The leading banks over the past 12 months from the Americas.

Antigua and Barbuda: Scotiabank

Tough economic conditions have dented banks’ ability to generate returns for shareholders across the Caribbean region. In Antigua and Barbuda, gross domestic product growth was a mere 0.5% in 2013 and about 1.5% is forecast for the end of 2014. Additionally, new regulation and a competitive banking market are continuing to add pressure on local lenders. 

Against this backdrop, Scotiabank readjusted its profit trajectory and closed 2013 with net profits more than 50% higher than in 2012, and gave investors an impressive 44% return on equity. Scotiabank’s strategy was based primarily on reducing the cost of funding. It also focused on low-cost deposits and aimed to distinguish its products by providing a better service rather than a cheaper price. 

In corporate banking, Scotiabank’s foreign exchange products continued to attract local hotel businesses, meaning the bank’s foreign exchange revenues have gone from 7.4% of total revenues in 2011 to 9.9% in 2013, and 10.6% for the first half of 2014. On the retail front, Scotiabank attracted new clients to its mortgage products and, at the same time, contained non-performing loans, which shrank to a ratio of 4.1% from 6.5% a year earlier. 

“The Antiguan economy continues to suffer from low growth, high debt and high unemployment, which has caused increases in delinquency in the banking industry. As a result there has been an increase in regulatory oversight in an effort to get the situation under control,” says Scotiabank country manager V Gordon Julien. “[However], we continue to be profitable by maintaining a disciplined approach to cost control and improving our value proposition to our customers, which is important in a highly competitive market such as ours.”

Furthermore, Scotiabank remained committed to its financial inclusion and socially responsible programmes with initiatives that cover healthcare and education, as well as sports activities for children and exhibitions to highlight women’s work in local communities. 

Argentina: BBVA Francés

Argentina has made headlines of late for all the wrong reasons: defaulting for the second time in 13 years, wrestling with so-called vulture funds in the US courts, closing the year with worrying economic data and, once again, confusing inflation figures. Further, the country’s banking market is characterised by rules that cap the interest rates that private sector banks can charge and that oblige them to allocate a fixed proportion of their loans to small and medium-sized enterprises. 

BBVA Francés is a long-term player in this market and, despite such stringent controls by the local authorities, the lender has managed to retain good profitability ratios, which last year were higher than most of the domestic competition. But what impressed The Banker’s judges the most was BBVA’s strong client relationships, its investment in technology, and new, successful commercial partnerships supporting product growth. Car financing, for example, benefited from a joint venture with Citroën and Peugeot, while retail customers could also take advantage of a series of new benefits from the bank’s partnership with LAN Airlines. 

Chief executive Ricardo Enrique Moreno says service and the ability to meet clients’ changing demands have been key to the bank’s success. “BBVA Francés keeps working to improve client experience and trying to differentiate from its peers in terms of service quality. During 2013, the bank showed a very good performance in the retail portfolio, specifically in car loans, one of the most competitive lines of business,” he says.

Over the years, BBVA has solidified its leadership in the high-income segment of the local market, but this has not distracted it from serving a social role. Initiatives to reach the wider community vary from scholarships in the arts and sport, among other fields, environmental projects and programmes to develop entrepreneurships in the agricultural sector.

Bahamas: Scotiabank Bahamas

After a steep drop in profits in 2011, Scotiabank Bahamas changed direction and has closed the past two financial years with positive growth rates. Return on equity is still weak but rising, and the cost-to-income ratio is at a very reasonable level. The high non-performing loan ratio is now stable and the first signs of improvement in the loan portfolio have started to show. 

The bank made efforts to improve mortgage origination, which has been affected by tough competition. Rather than slashing rates to beat the competition, the bank instead decided to offer competitive prices only to customers buying other products. Investment in technology provided better service to retail customers, as well as lower costs. This is exemplified by an upgrade of the branch network so that documents can be automatically indexed and stored; a simple solution that avoids manual input by staff, reduces the scope for errors, keeps costs down and improves customer satisfaction. Furthermore, Scotiabank’s strong presence in the country is supported by a wide-reaching branch and ATM network as well as its efforts in local communities through education programmes and financial inclusion initiatives.

“Scotiabank Bahamas faced considerable challenges this past year: anaemic growth, high levels of mortgage delinquency, cost pressures from increased regulatory supervision [and] government taxation,” says Sean Albert, vice-president and country head, Scotiabank Caribbean North District. Excess liquidity also put pressure on margins, as did the low interest rate environment and the internal reorganisation of the bank, which, Mr Albert points out, was necessary to improve the level of service and growth opportunities it offers. 

“The bank continued to deliver returns to shareholders in this challenging environment,” says Mr Albert. “Our products and services, pricing and fees were reviewed to improve customer [satisfaction].” 

Barbados: Scotiabank Barbados

Thanks to a new focus on lower risk customer segments, the improved management of bad loan and sales support activities, Scotiabank Barbados closed 2013 with a healthy 20% return on equity and net profits some 5% higher than in 2012. Having improved financial results, even if by a small margin, is a considerable achievement in the challenging market of Barbados, where economic conditions remain tough. 

Scotiabank Barbados has developed a number of new initiatives and products, particularly in the mortgage market – which has seen it attract new clients away from the competition – and in credit cards for affluent clients. Furthermore, the sales team has targeted entrepreneurs more effectively and encouraged them to use the bank’s cash management products, which had previously been used mainly by larger corporates. The bank has also strengthened its funding base by creating new term deposit products that receive a more favourable treatment under Basel III.

A push towards online and mobile banking resulted in an increase in the numbers of users. But in a market where personal contact and advice is still considered important, Scotia also made sure its physical network was kept up to date. Indeed, the bank expanded floor space in two of its key branches and added new ATMs to its network.

“It is no secret that Caribbean economies have had a tough time recovering from the global economic crisis that hit in 2008. Credit downgrades, significant government debt and, in some islands, extensive public service lay-offs have dampened consumer demand and created challenges for financial institutions based in the region,” says David Noel, managing director of Scotiabank’s east Caribbean operations. 

“We have been pleased with the results of our mortgage-switch campaigns, which have helped us get quality customers away our competitors and kept us as market leaders. We also successfully revamped our Aero and Gold credit cards, offering increased rewards and these have been very well received.”

Belize: Scotiabank Belize

Since introducing online banking in Belize four years ago, Scotiabank has remained focused on diversifying its distribution channels in the country. It has improved the level of information and data that customers can access online and has made its mobile banking platform more flexible. A bigger presence on social media has also meant that customer concerns and feedback reach the bank and are dealt with faster than in the past.

Greater customer engagement has contributed to Scotiabank Belize’s positive results last year – an impressive achievement considering the challenging economic backdrop. Lower demand for credit put increasing pressure on the banking system, but, at the same time, Scotiabank used the excess liquidity on its balance sheet to offer more competitive interest rates on some of its loans. This was particularly successful in the residential mortgage market. 

Initiatives to cut costs and streamline operations also helped Scotiabank Belize to close the year in profit. The bank simplified its loan adjudication process by placing this function within the group’s regional lending services unit, lightening staff’s administrative workload. It also added a dedicated customer service team to the regional call centre so that the level of service could be improved while also identifying cross-selling opportunities.

“Some of the key challenges Scotiabank Belize faced continued to be moderate economic growth, rapid regulatory changes and excess liquidity in the banking industry,” says vice-president Pat Andrews. “Despite these challenges, we continued with strong financial results as we focused on service. The initiative to direct all customer calls to branches to the regional contact centre was a significant success as was the launch of a centralised adjudication [system] through our regional lending service unit.”

Mr Andrews adds that the bank will continue to focus on alternative channels and improving efficiency in the future.

Bermuda: The Bank of NT Butterfield & Son

The Bank of NT Butterfield & Son not only closed 2013 with net profits three times larger than year-end 2012, it also expanded operations internationally, taking over parts of HSBC’s retail and corporate banking business in the Cayman Islands and the Legis Trust business in Guernsey, UK.

As part of its expansion strategy, the bank installed common core operating systems for the Bermuda, Cayman and UK markets, which allowed it to harmonise products – retail, corporate and wealth management solutions – and offer them simultaneously across markets. Chief executive Brendan McDonagh is rightly pleased with such developments and highlights the bank’s focus on delivering returns to shareholders as well as strengthening its balance sheet. 

“We have successfully integrated [the new] businesses in Guernsey and the Cayman Islands into the Butterfield Group’s international operations, adding significantly to assets and enhancing revenues with minimal increases in operating costs,” he says. “We completed those acquisitions and continued to enhance shareholder value through share repurchases and the payment of quarterly dividends, while maintaining a very strong capital position.” 

Butterfield’s return on equity grew to 9.2% in 2013 from the 1.1% recorded the previous year and Tier 1 capital expanded by 4%, higher than 2012’s 1.4%.

New products were also introduced. Specific accounts created for institutional clients were particularly successful and greatly contributed to the secured accounts portfolio, which was worth $409m at the end of 2013, a 45% year-on-year growth.

Similarly, premium banking services helped to draw affluent retail clients from the bank’s competitors. Butterfield also added self-directed online brokerage services to its asset management division, where customers can trade US equities, exchange-traded funds and options in real time. 

Bolivia: Banco de Crédito BCP

Strong loan portfolio growth and targeting new client segments has characterised Banco de Crédito BCP’s recent activity. All loan segments performed well but the retail business was exceptionally good, expanding by more than 25% year on year thanks, in particular, to considerably higher volumes of mortgages and consumer loans. 

Small and medium-sized enterprises and microfinance products also expanded significantly. BCP engaged with these two new client groups with a series of networking and financial education events for entrepreneurs across the country. It also opened two branches dedicated to microfinance, which will make use of the technology developed by the group’s successful micro lending experience in Peru.

Crucially, expansion in new and higher risk products was accompanied by cautious provisioning. BCP is proud to point out that its loan coverage ratio is above the industry average while its non-performing loan ratio continues to remain below that of its competitors.

The bank’s performance was greeted with enthusiasm by investors. BCP’s first subordinated debt issue, carried out in 2013, which raised $10m, was fully subscribed and highlighted the market’s confidence in the lender.

Furthermore, while a number of branches were being modernised, BCP intensified its focus on directing customers to alternative channels. 

Channel and product innovation is important to chief executive Jorge Mujica, who is keen to make sure that the bank’s growth is sustainable as well as contributing to the overall growth of the country. 

“Last year, we were able to improve product and service quality, expand our offering to new market segments while seeking to be a [socially responsible] bank,” he says. “We want to keep on improving customer experience and we will focus on the use of technology to provide a more efficient service. But we also want to refine our products to better respond to the needs of the wider community.”

Brazil: Itaú Unibanco

The largest private sector bank in Brazil, Itaú Unibanco has a strong balance sheet and a formidable business. Despite sluggish economic growth in Brazil, which affected demand for credit and quality of loans, last year Itaú delivered shareholders a return of just under 21%; it also lowered non-performing loans to 3.7% from 4.8% in 2012 – a sign that the bank’s strategy of prioritising low-risk portfolios worked. 

In particular, payroll loans, retail mortgages and credit to corporates expanded significantly, with increases of 66.6%, 34.1% and 21.9%, respectively.   

While fine-tuning its products to the current macroeconomic picture, Itaú did not neglect other areas that have potential. Seeking to push its fee-based revenues, it bought credit card business Credicard and launched a new card that offers benefits connected to mobile phones and retail purchases. 

The bank’s use of technology is also impressive: from sophisticated online-based investment advice and microfinance solutions to a smartphone app that works in a similar way to instant communicator systems and allows the transfer of money between current accounts, requiring just the telephone number of the beneficiary – a first in the local market.

When Brazil’s economy picks up again, Itaú will be exceptionally well placed to ride the rising tide – something that chief executive Roberto Setúbal is confident will happen soon. “Although the economy hasn’t been great recently, I think we can resume growth in the [near] future,” he says. 

“The general [macroeconomic] situation is still comfortable: high reserves, good external debt, a stable and manageable current account, a net public debt under 50%. The overall numbers are pretty much manageable. As world growth comes back, this will greatly favour Brazil. I believe that the next four years will be better than last four.”

Canada: Royal Bank of Canada

A strong local bank with a growing international business, Royal Bank of Canada (RBC) closed 2013 with record net profits of C$8.4bn ($7.4bn). The lender deepened its presence across a number of products, in particular in capital markets and investment and wealth management, while also maintaining a balance between revenues generated by retail operations and those from wholesale banking.

Great focus was put on being able to quickly respond to clients’ changing requirements and to new technology. In the payments space, RBC offers customers innovative services such as mobile wallets, cloud-based mobile payments solutions and, through a partnership with social network Facebook, a person-to-person electronic money transfer service. 

RBC also proved its leadership in capital markets thanks to ground-breaking smart order router technology that protects against predatory high-frequency trading; investments in projects that aim to improve competition and efficiency in the market and which may result in a new Canadian stock exchange; as well as the issuance of Basel III-compliant preferred shares and subordinated debt – the first in the local market.

RBC chief executive David McKay says: “I’m so proud of what we have accomplished as a team. We’ve been able to make a difference to clients and being innovative in our thinking and use of technology to provide solutions, from offering leading mobile payments security to ensuring our clients are protected from certain trading practices, we’ve delivered a strong financial performance and long-term returns for our shareholders.” 

As for the future, Mr McKay says: “We’re excited about our growth opportunities. Our leadership in Canada is a great base for our growth in top global markets such as the US and the UK. We have the scale and the people to continue to gain market share domestically, and the reputation for integrity, strength and security to win clients globally.”

Cayman Islands: Butterfield Bank (Cayman)

Butterfield Bank (Cayman) closed 2013 with impressive financial results: rising net profits and return on equity, decreasing non-performing loans and a cost-to-income ratio that is steadily reducing. The Bank of NT Butterfield & Son, its parent company, also performed well, for which it earned the Bank of the Year award for Bermuda.

Managing costs, in particular, has been key to Butterfield Cayman’s results. The bank has continued to streamline and centralise the management of key functions and has harmonised product offerings across jurisdictions to improve efficiency. It has also adjusted fee structures to promote the use of online channels for transactions. During 2013, such initiatives generated a $1.8m reduction of core non-interest expenses. 

Incentives to use alternative platforms also meant that 41% of retail clients and 65% of corporate clients now use the online network. Furthermore, the bank launched its mobile banking platform in the fourth quarter of 2013 and reports that by the first half of 2014, 25% of online users were channelling transactions through it.

Product wise, the launch of a new MasterCard complemented Butterfield’s cards portfolio and its royalty reward programme. Along with improved technology, the expansion of the credit card offering resulted in an increase in the volumes of credit card transactions and number of merchants on their networks by more than 14% and 9%, respectively, for the first six months of the year compared with the same period in 2013.

The bank is also proud of the acquisition of HSBC’s local business this year, according to Conor O’Dea, senior executive vice-president of international banking for the Butterfield group. “[HSBC Cayman’s] business has been successfully integrated into Butterfield group’s international operations, adding significantly to assets and enhancing revenues with minimal increases in operating costs,” he says. 

Chile: Banco de Chile

A solid player with strong footprints in both retail and corporate banking, Banco de Chile’s well-calibrated growth strategy generated a very healthy return on equity of about 22.5% in 2013 – with both net profits and assets growing by about 10% each. It also brought its cost-to-income ratio to below 43%.

The lender managed the expansion of its credit portfolio so that non-performing loans were kept at very low levels – 1.13%, substantially lower than the competition in many cases. In retail loans, for example, the bank focused on relatively low-risk, high-income segments, while in the credit card and consumer credit business, it improved risk analysis and the efficiency of processes as volumes reduced because of lower economic activity and new regulation. 

Furthermore, the bank’s consumer operation, CrediChile, invested in its operating system and provided customers with a new, secure online platform to pay utility bills and make purchases. 

While greater attention was put on safer banking for customers, the lender also remained committed to serving other crucial but potentially riskier customers. It expanded its small and medium-sized enterprises business in terms of both volumes as well as number of clients, thanks to 5500 new businesses being served last year. Additionally, more than 17,000 small entrepreneurs have been granted a total of $55m-worth of loans over the past two years,

In wholesale, Banco de Chile retained its market share while also improving returns – a significant achievement in a market characterised by tight margins. This was the result of more intense cross-selling activities in cash management and investment banking products, as well as online-based services. The bank’s partnership with Citigroup to promote international corporate products continued to attract interest among Chile’s larger businesses. 

Colombia: Banco de Bogota

Part of one of the largest banking groups in Colombia, Banco de Bogota has ramped up its already substantial presence in Central America, where it already runs BAC Credomatic and its profitable consumer credit business. Last year, the bank took over BBVA’s operations in Panama and Grupo Financiero Reformador in Guatemala, strengthening its position a key player in the region.

In Colombia, the bank has benefited from the country’s fast-growing economy, rising levels of international trade, and investments in infrastructure and tourism, which generated higher demand for both its retail and corporate banking products. 

Thanks to its international expansion, the bank was able to diversify its sources of funding, with a particular focus on low-cost sources such as deposits both in its domestic market and in Central America. In 2013, about half of the bank’s consolidated income originated from net interest on loan and credit products, with more than one-third coming from fee-generating activities, particularly from the credit and debit card business. 

Banco de Bogota’s credit card issuances in Colombia grew by 25.8% year on year in 2013 thanks to new retail solutions such as offering ‘cash-back’, as well as the launch of a new corporate card for the transport sector, which allows users to monitor fuel expenses. 

In Central America, credit card loan volumes rose by more than 13% over the same period. Mortgage and payroll loans also grew, while the bank retained its solid position in corporate lending and launched a new cash management solution. Investment in technology resulted in a faster credit approval process, more accurate reporting tools and increased the overall level of security of systems.

The bank’s multi-channel strategy was also impressive and resulted in more than half of all transactions being carried out through electronic channels in Colombia. 

Costa Rica: Banco de Costa Rica

Banco de Costa Rica has made a concerted effort to support its local economy at a time of increasing competition from both local and international lenders and pressures to deliver high returns. 

The bank has revised its business model to include more customer segments, modernised its technology systems and planned a growth path that it hopes will generate sustainable returns to investors and that will also have long-term effects on Costa Rica’s economic development. 

The bank has also been more active in the small and medium-sized enterprises segment and extended both its physical network and its alternative channels to reach wider parts of the population. It opened three new branches, bringing the total to 247 offices across the county, while better online and mobile networks resulted in higher numbers of electronic transactions: 137 million at the end of 2013, up by about 7.5% from a year earlier. 

Greater focus was put on small entrepreneurs and corporate products than on consumer loans. The loan portfolio grew by about 15% in 2013 with corporate loans expanding by 25%, year on year. Savings and current accounts also grew by an impressive 51% and 55%, respectively.

Chief executive Mario Rivera is particularly proud of the bank’s new business focus and its social role. “Our main success has been the introduction of a new [growth] model, which is oriented to attending more business segments and increasing Banco de Costa Rica’s profits in the mid term,” he says. 

“The bank will continue to contribute to the development of Costa Rica, specially focusing on medium, small and micro enterprises, taking advantage of market opportunities, and strengthening the implementation of our new business model.”

Dominican Republic: Banco de Reservas

A focus on efficiency and value-added products have been key to Banco de Reservas’ recent impressive growth. Net profits more than doubled in 2013 while assets grew by about 25% year on year. Other key metrics were also impressive: return on equity rose to just under 27% in 2013 from the 14% it recorded in 2012, the cost-to-income ratio lowered to about 70% and non-performing loans dropped to 1.8% of the total portfolio, from 5.4% in 2012. Furthermore, the all-important Tier 1 capital went up by more than 22% – a sign Banco de Reservas is focusing on growth as much as it is on strength. 

The treasury unit was one of the most profitable in the bank, investing excess cash effectively and identifying market opportunities to increase profitability. Banco de Reservas’ bond trading desk was also an important source of revenue, as was asset management: profits on investments and bond trading rose by an impressive 579% year on year. 

The capital markets and investment banking divisions have also closed a number of high-value transactions. The bank was committed to working with higher rated corporate clients, a segment that it managed to grow quickly and that originated large fees and high-quality assets. 

While focusing on highly profitable deals, Banco de Reservas did not neglect its social responsibilities and supported initiatives to help develop small entrepreneurs and the farming sector. Furthermore, investment in technology made the lender’s online banking platform more secure and user friendly. 

Chief executive Enrique Ramírez says: “We foresee increasing our presence throughout the country, lowering transaction costs and increasing access to banking services for customers through the use of banking agents. We want to [make good use of] our new data-processing systems and firmly establish Banco de Reservas as the retail banking leader in the Dominican Republic.” 

Ecuador: Produbanco

Changes in banking rules and tax regulation have put pressure on Ecuador’s financial sector, from restrictions on senior managers’ salaries and the removal of fiscal benefits on reinvested profits, to the elimination of certain privacy rules.

In spite of this environment, Produbanco continued to grow its business and expanded assets by more than 10%. More importantly, its loan portfolio grew by 20%, while also keeping the delinquency rate at an exceptionally low 1.32%. The bank continued to invest in technology in 2013, updating its core banking platform, creating a model to update and refine customer data that is used by both the commercial and risk functions, and setting up a multidisciplinary unit for retail banking products where certain operations are centralised and speed of delivery is improved.

Produbanco’s multi-channel strategy is also commendable. Last year, 77% of all transactions were processed through non-branch networks, with online banking attracting large part of these: 63% of total. 

Much traffic was also re-directed from the branch to new ATMs, where customers could make withdrawals and cash in cheque deposits quickly and easily. This resulted in 22% of deposits being made directly by customers, without the need of branch staff. As of the end of 2013, Produbanco’s customers could deposit cheques online, thanks to an innovative and secure new product, while partnerships with local financial co-operatives allowed users in more remote parts of the country to make payments through the bank’s network.

Produbanco’s efforts to extend banking services to larger parts of Ecuador’s economy resulted in it organising and hosting a series of lectures and training programmes on business and personal finance for small entrepreneurs. This initiative fitted in with the bank’s social responsibility policy, and also contributed to the 19% business growth in its smaller clients division.

El Salvador: Banco Agricola

Banking regulation and supervision have been under review in El Salvador since the global financial crisis, to make sure that lenders are sufficiently capitalised and adopt prudent risk management policies. With a number of new rules still being discussed and a challenging economic environment, local banks’ profits have suffered. 

Banco Agricola, however, closed 2013 with $91m in net profits, an increase on 2012’s figures, and a return on equity of about 17.5%. Furthermore, its non-performing loan ratio has been steadily decreasing over the past few years and is now 1.6%. 

Despite the ongoing challenges, Banco Agricola managed to grow across a number of products, particularly in retail banking and micro and small businesses lending. It also placed record high volumes of both corporate and government debt locally, and consolidated parts of its business to better support the capital markets and foreign exchange businesses.

“Throughout 2013 and 2014 we dealt with many issues concerning new regulation and adverse market conditions,” says chief financial officer Ana Beatriz Marín. “Slow growth and interest rate pressure on bottom-line margins were widely felt across the industry. Still, we delivered outstanding results.”

Ms Marín is also proud of the bank’s effort to include wider parts of the population in the banking network. In addition to its extensive branch presence, the lender created a new network of banking agents and launched a new mobile banking app for smartphones. 

“Our strong commitment to [serve the local economy] led us to develop new distribution channels, physical and mobile; this allowed us to reach customers and communities which previously had no immediate access to financial services,” she says, adding that the bank aims to expand its regional network and distribution channels, improve efficiency, and develop further its IT infrastructure in the future.

Grenada: Scotiabank

With the agriculture sector and tourism infrastructure badly damaged by natural catastrophes, Grenada’s economic output was ailing even before the global recession reached the island’s shores. With the country struggling to recover, Scotiabank managed to remain profitable and, last year, improved its cost-to-income and non-performing loans ratios, which had both dangerously spiked in previous years. 

Key to this was a carefully planned mortgage strategy that won over new customers. A similar programme was launched for small and medium-sized enterprises and a reward system was created to encourage retail customers to use additional products or services by the bank. Furthermore, greater focus on risk management and the introduction of new standardised procedures have helped to keep costs down. Country manager Elie Bendaly is confident these initiatives will continue to bear fruit in the future.

“Many Caribbean countries have struggled to recover from the global economic recession and Grenada has been among them, with the economy contracting by 7.7% since 2008. The economic climate has dampened consumer demand and this has created challenges for all the banks here,” says Mr Bendaly. “Our mortgage-switch campaigns have helped us get quality customers away from our competitors and kept us as market leader. In this economic climate, we know customers are looking for opportunities to reduce costs so we think this [product] will continue to do well.” 

Because of the hardship many in Grenada are enduring, Mr Bendaly is also keen to mention the bank’s commitment to wider parts of society, with a particular focus on healthcare. “Community outreach is one of our key strengths and we built on this by launching new philanthropic initiatives such as our red ribbon campaign Together We Care to assist the national AIDS programme,” he says.

Guatemala: Banco Industrial

Traditionally a leader in corporate banking, Banco Industrial has ramped up its offering for smaller companies, including micro entrepreneurs, as well as other retail customers. It has also grown its presence in the remittances business and made greater efforts to reach rural areas and parts of the population outside the banking network. 

As a consequence, its overall retail loan portfolio grew by more than 20% in 2013. Furthermore, its trade finance and foreign-exchange businesses continued to fare well. The bank’s focus on improving efficiency reduced costs thanks to, for example, the automation of processes and outsourcing of some operations. As a result, Banco Industrial’s net profits grew by more than 10% to 910m quetzales ($118m), the highest on record.

“We achieved record profits during 2013 by penetrating higher profit segments while keeping our funding costs low,” says Luis Fernando Prado Ortiz, head of the international banking division. “Our efficiency ratio dropped to 54.5% from 58% two years ago.” Mr Prado Ortiz is also keen to highlight the successful issuances of new debt for a total of $450m – which were supported by the Inter-American Development Bank and the US government institution Overseas Private Investment Corporation – that helped diversify long-term funding. 

As for the future, Mr Prado Ortiz says the bank will expand both in Guatemala and abroad. At home, it will reach more remote areas and develop its multimedia strategy; internationally, it plans to leverage on its experience in trade and high-end products. 

“We will increase our presence in the individual and consumer banking segments through banking agents located across Guatemala, as well as through online and mobile banking. We will continue our international expansion strategy through a new banking operation in Panama where there are opportunities in trade financing and private banking.” 

Guyana: Scotiabank

Although enjoying strong economic growth, Guyana is not an easy market for businesses, not least for banks. Shortages of skilled labour and poor access to credit information, for example, are ongoing problems. Scotiabank’s commitment to the local market, however, continues to pay off. 

In 2013, thanks to new business development and cost-cutting initiatives, the lender recorded a 15% increase in net profits and a 25% return on equity. Even more impressively, it strengthened its balance sheet by expanding the Tier 1 capital by 24%, a reflection of the bank’s focus on stability as well as profitability.

A new referral system proved particularly successful and enabled employees to access information on possible cross-selling opportunities across all banking divisions. This was a significant improvement to the existing referral mechanism that could only be accessed at individual branches. The creation of a Caribbean regional office that groups back-office services to Guyana and Trinidad and Tobago significantly reduced costs and resulted in higher staff productivity. Risk management was also an area of strength for the bank and contributed to reducing its non-performing loan ratio, down to 6.8% in 2013 from the 7.2% and 7.8% recorded in 2012 and 2011, respectively.

Furthermore, to encourage a larger number of customers to use alternative networks, Scotiabank installed computer stations in two of its largest branches and helped customers set up access to online banking. Additional campaigns were launched to advertise the benefits of mobile and telephone banking.

On the marketing front, Scotiabank became the first lender in Guyana to reach customers and the wider public through social networks, which improved communication and engagement particularly with younger customers. This was a valuable addition to existing marketing efforts, which included extensive visits to businesses across the county, as well as to remote communities.

Honduras: Banco del Pais

Honduras continues to face social and economic challenges. Despite higher public investments, exports and remittances over the past five years, economic growth in the country is moderate and is not equally felt across society. 

In this challenging environment, Banco del Pais continued to expand its business. In 2013, retail loans grew by 20% year on year while corporate loans rose to a record $740m. Its credit card business also grew by generous margins, above the national average. The bank’s number of total cardholders grew by 36% year on year, thanks to 15,000 new customers, and transaction volumes were 30.5% larger than in 2012.

This expansion was coupled with cautious risk management, which resulted in a 1.34% non-performing loans ratio, a figure exceptionally low in the local market.  

The bank was also active in microfinance and served small entrepreneurs though 47 points of service across the country. Good client selection has kept bad loans in this segment in line with the bank’s overall ratio.

Banco del Pais’ strong asset quality and management was also recognised by rating agency Fitch, which upgraded the lender’s long-term debt to AA.

A number of initiatives were launched to improve internal and external reporting systems as well as reduce costs through the automation of certain processes. For example, the bank improved the process required to open and manage current and savings accounts so that it would increase the speed of service and staff productivity.

Investment in technology improved alternative channels and partnerships with merchants, and public services providers have added new payments services to the bank’s online network. Such investments also benefited Banco del Pais’ extensive physical network of 300 service points, including ATMs and agencies.

Jamaica: Scotiabank Jamaica

Jamaica’s economy remains stagnant and the rescue funds obtained in 2013 from the International Monetary Fund (IMF) to avoid collapse came with austerity measures that are hindering growth. After two sovereign debt restructurings in three years, government debt is still about 140% of gross domestic product – although some signs of improvement are emerging. 

This situation is having an impact upon all Jamaicans; businesses and financial institutions are no exception. In this gloomy scenario, Scotiabank’s achievements stand out. It grew net profits while keeping its cost-to-income ratio stable and sensibly reduced non-performing loans.

“The Jamaica business environment has remained very challenging as the country works through the current IMF programme, which brings with it slow economic growth, reduced government spending and devaluation of the local currency,” says chief executive Jacqueline Sharp, who also points at increasing competition among banks as a key challenge in the country. 

But she is also hopeful about the future of the bank. “We have improved our strategic partnerships with key industry players and professional organisations to provide specially designed financial plans to their members,” she says. “We’ve launched new and enhanced products to meet the diverse needs of our customers. We also enhanced our retail banking offering through the launch of a premium banking [service], which is designed to meet the distinct needs of our mass affluent customers.”

In 2013, Scotiabank Jamaica’s wealth and insurance divisions continued to grow and launch products and services. But the bank was also active with smaller clients, particularly through its CrediScotia brand, which works with micro entrepreneurs in the country. The bank is also keen to develop technology to reach more of the population and improve services to all existing customers.

Mexico: Banorte

One of the most impressive things about Banorte in the past few years has been its steady expansion strategy, balancing growth spurts with cautious risk management. Following the successful integration of Mexican lender Ixe in 2013, Banorte went on to acquire the local pension fund business of Spain’s BBVA, Afore Bancomer, and the remaining stake it did not already own in the Mexican insurance and annuities operations of Italy’s Generali – two deals that gave Banorte additional market share and great cross-selling opportunities. 

Investors were quick to recognise the bank’s potential, which helped it to raise the fresh capital it needed for expansion. The bank’s $2.5bn equity offering in 2013 was the largest such single deal by a Mexican financial institution and saw the bank’s share price rise by 10% the day after its closing. It should also be noted that the capital raising was completed against a backdrop of higher volatility in international markets and lower-than-expected economic growth in Mexico. As a result of this and Banorte’s cautious growth strategy, Tier 1 capital grew by 25% year on year, net profits expanded by 24%, while return on equity (ROE) was a healthy 14.2%. 

Chief executive Alejandro Valenzuela says: “We were able to overcome successfully the challenges that we faced last year: to raise fresh capital in the international markets and to expand our business via acquisitions. We were also able to deliver strong results despite a deteriorating economic environment and a decreasing interest rate environment.”

As for the future, Mr Valenzuela is keen to leverage on the recent acquisitions and develop further cross-selling. “Our management is focused on implementing strategies to improve the cross-sell ratio, cost efficiency and ROE. We expect to achieve most of our growth [by focusing] on the customer base that we already have at Banorte,” he says.

Nicaragua: Lafise Bancentro

Part of the international banking group Lafise, which has operations across central America as well as Mexico and the US, Lafise Bancentro has strengthened its presence in Nicaragua. It closed 2013 with assets and Tier 1 capital both about 25% larger than the previous year. Net profits also grew by the same measure and the bank recorded a very healthy 26% return on equity. 

General manager Carlos Briceño is understandably pleased with the results, which, he points out, were secured in an increasingly challenging regulatory environment. “Last year was outstanding for our bank: we achieved the best financial results in our history and we have improved our market share every single year,” he says.

“One of the main challenges faced last year – and that certainly will be faced in the coming years – was to cope with more strict and costly regulations without sacrificing efficiency, time of response and personalised attention to our clients.” Costs were kept under control in 2013, as reflected by the bank’s declining cost-to-income ratio.  

Mr Briceño is also proud of the bank’s commitment to the local community. Through its Zamora Teran Foundation, Lafise promoted the One Laptop per Child programme by attracting further sponsorship and involvement from local corporations as well as individuals. As for the future, the bank is committed to growing its presence in Nicaragua, as well as the rest of the region. 

“In the coming year, we expect to continue with the innovation in our products and services. We also plan to open new offices and expand our ATM network to maintain the leadership in geographical coverage in both Nicaragua and in central America,” says Mr Briceño.

Panama: Banco General

In Panama’s increasingly competitive market, Banco General closed 2013 with strong results and a robust balance sheet, characterised by high liquidity levels, a diversified loan portfolio, cautious loan loss reserves and a stable and diversified retail deposit base. Net profits were $273m, about 4% larger than the previous year, while assets grew by 9.5% to $11.8bn. The bank’s return on equity was a healthy 19.7% as was the 2.4% return on assets. Of note is Banco General’s extremely low non-performing loans ratio, 0.42% of its total portfolio.

The bank retained its market leadership in residential mortgages with a sizable 25.9% of the market in 2013, and made efforts to grow in the retail, corporate and private banking spaces, both locally and regionally. Personal loan volumes in Panama grew by 39%, credit card issuances by 25%, and corporate loans by 14%. In wealth management, assets under management grew by just under 9% last year. This is the result of a two-year plan that Banco General had put together to improve client segmentation, better fitting products and cross-selling opportunities.  

Away from Panama, the lender’s corporate and private banking businesses grew in Costa Rica, where the bank has a subsidiary, as well as through business generated by representative offices in Mexico, Guatemala, El Salvador and Colombia.

But Banco General’s most notable achievement yet may be in its capital markets and investment banking division. It structured and successfully placed more than $963m-worth of debt issuance locally in 2013, maintaining a leading position with more than 44% of market share. Its dominance in this area in Panama was highlighted by the $470m bond issue for AES Changuinola, a power plant operator, which was the largest ever corporate debt issue in Panama’s capital markets.

Paraguay: Itaú Paraguay

Itaú Paraguay has grown into a highly profitable and increasingly solid business. In 2013, the bank recorded net profits of Gs543bn ($115m), 22% higher than in 2012, which followed double-digit growth in previous years. Assets also expanded by 35% and Tier 1 capital grew by 11%. 

The bank prides itself on running a balanced business, equally split between retail and corporate banking, meaning it avoids concentrating on specific economic sectors. In the past two years it has launched a series of initiatives to penetrate further some segments in which it is under-represented, particularly in consumer credit and services for both individuals and entrepreneurs. It has partnered with a local supermarket chain, Superseis, to add 15 new point-of-sale terminals at the stores as well as to launch a new co-branded credit card. In another move, it has expanded its territorial coverage with 13 new offices, while also offering a series of new payments services to customers, which include the ability to easily process payments in Paraguay that have originated from another country in Latin America.

Investment in technology has also improved not only the bank’s online and mobile platforms, which now offer a variety of new services, it also improved ease and speed of service at the branch. 

Itaú Paraguay’s chief executive, Viviana Varas, says: “We will continue to meet the expectations of a growing market, developing innovative products and services for both individuals and businesses. We will continue to expand our customer segments and remain present in the community, through cultural initiatives and financial education.”

Peru: BBVA Continental

A number of products stood out among BBVA Continental’s improved offering to the expanding Peruvian banking market, which has benefited from fast economic growth, international trade and strong foreign direct investment. 

As Peru’s development gathers pace, banks are engaging with larger parts of the population and an increasing number of businesses. Indeed, BBVA Continental focused on a number of key products. As part of its payroll portfolio, it created an account where clients can receive salary payments and also enjoy special benefits, such as withdrawing money from any ATM nationwide free of charge. It also launched structured deposits that provide additional flexibility and variable interest rates. 

In the corporate and investment banking division, it created cash management services tailored to foreign trade transactions, helping customers dealing with foreign exchange issues. Furthermore, BBVA Continental strengthened its mobile banking portfolio with an app for money transfers and utilities payments. It was also the first bank in the country to launch an app that allows clients to check accounts and perform specific transactions though a pre-paid internet connection. 

The bank also designed a mortgage product for younger clients and created a set of products that provide hedging and risk management solutions to small and medium-sized businesses. A nationwide marketing campaign specifically targeted smaller businesses in an effort to grow the bank’s customer base as well as support the Peruvian economy.

The successes of these new, wide-reaching and innovative products are reflected in BBVA Continental’s financial returns and the expansion of its balance sheet. The lender closed 2013 with 1.3bn soles ($437m) in net profits and an impressive return on equity of just under 30%. Assets grew by 13.8% to 56.55bn soles while the 4.6bn soles Tier 1 capital is more than 20% larger than in 2012.  

Puerto Rico: Banco Popular de Puerto Rico

Although showing some signs of recovery after the past few years of recession, Puerto Rico’s economy continues to flounder. The high unemployment rate and poor fiscal conditions of the local government characterise this US territory. 

However, Banco Popular de Puerto Rico kept profitable through the downside, while also raising its Tier 1 capital and steadily lowering the ratio of non-performing loans on the overall portfolio. The bank has also made concerted efforts to not only serve its clients, but also focus on extending its work to wider parts of the population. It supported initiatives to finance businesses run by women and launched campaigns to promote a savings culture among children alongside numerous charitable programmes.

“Our business in Puerto Rico has delivered positive results, even in the worst years of the recession, which shows the strength of our franchise,” says chief executive Richard Carrión. “As the largest financial institution on the island, we are committed to working alongside our customers and the government to put the Puerto Rico economy back on the path of growth.”

The bank has continued to focus on both strength and profitability this year, including the repayment of post-financial crisis funds received by the US federal government under the Troubled Assets Relief Programme (TARP). In mainland US, the bank decided to focus on its operations in the New York metropolitan area and southern Florida. It sold its businesses in California, Illinois and central Florida, and plans to consolidate others and transfer most support functions to Puerto Rico and New York. 

“During 2014, we accomplished important milestones, such as the restructuring of our US operations and the repayment of TARP, while at the same time we continued to drive improvements in credit quality and generated strong revenues,” says Mr Carrión. 

Trinidad and Tobago: Scotiabank

Celebrating its 60th anniversary in Trinidad and Tobago, Scotiabank has gone from strength to strength in the country. 

The bank improved its services for small and medium-sized enterprises giving them direct access to bank advisors, created a series of business training events across the country, and launched investment funds to finance micro entrepreneurs’ equipment needs. It also gave investors two new Trinidad and Tobago dollar-denominated mutual funds, and created a premium banking service that resulted in two new centres in the country. 

Such initiatives helped Scotiabank close 2013 with a healthy profit, while good risk management made sure that the percentage of non-performing loans decreased to 1.98% of the total portfolio, from 2.25% and 2.87% that it recorded in the previous two financial years.

“We celebrated our 60th anniversary in Trinidad and Tobago this year so this in itself is a major accomplishment,” says Anya Schnoor, who heads the bank’s local operations. “We also launched a number of new products – namely our local currency mutual funds, two new insurance products, as well as a redesign of our credit card portfolio. We continue to offer best-in-class electronic banking platforms and opened two new premium client centres in key locations.”

As for the future, the bank will focus on wealth management as well as on providing services to the country’s expanding large and small corporates. Businesses are expected to grow on the back of the country’s important energy resources; they are also likely to benefit from government efforts to develop the financial services sector as well as the country’s logistics and business outsourcing services to the rest of the Caribbean region. 

“Scotiabank [in] Trinidad and Tobago sees opportunities for growth in the wealth and corporate segments. The improved growth prospects for the economy should provide businesses the needed confidence to retool or expand their operations. With our integrated global platform we are ideally placed to provide the relevant advice and solutions to meet our client needs,” says Ms Schnoor. 

Uruguay: Itaú Uruguay

Fast becoming a leading force in Uruguay’s retail banking, Itaú last year acquired Citi’s retail operations in the country and beefed up its business with an additional $265m in deposits, a $60m loan book and a portfolio of Visa, MasterCard and Diners Club International credit cards. This adds to the lender’s dominant position in the credit card space in Uruguay and contributed to assets expanding 50% on the previous period. 

“The main challenge Itaú faced last year was the acquisition and integration of Citibank’s retail banking operations in Uruguay without losing focus on increasing market participation and performance [in other areas], and maintaining high levels of customer satisfaction,” says chief executive Horacio Vilaró. “[The integration] led to the consolidation of Itaú as the third largest bank in Uruguay by assets – second among privately owned banks – and the leader in return on equity among all banks. Itaú retained the first place as credit card issuer and the leadership in electronic banking services.”

As of 2013, Itaú’s return on equity was an impressive 30%, second only to Citi’s 38%, according to the Uruguay central bank. Its net profits jumped by 76% to 1.5bn pesos ($60m). Deeper market penetration will be next year’s focus, as will a further push towards online and mobile banking. 

In 2013, Itaú Uruguay’s number of electronic transactions grew 20% year on year, and as of June this year, 76% of premier customers used online banking. The multichannel strategy will play a big role in the bank’s future, according to Mr Vilaró. 

“Our plan is to continue increasing market participation in all segments, maintaining leadership in performance and a focus on customer needs. Multichannel strategy represents an opportunity for [the bank to] continuing growing with high standards of customer satisfaction and performance. Internet and mobile banking are key drivers for long-term success,” he says.

US: Wells Fargo

The world’s fifth most profitable bank, ahead of US rivals that can also count on sizeable international operations, Wells Fargo generated record earnings at the end of 2013 with net profits of just under $22bn, 16% higher than in 2012. 

The lender has come a long way from the stagecoach company founded in 1852, from where it traces its origins as well as its logo. Wells Fargo has diversified and balanced sources of revenue, both in terms of the combination of spread income and fee income, which helped in achieving its strong and stable results, with no sudden slides even in periods of low economic growth. It also focuses on growth as much as it does on risk management with significant investments and efforts to contain cyber threats, operational and credit risks.

Among the bank’s growth areas, of particular note is the wholesale banking division which has a stronghold with middle-market companies – a crucial segment with low mobility where clients traditionally stick to their preferred bank, and which Wells Fargo dominates in the US with a 24.5% market share, up from the 22.1% it had in 2012.

Also of note is the bank’s leadership, where team spirit and a widespread sense of purpose in serving customers replace the individualism so easily associated to the high-stakes world of finance. 

John Stumpf, the chairman and chief executive of Wells Fargo, says: “On behalf of all my teammates at Wells Fargo, I thank The Banker for this recognition. It is an honour to be recognised by such a leading publication committed to excellence in financial journalism, and to be selected from among a group of financial institutions that include some of the finest in the US. I’d also like to thank the 265,000 team members who come to work each day committed to serving customers and helping them succeed financially.”

Venezuela: BBVA Provincial

Over-reliance on oil production, controls on international trade and rising criminality have created a painfully vicious economic cycle in Venezuela. Spiralling inflation and controls on lending activities add an idiosyncratic spin to the banking market, making it both challenging and very lucrative.

The country’s lenders have experienced some of the highest returns on equity (ROE) in Latin America, as rising prices translate into higher interest margins and greater profitability. But aside from its jaw-dropping 66% ROE and net profits leapfrogging by high double digits year after year, BBVA Provincial impressed The Banker’s judges mostly for its investments in technology. 

The bank upgraded its internal systems, which allowed for better and faster data analysis. It also added functionalities to its ATM network, such as cash payments for both customers and non-customers; grew its existing online payments portal – the first of its kind in the country for dealing with payments to public sector and private providers; and substantially improved its products and services offered through smartphone and tablet apps. 

These efforts paid off. Users of BBVA Provincial’s online and mobile networks rose by 36% and 170%, respectively, in the year to June. Online, mobile and ATM transactions represented almost 96% of total in the same period. 

Chief executive Pedro Rodríguez Serrano says: “Our transformation plan towards digital banking – through an investment of more than $1bn over the past few years – is enabling significant changes in the way we do banking: becoming a modern, simpler institution, creating a new digital offering and improving customer service. BBVA Provincial is betting on becoming a benchmark in digital banking, adapting to customers’ growing demands for speed and efficiency. That is why our efforts will be strengthened towards virtual and mobile growth, without neglecting [physical] proximity to clients.”

PLEASE ENTER YOUR DETAILS TO WATCH THIS VIDEO

All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker



For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Join our community

The Banker on Twitter