Latin America best managed banks 2018: Strength beyond the numbers
Euromoney attempts to look through the gloss of momentum and short-term results to answer the question long-term investors ask: which banks have the best blend of performance, management expertise and fundamental strength to outperform?
What does it mean to be a well-managed bank?
Financial results, are of course, paramount. A well-run bank is profitable and (hopefully) generates a return on equity well above the cost of that equity. Other metrics are also clearly important. For example, a bank with a growing credit portfolio is demonstrating that it has the ability to originate new loans – in other words, it has attractive products and a distribution network – a core requirement for banks wherever they are.
Other data points will be of greater or lesser importance depending on the specific business model. How do you compare the relative attractiveness of a bank that targets corporate business against another that has more of a fee-based revenue model? How to compare a retail-orientated lender against an investment bank? And a bank reporting double-digit growth in an upturn today is only a great investment if its management can be trusted to manage credit risk and avoid a blow-up in delinquency when the economic cycle turns.