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Best domestic bank: Bendigo and Adelaide Bank
Bendigo and Adelaide Bank gets what might be called the Steve Bradbury award, named after the Australian skater who won an Olympic gold medal when his highly ranked competitors piled into each other just before the finishing line.
Australia’s dominant banks – ANZ, CommBank, NAB and Westpac – tally collective earnings of A$32 billion ($24 billion). If the big four are the merciless profiteers, as many Australians, including a good few politicians, see them, then Bendigo and Adelaide Bank can claim to be banking’s customer-friendly emancipator: community-oriented, attentive and the antithesis of those oligopolistic firms.
While 2017 was the big four’s annus horribilis, with repeated revelations of market abuse and a royal commission into their misconduct, it has been smaller Bendigo’s boon.
And the market has noticed. Shares in the big four slumped when that royal commission was announced in November, but Bendigo stock soared.
Customers are noticing too. Though Bendigo and Adelaide is a fraction of the size of even the smallest of the big four, its searing focus on the customer has catapulted it into fifth place in Australia’s bank rankings, with annual earnings of A$416 million and 500 outlets nationwide.
Rural-based Bendigo has rewritten the rules of modern banking by reaching back into the themes of the past. It has expanded by partnering with local companies in districts across the country to restore banking and financial services to communities abandoned by the bloodless big-city banks.
Now it’s starting to do the same in places where the big four still dominate – in the cities. But as tech-loving Australians also warm to their own emerging fintechs, Bendigo’s existential challenge is to extend that same country spirit to the suburbs and online.
Best investment bank: Macquarie
The so-called millionaires’ factory of Macquarie Group motored on in 2017, largely as it has for the last decade and more, at the top of its game.
In October, Australia’s biggest investment bank smashed market expectations with an A$1.25 billion ($940 million) half-year profit en route to what is expected to be another record for the 2017/18 full financial year.
That is thanks in large part to the fee bonanza Macquarie is reaping from its spending spree over the years in international infrastructure, where it is now a global leader. Macquarie’s international operations generated almost two thirds of its profits.
With operations in 28 countries, asset management this year had A$473 billion in assets under its wing, making it the group’s main profit engine. Macquarie’s asset management arm banked A$537 million in performance fees from its infrastructure-based funds.
That’s good news for Shemara Wikramanayake, the division’s boss since 2008. A succession of stellar results on her watch means she is tipped to succeed Nicholas Moore, Macquarie’s long-standing chief executive.
Macquarie’s reputation for measured risk was enhanced when central banker Glenn Stevens, the Reserve Bank of Australia’s pro-growth governor from 2006 to 2016, joined Macquarie’s board in October.
The trailblazing Macquarie’s next big investment theatre? Its green group has about $20 billion invested in renewable technologies.
Best bank for SMEs: ANZ
ANZ chief executive Shayne Elliott attracted headlines in 2016 by pulling his firm out of the small and medium-sized enterprise sectors of five of Asia’s booming markets, including Indonesia and Vietnam. A year later, Asia’s loss is Australia’s gain as ANZ lasers in on thriving small businesses in its home market.
ANZ has increased its SME base by about 30,000 customers in a pitched attempt to move up the league table from the third or fourth slot, depending on the measure used, to its stated goal of first place.
ANZ’s ambition is to be the default go-to bank when Australians think of small business banking.
Lending is up about 9%, and ANZ has devoted about 30% of that to startups, helping them along with initiatives including Innovyz Start. That’s where the bank selects a handful of likely new customers to be intensely mentored by small business experts en route to new funding and ramping-up.
ANZ’s SME push is driven by technology via its walled-garden social media platforms and cloud-based innovations such as Employment Hero, which handles day-to-day workplace issues, including payroll and performance management.
ANZ has aggressively rolled out so-called application programming interfaces, which streamline bank-compiled market data and channel it directly to its customers, in readiness for Canberra’s regulatory push to more-open banking.
Best bank for CSR: Bendigo and Adelaide Bank
Bendigo and Adelaide Bank’s boss Mike Hirst may well be the George C. Scott of Australian banking.
The actor Scott refused an Oscar for his title role in the 1970 film ‘Patton’ on the grounds that the award was recognition of something that shouldn’t require recognition. As Bendigo’s Hirst says of corporate social responsibility: “CSR has become what you write in an annual report about how wonderful you are. We don’t write any of that stuff. We like our deeds to talk for us.”
Indeed, tap CSR into the search window of Bendigo and Adelaide Bank’s website and after wading through the CVs of staff who have worked at the Australian company CSR Ltd, the former Colonial Sugar Refineries, there’s Hirst describing his bank’s business model.
That’s because Bendigo’s very raison d’etre is corporate and social responsibility, except it calls it ‘community and shared values’.
Bendigo is the bank that helped breathe new life into rural Australia by teaming up with local communities to bring financial services back into their towns.
Some 20 years after its first community bank, Bendigo now backs 320 across the country, returning around A$183 million ($138 million) to their communities.
That has been manifested in Bendigo backing thousands of community projects that are ordinarily the preserve of government: new health services, facilities for the elderly, scholarships, new parks and gardens, and helping to put small-town sporting clubs on the playing field.
“CSR too often gets defined as environmental and philanthropic,” says Hirst. “Ours is about helping people help themselves.”
Best international bank: UBS
UBS is Australia’s go-to foreign bank for dealmakers. It dominates the Australian capital markets league tables, with an average share of 15% to 20% across the component sectors. In M&A, UBS topped out with a 20% market share.
In stock broking, UBS did A$42.2 billion ($32 billion) in trades up until December to easily take first slot, leaving plenty of daylight between it and its nearest rivals. Deutsche Bank, Morgan Stanley and Citi are all working in the low A$20 billion range.
A standout UBS deal this year was the mandate from Royal Dutch Shell to place its 8.5% of Australian explorer Woodside Petroleum, an A$2.3 billion transaction. It also teamed up with billionaire retail investor Solomon Lew in his showdown with retail giant Myer.
But it seems the Swiss aren’t intending to rest on their laurels. In November, they hired back one of their former star bankers, the much-watched Aidan Allen, who had been poached by Citi in 2013 after 10 years at UBS.
Allen is regarded as the leading private equity adviser in the country, with the top names at corporate giants Boral, Qantas, Aristocrat and Woolworths among others in his contact list.
With Allen’s back-to-the-future re-hire, UBS seems set to maintain its primacy down under.
Best private bank: Credit Suisse
Wealthy Australians have never much availed themselves of private banks in the way that much of the rest of the world understands and uses them. Indeed, a prevailing view holds that egalitarian Australians don’t see themselves as wealthy, when they clearly are.
Credit Suisse is doing its best to change that perception, walking directly into a niche neglected by the home-grown operators.
Australia is home to around 430,000 high net-worth individuals, the sixth highest in the world. Credit Suisse’s own data holds that around 3,000 Australians own net assets of more than A$50 million ($38 million) each, an increase of 30% from 2016, thanks to soaring property and share markets.
With its global reach and established presence in private wealth management, CS claims to be the fastest-growing private bank in Australia.
Under the tutelage of Alex Wade, head of Australia, and developed and emerging Asia private banking, the Swiss bank has doubled its headcount to about 100 private wealth managers in Melbourne and Sydney, targeting the existing huge wealth generators and hoping to snare some of the 200,000 new millionaires created in Australia in a year as markets continue to boom.
Best digital bank: Westpac
Almost three years on, Westpac’s digital strategy looks a lot like a prudent insurance policy, an attempt to future-proof itself against technology disruption.
The bank has been a big financial backer of the ground-breaking Sydney fintech hub Stone and Chalk, the largest fintech hub in the Asia-Pacific region, where there are more than 60 startups under construction. Westpac’s in-house fintech funder Reinventure is also a big investor in peer-to-peer lender SocietyOne, where former Westpac luminary – and the bank’s would-be chief executive at one time – Jason Yetton is the boss.
Westpac put A$40 million into payments platform ZipMoney, the main competitor to the runaway startup Afterpay. And it has staked digital home loans startup Uno, which aims to transform the very heart of Westpac’s A$8 billion profit made largely from mortgages, its pot of gold.
The bank’s Digital Connect platform also saw the launch this year of its first corporate lending portal, now accessible to 1,500 of the bank’s largest customers, who account for A$40 billion in lending.