the first of its kind in Lebanon – to channel private funds into government-backed infrastructure projects.
Last year also saw Broadgate open an office in Geneva to serve its growing wealth-management client base, while notable advisory mandates during the awards period included the sale of a controlling stake in Lebanese insurance and reinsurance company Assurex to Saradar Capital Holding, the merger of fashion retailer Pearl Brands with the Lebanese subsidiaries of the UAE-based Chalhoub Group, and the sale of real-estate developer Faqra Club to ZR Group Holding.
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Oman
Best investment bank: HSBC |
Another year of solid results and substantial progress in digitalization helped Bank Muscat retain its title of best bank in Oman. The local market leader’s net profit rose to RO180 million ($468 million) in 2018 on the back of an 8.2% increase in net interest income and income from Islamic financing, which in turn was boosted by 7.3% growth in outstanding loans and receivables.
The bank’s funding base also remained strong, with deposits – including Islamic deposits – rising 14.1% in the 12 months to end-December. Technology upgrades during the year included the introduction of tablet banking for retail customers, the implementation of a customer relationship management system and the launch of a business-to-business platform for corporate and public-sector entities.
Bank Muscat also confirmed its position as a leading investment banking player in Oman, completing transactions worth more than $2.5 billion across a wide range of sectors. Key deals included an inaugural $1.5 billion bond issue for Omantel, a $400 million term loan for a subsidiary of Omani utility group NAMA, and a balance sheet restructuring and capital raising for Dhofar Insurance Company.
Nevertheless, the award for best investment bank in Oman goes to HSBC, which once again demonstrated its ability and willingness to support state and private-sector entities with complex financing solutions.
HSBC has been the strategic investment banking adviser to the government of Oman since 2016, a relationship that last year earned the bank its fourth consecutive debt capital markets mandate from the ministry of finance – October’s $1.5 billion $1.5 billion sovereign sukuk – as well as a $4 billion pre-export finance facility.
The bank also acted on Omantel’s eurobond debut, while other notable financing transactions included a $1.35 billion revolving credit facility for Oman Oil Company, a $250 million term loan for Bank Dhofar, and a 13-year interest swap on the back of an ECA-supported project finance facility for Oman Oil Refineries and Petroleum Industries Company (ORPIC).
HSBC is the only global group with a substantial commercial banking presence in Oman, which includes a dedicated global banking and markets team.
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Palestinian Territories
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Multi-year award winner Bank of Palestine turned in another year of solid results in 2018 but was unable to match the profitability and technological sophistication of Arab Bank Palestine, the winner of this year’s Palestine country award.
The Jordanian group’s Palestinian operation, which accounted for 24.7% of sector assets at end-December, defied challenging operating conditions to post a return on equity of 26% last year, up three percentage points on 2017. Asset quality was also among the best in class with non-performing loans accounting for just 2.9% of the total at year-end, despite relatively weak loan growth of 2.5%. A 1.3 percentage point increase in the bank’s capital adequacy ratio to 12.4% was also a positive signal.
These strong results provided a timely illustration of the value of scale in a rapidly changing bank environment. As part of a well- established regional group, Arab Bank Palestine, and its customers, benefit from solutions developed in, and for, larger markets. During the awards period, the group rolled out a range of new technologies in Palestine, including interactive teller machines, ATM cheque deposit facilities, and its new Arabi Mobile application.
Last year also saw the launch in Palestine of Arab Bank’s new wealth management service, provided in partnership with AB Invest, as well as a revamp of the group’s Shabab youth banking programme.
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Qatar
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The economic blockade of Qatar by neighbouring Gulf states has so far failed to put a noticeable dampener on the country’s vibrant banking market. Qatar National Bank (QNB) again leveraged its market dominance to post a sector-beating return on equity of 20.5% for 2018 but faced stiff competition from a clutch of dynamic smaller rivals.
Of these, the stand-out in the current awards period was Qatar Islamic Bank (QIB), which this year wins the country award for best bank.
The Islamic lender lagged QNB in profitability but showed strong improvement across all metrics, notching a 2.1 percentage point rise in return on equity to 17.4% on the back of an impressive 10 basis point rise in net interest margin. This was achieved primarily through a timely focus on balance-sheet optimization that prioritized a reduction in cost of funding over rapid lending growth.
Under the leadership of chief executive Bassel Gamal, QIB maintained the momentum in the first quarter of this year, posting a 9.6% year-on-year increase in net profit. The bank also outperformed rivals on asset quality, with non-performing financing assets accounting for just 1.2% of the total at end-March.
Meanwhile investment in technology continued apace. Last year saw the addition of facial recognition, savings account opening and pre-approved financing facilities to QIB’s mobile platform, as well as the launch of a new mobile app for investor relations.
The bank also introduced the first Islamic POS and online payment gateway to support the banking needs of corporate and SME clients. Equity investors recognized QIB’s work on both profitability and innovation, and in the 12 months to end-March, the bank’s share price rose by 56.1%, nearly twice the 29.8% increase that QNB recorded over the same period.
Bond buyers also showed considerable enthusiasm for Qatari assets last year. Eurobond sales from the jurisdiction topped $31 billion during the awards period, more than four times the level recorded during the previous 12 months. The biggest beneficiary of this issuance bonanza was Standard Chartered, winner of the best investment bank in Qatar award.
The UK house jumped to the top of the debt capital markets league table, acting on 24 deals with an allocated value of $9.5 billion, according to Dealogic. These included two $12 billion outings by the Qatari sovereign, in April 2018 and March this year, as well as a clutch of benchmark and smaller dollar offerings by most of the country’s leading banks.
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Saudi Arabia
Best investment bank: HSBC Saudi |
Competition in the Saudi banking sector remained fierce last year, with National Commercial Bank (NCB) and Al Rajhi Bank fighting it out at the top of the market.
NCB, which offers conventional as well as Islamic banking, retained its market-leading position, with 19% of total outstanding loans at end-2018, while its corporate focus could give it the edge if the Saudi government’s plans for massive spending on infrastructure and industrial projects come to fruition.
This year, however, Al Rajhi Bank wins the award for best bank in Saudi Arabia by virtue of its superior profitability. The Islamic lender’s rapidly expanding retail deposit base contributed to a sector-best cost of funding, which in turn translated into a 12.9% increase in net income and a return on equity of 19.8% for 2018 – well ahead of the 18.1% recorded by NCB.
This was partly driven by a 3.1 percentage point decline in Al Rajhi’s tier one capital ratio, to 19.1%, but the lender also outperformed on return on assets with a sector-beating 2.94%. Asset quality also remained healthy despite relatively strong non-performing loan formation. At end-December, NPLs accounted for just 0.95% of the total.
Al Rajhi also reinforced its commitment to innovation last year, with technology accounting for the majority of a 4.9% increase in operating expenses. Recent enhancements to the bank’s digital offering include fingerprint identification and electronic signatures, while 250 self-service kiosks have also been rolled out across remittance centres.
Previous spending on digitalization is already showing results, with the number of active retail and corporate users of the bank’s Al Mubasher online banking platform increasing by 61% and 12.5% respectively last year. By end-December, 56% of all customer transactions were being performed digitally.
Meanwhile, HSBC’s deep engagement in Saudi Arabia and central role in supporting the government’s Vision 2030 initiative earn the UK house the country award for best investment bank again this year. During the awards period, HSBC led a clutch of eurobond issues that contributed to establishing and improving Saudi Arabia’s sovereign yield curve, as well as working on privatization and PPP projects with entities including Tadawul, Tatweer, SAGO and the ministry of health.
The bank also notched a series of landmark corporate debt capital markets mandates, including a Formosa issue for Apicorp and Almarai’s debut sukuk. As a result, HSBC maintained its DCM league table dominance, with $4.7 billion of allocated volume in the 12 months to end-March, compared with $3.8 billion for closest rival Citi, according to Dealogic.
The UK house was also well-represented on the M&A side, acting as sell-side financial adviser on PIF’s jumbo sale of its 70% stake in Sabic to Saudi Aramco that valued the former at $69.1 billion, as well as on deals for Sabic, Aramco and Sipchem.
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UAE
Best investment bank: Emirates NBD Capital |
First Abu Dhabi Bank (FAB) dominated headlines again in the UAE last year as cost synergies from the 2017 merger of First Gulf Bank and National Bank of Abu Dhabi, which was completed at the end of the year, began to feed through into strong bottom line results. Nevertheless, the top performer in the UAE in 2018, and the winner of country award for best bank, is again Emirates NBD.
Under Australian chief executive Shayne Nelson, the Dubai-based bank posted another year of outstanding results, with net profit up 17.4% and return on tangible equity rising 1.9 percentage points to 22.1%. Net interest margin was up 35 basis points to 2.82%, despite a rebalancing of the bank’s funding structure towards retail deposits, while a 16% increase in spending, largely driven by investment in digitalization, sparked only a modest rise in its cost-income ratio (CIR) to 32.3%.
This strong performance was continued into the first quarter of this year, when net profit rose 15% year-on-year on the back of a 3% growth in lending and CIR was slashed to below 30%.
Meanwhile, the impact of lavish spending on technology was apparent in a series of upgrades to Emirates NBD’s multichannel offering, including tablet-based account opening and a fully digital branch, as well as rapid growth at its youth-oriented digital-only subsidiary Liv. Launched in 2017, Liv was the fastest-growing lender in the UAE last year by customer numbers.
Emirates NBD also demonstrated its commitment to international expansion with the opening of its first Indian branch in Mumbai last year, as well as a rep office in Turkey ahead of the planned acquisition of DenizBank from Sberbank. Emirates NBD said in April that it would push ahead with the purchase despite economic headwinds in Turkey after achieving a 20% discount on the previously agreed price.
Meanwhile Emirates NBD Capital (EmCap) wins the award for best investment bank in the UAE on the back of a strong performance in corporate finance, debt capital markets and loan syndications.
In the 12 months to end-March, the Dubai-based firm again proved its credentials as the leading local advisory house, completing a private placement of a 10.1% stake in logistics provider Aramex for Australia Post following a dual-track process, acting as sole financial adviser to utility company Utico on a private equity-raising, advising DMCC on a financing structure for the Uptown Dubai Project, and acting as sole bookrunner on a $184 million rights issue for Ajman Bank.
EmCap also held its own in debt capital markets during the awards period, leading a wide range of sukuk, conventional and subordinated issues for borrowers including Noor Bank, DP World, NMC Healthcare and Emirates Development Bank. In syndicated loans, it arranged financing for UAE firms across sectors from energy and transportation to construction and finance.
