Asiamoney best bank awards 2020: Myanmar
Best domestic bank: CB Bank
Best corporate and investment bank: CB Bank
|Kyaw Lynn, CB Bank|
For a country where approximately 90% of the population is unbanked, Myanmar is flush with banks. But the sector is dominated by just a handful of private institutions. Among them, CB Bank is the most impressive, with a strategy that targets retail, SMEs and corporations, and gaining strength from an intriguing digital approach.
Founded in 1992, the bank is a veteran in the market and the oldest among the top ranks, given that many of its rivals were only established after a run on the banks in 2003. But CB Bank, led by chief executive U Kyaw Lynn, keeps up with the times.
It introduced mobile banking in 2014 and its CB Pay app in 2018. Through its smartphone-based platform it is targeting businesses with point-of-sale technology, appealing to consumers with the ease of a tap-and-go payments system.
The potential goldmine of data produced by its mobile services is not lost on the bank, which has a team of analysts to spot trends and opportunities. And instead of entering the saturated mobile electronic-wallet market with a propriety product, it has partnered with telecoms company Ooredoo to link its bank accounts with the firm’s e-wallet app, launched in 2017.
Though its roots are in retail, CB Bank has developed a strong corporate client base. Its corporate lending accounted for 90% of its outstanding loans last year. The bank had a loan book of K7.57 trillion ($5.5 billion) in 2019, an increase of 19% year on year. Deposits were up 32% on the year. Small and medium-sized enterprises and retail lending made up 7% and 3% of its book, respectively.
CB Bank unveiled a supply-chain financing service at the end of 2019 that allows buyers to optimize working capital by extending the trade payable cycle and lets suppliers generate additional operating cash flow. This has attracted domestic corporate clients and multinational conglomerates, minimizing supply-chain risk and freeing up cash.
As Myanmar opens up, more foreign banks are entering the market. While some local firms are concerned about the competition, CB Bank is embracing the opportunity to establish partnerships so that it can gain access to overseas clients.
It has already partnered with Singapore’s OCBC and with State Bank of India to introduce export financing for its own clients while opening the door to their customers doing business in Myanmar.
CB Bank is using its corporate relationships to expand its reach, offering bank account services to corporate clients’ employees, suppliers and vendors. It is a smart approach to growth, when the average person or small business in Myanmar borrows from neighbours and keeps cash under the mattress.
For example, alongside providing payroll and cash-management services, the bank also offers bank account services, mobile banking and internet banking services to employees.
Among the clients it has secured is Singaporean ride-hailing giant Grab, helping its drivers to open new bank accounts with mobile banking services, ATM cards and consumer loans.
The bank is boosting its SME customer base, nearly doubling the number of active borrowers from 1,665 to 3,000 last year, while its loan portfolio for the segment jumped from K324.3 billion to K530 billion.
In 2017 CB Bank became the first in Myanmar to issue credit cards, for retail and corporates, and has since partnered with well-known brands to help expand its reach, including Manchester United Football Club, a popular team in this frontier nation.
Myanmar is still very focused on cash, making collections and payments processes cumbersome. To capture opportunities there, the bank has expanded its ATM network and opened 25 new branches across the country; it plans to open more this year.
CB Bank provides cash-management products such as electronic and paper-based payments, receivables and liquidity management solutions, and electronic delivery channels to corporate clients, multinational conglomerates, non-governmental organizations, foreign embassies and financial institutions.
Best international bank: OCBC
|Daniel Tan, OCBC|
International banks don’t have an easy time in Myanmar under the eyes of the central bank and regulator, but Singapore’s OCBC has been one of the most innovative and adaptable foreign players since it set up office in 2015.
Driving the growth of the franchise is general manager Daniel Tan. One of his most prescient moves last year was to create a dedicated China desk, led by two bankers. Tan earmarked resources for the team to capture cross-border investments from the growing Guangdong-Hong Kong-Macau Greater Bay Area. It completed a cross-border $10 million bank guarantee to a Chinese contractor for a bridge project in Yangon.
OCBC has industry expertise in education, healthcare, telecommunications and transportation. For the latter it supplied $7.5 million in financing for the construction of dry ports in Yangon and Mandalay — for a foreign-local joint venture project — and $10 million for one of Myanmar’s largest motorcycle distributors.
It also provided a $29 million cross-border syndication loan to finance 400 new telecom towers in the country.
The bank primarily offers services in cash management, trade financing and foreign exchange. Last year it created its first foreign-exchange forward so that customers can hedge the currency risk between dollars and kyat.
OCBC also arranged and led a series of deals in collaboration with domestic banks in 2019, including a $34 million club loan to finance an office building in Yangon, a $20 million club deal to fund a retail mall in Yangon and a $13 million loan for a leading Myanmar distributor of cement, diesel and building materials for the local market.
Among its other achievements last year was the completion of Myanmar’s first green loan – a $44 million refinancing for the construction of green shopping mall Junction City.
It is also pursuing socially responsible investment financing: to increase financial inclusion it supplied $35 million to microfinance institutions that provide financial services to Myanmar’s unbanked population.
OCBC has kept up with local banks in internet and mobile banking, launching its own smartphone app in 2018 just as the popularity of mobile and online services surged. Over the last two years, the use of its Velocity@ocbc internet banking platform grew 30% to cover 85% of its customer base, while 15% of clients have taken to its mobile app. The bank is ahead of the curve compared with some local competitors, incorporating facial identification, thumbprint and voice recognition technology.
Best digital bank: CB Bank
Internet and mobile have become ubiquitous terms in Myanmar’s financial industry. All of the top names, as well as smaller banks, have rolled out digital services, including payments apps and e-wallets. But CB Bank is Asiamoney’s best digital bank because alongside its increasingly popular smartphone app it is pursuing an internal digital and technological transformation that will improve its operations and boost market share.
CB Bank first introduced mobile banking in 2014, rolling out internet banking the following year and its CB Pay mobile banking app in 2018. In January this year, it became the first bank to enable customers to pay their taxes digitally.
CB Bank decided against creating its own e-wallet and competing in a saturated market, instead partnering with telecoms operator, Ooredoo, which launched its M-Pitesan e-wallet in 2017.
CB Bank also offers point-of-sale terminals. By the end of 2019 it had 8,000 merchants using more than 10,000 terminals, which can process 10 payment systems, including Alipay, Apple Pay, Mastercard and Visa.
Last year, CB Bank hired Bogdan Putnikovic as chief information and operation officer. It is now looking at ways to take advantage of technologies such as blockchain, biometrics, cloud computing and virtual reality.
The bank brought together a new data science team to analyze the data generated by its nearly one million mobile banking users. Analytics and algorithms are adding value across the bank, for example in customer relationship management.
CB Bank has launched a human resources mobile app for its employees, giving them access to HR-related information and a learning and development portal.
In a search for international financial technology partners, the bank opened its Innovation Lab on the API-Exchange (Apix) in October 2019. Apix – an Asean Financial Innovation Network initiative – is the world’s first cross-border, open-architecture platform for bringing together financial institutions and fintech firms. CB Bank is the first bank from the region to join.
The bank is set to open its first so-called smart branches, which are kitted out with terminals for form filling, telling and passbook update services. Using the smart branches customers will be able open and access savings accounts and internet bank accounts.
Best bank for SMEs: Aya Bank
Myanmar’s economy is driven in large part by small and medium-sized enterprises (SMEs). Most banks try to target as much SME business as possible, but Ayeyarwady Bank, in particular, is known for its wide penetration and active lending in this sector.
Aya, as the bank is also known, was founded in 2010 by Zaw Zaw – the businessman is its chairman – and in less than a decade has grown to be the second-largest bank in the country by measures including its loan portfolio and number of borrowers, of which SMEs account for 16% and 80%, respectively. As of September 2019, its net loans and advances stood at K2.95 trillion ($2.1 billion).
The bank plans to increase its emphasis on SMEs and consumer banking, increasing its SME loan book to between 25% and 30% of the total. It will do so by working with international organizations and development agencies. Aya Bank has signed its second agreement with the Development Finance Corp (previously the United States Development Credit Agency), the only Myanmar bank chosen for the $20 million seven-year scheme. It also has agreements with Asian Development Bank, French state-backed AFD-Proparco, German Investment Corp (DEG-KfW) and Japan’s JICA for lending to the SME sector.
It is developing offerings including hire-purchase programmes with companies such as automobile and agricultural machinery manufacturers and aims to secure more international partners to help drive its SME-focused strategy.
Best bank for CSR: KBZ
|Mike DeNoma, KBZ|
KBZ Bank, led by chief executive Mike DeNoma, is the largest bank in Myanmar by many measures, which means it can reach communities in need, funding schools, healthcare and programmes on a level its peers can’t match.
The bank recently revamped its internal culture by spreading three core values: ‘Loving-kindness, courage and perseverance’ or ‘Metta, Thet Ti and Virya’.
To act on that spirit and oversee its corporate social responsibility activity, KBZ created a social purpose and impact partnership committee in December 2019. Since then, the committee has contributed $1.1 million to nine projects.
One of KBZ’s key initiatives is to provide medicine and treatment to children with cleft lip and palates. Working with Myanmar’s ministry of health and sports and with Singapore-based charity Smile Asia, the bank has led eight outreach missions over the last three years, most recently to the capital Nay Pyi Taw in December. The project has so far helped 675 children, who are brought to Yangon for free operations.
The bank is involved in a project in Yangon to clean up back-streets and create safe spaces, including creating public murals. It set aside funds to help people in the aftermath of natural disasters such as floods, droughts and cyclones.
In July 2019, KBZ introduced a donation function to its KBZPay mobile wallet: in the six months to the end of the year, it channelled K28.2 million ($19,448) to organizations including Yangon Rescue Organization and Nurture Aids Center. It plans to expand its donation initiative to cover six non-profits including Mary Chapman’s School for the Deaf, the Muslim Free Hospital and Medical Relief Society, and charity Save the Aged.
Best for microfinance: Dawn
|Gonzalo Gonzalez, DAWN
Early Dawn Microfinance was born under the wing of Save the Children International in 2002 as a donor-funded programme, but it was spun off in 2015 as an independent company and has become one of Myanmar’s largest and most reputable microfinance institutions (MFI).
Dawn has outperformed growth targets across the board, capturing more borrowers and boosting its portfolio and average size of loans. As of the end of 2019, it was the third-largest MFI by active borrowers and eighth-largest by loan portfolio in a sector with roughly 180 lenders.
Dawn added 51,000 active borrowers last year, taking the total number of clients to more than 246,000, and boosted its outstanding loan book to $52.2 million, surpassing a $50.6 million target.
More than 90% of its lending is still in group loans, with an average size of $270, but the MFI began rolling out its individual lending business after completing a pilot in October 2018. The unit focuses on small business owners and operates in 11 branches.
The MFI established 10 new branches in 2019, bringing the total to 63, expanding its presence in the Magway and Mandalay region, while opening two locations in the north-western a region.
Dawn has relationships with many of Myanmar’s top banks, including Yoma with which it signed a K3.49 billion ($2.4 million) funding agreement in December. Dawn raised $15.9 million in debt and $5.9 million in additional equity last year. It was also allocated $37 million from a multi-donor trust fund managed by the United Nations Office for Project Services. Through the trust, foreign investors lend to Myanmar’s MFIs in local currency. Dawn received nearly a quarter of the $163 million allocated for 12 selected MFIs.
It is one of 17 institutions with a deposit-taking licence in the saturated microfinance sector. It piloted its voluntary savings account product for existing clients in February 2019, expanding the scheme to nine branches by December and taking K44.9 million in deposits.
It also took steps to streamline and modernize its business: it completed a centralization of its core banking system, reducing manual processing and enabling real-time access to data.
To overcome the problems of operating in a cash-based economy, Dawn has developed a partnership with mobile money solutions provider Ongo to implement its cash management services in all of the firm’s branches.
By using Ongo for cash collections and provisioning, Dawn increased its loan officers’ productivity and safety by reducing the time spent counting cash and reducing the risks of carrying large quantities of money.