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The Quek clan’s Hong Leong Bank is Malaysia’s oldest local bank, founded in 1905 to serve the Chinese traders of Borneo, but it feels like the country’s newest bank thanks to the arrival of digital-obsessed chief executive Domenic Fuda, HLB’s first Western boss, two years ago.
It is evident in the prototype branch on the ground floor of HLB’s head office in suburban Kuala Lumpur, the model for the transformation Fuda is steadily rolling out across HLB’s 250-strong branch network.
With an atmosphere that is more atelier than abacus, HLB 2.0 is part groovy café, part premier banking suite. And this is a normal branch, as HLB’s high net-worth banking is tucked discreetly out of regular public view.
Cash isn’t much in evidence here either; seven out of 10 staff in the new-look HLB branches are customer-facing, often wielding iPads so that customers’ details are just a tap away. The digital transformation has HLB, Malaysia’s fifth-biggest bank, vaulting ahead of scandal-wracked AmBank in sixth place and challenging fourth-ranked RHB, whose planned $9 billion merger with AmBank fell through this year.
At HLB, profit generated per customer is up about 12%. Other key indicators are moving in the right direction; HLB’s cost-to-income ratio is now the second-best among Malaysian banks, as is its level of non-performing loans. The bank says its headcount is down about 10% and overall revenue growth is up 6%. The market likes it too, as stock analysts move HLB from a sell/hold to a buy.
Best corporate and investment bank: CIMB
Bankers could be excused for feeling a sense of déjà vu in Malaysia’s equity and capital markets this year as CIMB showed up in seven of the 10 largest equity and capital market deals in the country. That ubiquity secured CIMB top spot as most active bookrunner among Malaysian investment banks.
Notable deals included the largest local block trade in Malaysia in a decade – CIMB’s role as bookrunner in helping to offload Japanese banking giant MUFG’s $610 million stake in CIMB itself.
CIMB also co-ran the book for sovereign fund Khazanah Nasional’s sale of its CIMB stake, a $133 million deal. The bank was very active on the Islamic finance side too, helping to raise a $200 million sukuk for Malaysia’s Quantum Solar Park, which CIMB says is the world’s biggest green sukuk to date.
In M&A, CIMB held Philippine property company Ayala Land’s hand when Ayala bought a controlling stake in Malaysian property developer MCT for $50 million in early 2018. It also advised Dutch coffee house Douwe Egberts in its $360 million takeover of Malaysian beverage group OldTown.
Best international bank: Standard Chartered
Bangladeshi banker Abrar Anwar modestly says he is still learning the ropes at Standard Chartered Bank’s Malaysian offshoot since coming on board in Kuala Lumpur last November, after being at the helm of StanChart in Dhaka. But Anwar has got off to a strong start, as indicated by the RM156.9 million ($38.2 million) in profit that his new KL-based team generated in the first quarter of 2018, his first full quarter in charge. That’s 41% higher than the same quarter in 2017. And 2018 hasn’t been easy, as Malaysians waited to see how toxic politics played out.
In small and medium-sized enterprises, Anwar’s team say he has brought to Malaysia some of the intimate “banker-inside-the-business” practices that mark SME banking in Bangladesh, with its myriad small operators that make up its textile industry. That means up-to-the-minute management of the processing and tracking of bills of lading, orders and transfers, the minutiae of SMEs that StanChart finesses for its commercial customers, through its digital and direct platforms.
StanChart also ran an eclectic corporate and investment book during the year. Deals ranged from a $575 million revolving credit facility arranged for shipping tanker firm AET to a RM1.5 billion Islamic finance syndicated loan for the Malaysian arm of Saudi Telecom. It also arranged a $100 million bond-raising for resources logistics firm Yinson Holdings, in what StanChart claims was the first unrated public dollar bond deal, as well as the first public dollar perpetual instrument by a Malaysian company.
Best private bank: Maybank
Eunice Chan, who runs Maybank’s high net-worth and affluent banking (or HAB) business, divides her clients into three categories; Maybank Private for the uber-rich, Maybank Premier for the simply affluent and Maybank Privilege for the well-on-their-way-to-wealthy.
Malaysia’s well-to-do came under pressure to keep their money at home in the run-up to what proved to be nation-changing elections.
In 2017, HAB clients were an important generator of profits for Maybank, accounting for 41.5% of the bank’s pre-tax profit from its consumer division. Maybank says assets under management grew 35% in 2017 as it won business from new clients. Maybank’s soar-away operation was its unit trust division, where assets under management jumped 41.3%, or three times the industry average of 12.7%.
Best digital bank: Hong Leong Bank
Chief executive Domenic Fuda hasn’t just future-proofed HLB with his mantra of “digital at the core”, he’s also saving it money while earning more too.
This digital transformation is a facelift, Fuda says, that’s not just designed to shore up HLB’s defences from franchise-killing fintechs, but to position HLB as Malaysia’s leading digital bank in the 21st century – and stay there.
Overheads at HLB were down 3% this year while 34% of digital retail customers bought products they didn’t in the old, non-digital HLB. As Citi banking analyst Robert Kong puts it, Fuda’s comprehensive digitalization of HLB “means not only the transformation of the customer experience, but middleware and back-end systems as well.”
By February this year, HLB reported that mobile and internet banking transactions, made in English, Malay and Mandarin, make up 72% of all transactions.
Best bank for SMEs: CIMB
Effendy Shahul Hamid’s commercial banking division at CIMB has been a standout through 2017 and 2018. As the country underwent an unexpected political revolution, much of corporate Malaysia put business on hold; yet CIMB’s small and medium-sized enterprises business proceeded apace, snaring market share and advancing its digital offerings.
CIMB says that BizChannel, its online banking platform for SMEs, has been well received, with strong penetration. CIMB also offers the lesser BizLite for SMEs, and its takeup in Malaysia has encouraged the bank to roll it out at its sister operation in Indonesia. The bank now boasts more than 500,000 business customers, served by 2,000 staff – about 15% of its Malaysian headcount – manning 150 dedicated SME centres across the country. CIMB puts its SME market share in Malaysia at about 10%, and claims the operation has grown faster than the industry average in recent years. Malaysia’s SME sector generates around 36% of the Malaysian economy.
Best bank for CSR: Maybank
Maybank is serious about saving tigers, not just for Malaysia but for the world. The bank’s philanthropic arm, the Maybank Foundation, has partnered with the World Wildlife Fund to protect tigers in Malaysia’s Belum-Temenggor forest in Perak state. The forest, which borders Thailand, is one of the world’s main habitats for endangered Malayan tigers, and is deemed a priority site in the Malaysian government’s conservation action plan.
Maybank says naturalists funded by the foundation have covered more than 5,000 square kilometres of dense jungle by foot patrol, de-activating traps and snares set to catch tigers otherwise bound for Asia’s markets. The foundation estimates that it saved 177 tigers and other animals crucial to maintaining the natural ecosystem. Alongside these on-the-ground efforts, Maybank has funded community awareness and education initiatives to deter poaching, such as this year’s Art of The Tiger and the MyTiger Values art competition, aimed at underlining the importance of protecting the tiger populations among Malaysia’s youth.