The cream of the crop for 2014 from the Middle East.

Bahrain: Ahli United Bank

Building on its successful results in 2012, Ahli United Bank (AUB) was once again the clear winner for Bahrain’s Bank of the Year award. Tier 1 capital and total assets increased by 7.1% and 9.3%, respectively, while the bank’s return on equity continued its year-on-year rise to hit 13.4% at the end of 2013. Moreover, AUB achieved a notable surge in net profits, which increased by 25.7% to hit $366.5m. When factoring in the sale of the bank’s stake in Qatar’s Ahli Bank, net profits increased by 72.6%, reaching $579.4m.

“AUB continues to differentiate itself as a distinct regional player with a truly diversified business model capable of withstanding singular or even multiple market disturbances, as evidenced by its expanding operations and increasing financial profitability,” says Adel El-Labban, AUB’s chief executive and managing director.

In support of its successful cross-border financing business, AUB now leverages the consolidated balance sheet size of the entire banking group, spanning six regional countries plus the UK, to provide higher financing options to its customers. The strength of the bank’s cross-border business has grown steadily, accounting for about 23% of its total loan portfolio.

Across AUB Group’s operations in the Middle East, the bank has consistently innovated both its service and product offering to maintain its competitive edge. Ahli Bank Oman has launched a dedicated small and medium-sized enterprises strategic business unit to capitalise on the growing potential of this business segment in the country. Moreover, AUB launched a dedicated business-to-business platform for corporate customers to facilitate solutions for payments, collections and reconciliations by directly integrating with the customers’ existing accounting platforms. 

“AUB will continue to seek opportunities, where viable, to further expand its banking franchise through value-accretive organic or inorganic means. This entails a continuous, dynamic and focused approach to ensure the effective deployment of capital resources across the AUB Group’s current and targeted markets in the region,” says Mr El-Labban.

Iran: Bank Pasargad

This is the third consecutive year in which Bank Pasargad has won the Bank of the Year award for Iran. While the bank’s financials have remained strong, it has also embarked on a process of restructuring in which three new divisions have been created, including private and corporate banking, an investment and participation department, as well as a research, development and marketing department. Bank Pasargad is using this restructure to tap into new markets, improve the efficiency of existing services and better position its business lines to meet future demand.

“The bank has continued to grow despite this very rough domestic economic environment by a vigorous commitment to our values and close relations with our corporate customers,” says Majid Ghasemi, chief executive of Bank Pasargad. 

Accordingly, these efforts have helped to promote greater innovation and development across products and services, including the creation of an ‘intelligent queuing system’ via SMS. Moreover, Bank Pasargad has introduced a hybrid card which shares the features of both a common debit card, allowing for online transactions, and a pre-paid e-wallet, facilitating the purchase of transportation tickets and online micro-payments.  

In terms of the bank’s key financials, Tier 1 capital increased by 17%, jumping to IR48,110bn ($1.78bn) from IR41,214bn. Assets and net profits also recorded significant improvements, with year-on-year growth of 34% and 35% recorded, respectively. 

“In the coming year, we will prepare the bank for the lifting of international sanctions. In this regard, we need to once again establish our corresponding banking relations with a number of first-class international and regional banks, develop the bank’s international network by opening either representative offices or branches in target countries, and arrange the fundamentals so premier international banks can enter our shareholding structure,” says Mr Ghasemi.

Israel: Bank Leumi

While growth in the Israeli economy may be slower than in previous years, the country’s banks are adapting to these conditions remarkably well. In particular, Bank Leumi, the second largest Israeli lender by total assets, enjoyed a standout year in 2013. With a new strategy focusing on a back-to-basics approach to banking, Bank Leumi is prioritising its core capabilities in the service of its Israeli customers. 

“In this challenging period, banks around the globe are required, first and foremost, to lead a deep change. This means more technology, more customisation, and more availability – which are based on a more lean and efficient operating model – while taking into account regulatory changes and social trends,” says Rakefet Russak-Aminoach, chief executive of Bank Leumi.

In this respect, Bank Leumi’s success has been clear. Despite a marginal decline in total assets, the lender registered Tier 1 capital growth of 8% for 2013, while net profits increased by 109.1% off the back of a difficult 2012. Return on equity also saw substantial growth, rising from 3.8% to 7.6%, while the bank’s cost-to-income ratio fell from 74.7% to 69.4% as it successfully streamlined its activities. 

Most significantly, Bank Leumi established a fully owned subsidiary in 2013, known as LeumiTech, dedicated to serving the country’s hi-tech sector. With plans to extend up to NIS2bn ($524.76m) in credit to Israel’s tech community, the bank aims to position its subsidiary as the home of hi-tech in Israel. 

“We will expand our operations among the Israeli hi-tech industry through LeumiTech, the hi-tech arm of Leumi Group, which was founded earlier this year in order to provide high-tech companies with comprehensive and tailor-made service, and thus enable this flourishing industry to continue being the growth engine of the Israeli economy,” says Ms Russak-Aminoach.

Jordan: Arab Bank

Arab Bank emerged as the standout winner in Jordan based on its strong financials, innovation and commitment to the country’s economic development. Despite facing a host of domestic and regional challenges, including a growing number of political and security concerns in neighbouring countries, Arab Bank was able to increase its net profits by 42.6% year on year in 2013. Moreover, both assets and Tier 1 capital saw growth of 1.7% and 2.7%, respectively. 

Encouragingly, these figures were supported by the continuation of positive longer term trends as the bank’s return on equity grew, while its cost-to-income ratio and non-performing loan ratio both fell. 

“One of the key challenges during the past year was the instability which many countries in the region witnessed, but despite the challenging operating environment, Arab Bank was able to grow its businesses safely and achieve solid financial results by relying on its experience and an overall prudent approach,” says Nemeh Sabbagh, chief executive of Arab Bank. 

In terms of its core corporate banking business, Arab Bank completed the roll-out of its online trade finance and cash management platforms, allowing both domestic and regional customers the ability to conduct their business electronically. With respect to project finance, Arab Bank is pursuing a strategic focus on environmentally friendly projects, and to this end it financed the development of the 117-megawatt Tafilah Wind Farm project in 2013. 

Building on its consumer banking business, Arab Bank also unveiled new service offerings, include the Elite and Arabi Premium initiatives for affluent and mid-income executives, in order to meet its ambition of developing products that match the customer’s entire lifecycle.  

“Arab Bank has reported record growth during the past year by expanding its core banking revenue in its key markets across the [Middle East]. In the past three years there has been an emphasis on growing and maintaining sustainable earnings from our client base on both the corporate and retail levels,” says Mr Sabbagh.

Kuwait: Kuwait Finance House

Kuwait Finance House (KFH) had another strong year in 2013 with sizeable growth recorded across key financial metrics. Tier 1 capital increased by an impressive 28.8% from 2012, while the bank’s net profits increased by 32.2%. Meanwhile, total assets rose by 9.8% from the previous year, indicating healthy gains under the bank’s new strategy, based on minimising expenses, maintaining asset quality and reinforcing returns and profits by entering new markets and business fields. 

To support these plans, KFH increased its paid-up capital by Kd64m ($219.85m) in 2013. This will be used to support the bank’s expansion plans, develop its market share, and execute development plans to support its domestic and global expansion. In part, this development is evident through KFH’s roll out of new sharia-compliant banking services, 10 of which were introduced in 2013, as well as its dominant physical presence in Kuwait, with 57 bank branches, part of 360 branches worldwide. 

KFH has also leveraged its expertise in Islamic finance to execute a number of transactions both regionally and internationally. In 2013, the bank successfully supported a $500m ijara (lease) deal for the Sharjah Electricity and Water Authority to fund current and future infrastructure projects. KFH was also the primary dealer for the first issue of a $490m sukuk out of a $2bn programme issued by the International Liquidity Management Corporation.

In terms of its international operations, KFH-Turkey arranged the Turkish government’s $1.5bn sukuk issuance in 2013.  Moreover, KFH-Turkey also introduced its so-called XTM services to the country, whereby customers are able to hold a video conference with the bank’s call centre. In Bahrain, the bank has signed a Bd18m ($47.75m) Islamic project finance deal with Banader Hotels to provide the funds to complete construction work on the company’s hotel in Manama.

Lebanon: Blom Bank

Steady, consistent growth underpinned Blom Bank’s winning entry for Lebanon’s Bank of the Year award in 2014. Despite a difficult operating environment, Blom Bank achieved a net profit increase of 4.91%, reaching $352.44m in 2013, while Tier 1 capital rose to $2.39bn, up 7.69% from 2012. Yet, the standout feature of the bank’s performance was its cost-to-income ratio, which at 37.7% was by the far the lowest of any Lebanese lender. Blom Bank achieved this through its simple and efficient organisational structure, as well as its lower US dollar funding costs. These gains were made against a backdrop of political and economic uncertainty in Lebanon. 

“Despite the challenging environment, we were able to maintain deposit market share and healthy deposit growth while maintaining margins despite a ferocious price competition. We were also able to continue our leadership in both retail and small and medium-sized enterprise lending with growth rates of about 8% per annum,” says Saad Azhari, chairman of Blom Bank. 

In the retail space, Blom Bank has taken a leading role in developing branch-based capabilities in the country. Since 2012, it has been the only Lebanese lender to offer a full suite of services in all of its branches from 8am to 5pm on weekdays. Given that branches are the dominant delivery channel in the country, the bank is expanding cautiously at the rate of two branches per year. 

This has been accompanied by notable progress in electronic banking, including becoming the first bank in the Levant to introduce an electronic transfer service enabling customers to send money to any recipient who can then withdraw the funds from a Blom ATM without a card. 

“We need to preserve, if not enhance, our franchise as the country’s most consistent bank in terms of performance and predictability,” says Mr Azhari. 

Oman: BankDhofar

Even by the strong standards of Gulf-based lenders, Oman’s BankDhofar enjoyed an impressive 2013. The bank’s Tier 1 capital grew by 17.47%, while net profits and total assets surged by 54.74% and 21.53%, respectively. Moreover, the Omani lender’s return on equity hit 20.67%, up from 15.38% the year earlier. This stellar performance was driven in part by the healthy level of economic growth taking place in the country, but it also reflects the sound development strategy being pursued by BankDhofar. 

In terms of technology, BankDhofar has invested to improve the range of banking channels available to its customers. With advanced ATM and cash deposit machines located across the country, coupled with an internet banking platform designed to address personal and business banking requirements and a recently launched mobile banking service, BankDhofar has taken the lead domestically in digital innovation. 

“We pioneered advanced technology deployment including our mobile banking channel and we’re the first Omani bank to offer instant issuance of personalised cards, cardless cash services and public key infrastructure with Oman’s Information Technology Authority,” says Abdul Hakeem Omar Al Ojaili, acting chief executive of BankDhofar. 

Developments in the small and medium-sized enterprises (SME) space have been prioritised as part of the bank’s five-year strategy, initiated in 2012. BankDhofar has since established a dedicated SME department staffed with sector experts to increase lending to this segment. Similarly, the bank’s sharia-compliant window has unveiled a number of innovative products and services for SMEs. 

“I look forward to reaping the rewards from investments we have made in technology infrastructure, talent development and the unique environment and customer-centric culture in addition to the expected growth in our Islamic banking window,” says Mr Al Ojaili.

Palestine: Bank of Palestine

The Bank of Palestine performed exceptionally well in 2013, with growth recorded along most financial indicators. The bank’s Tier 1 capital increased by 13.95% from 2012, while assets and profits rose by 17.45% and 5.45%, respectively. Encouragingly, the bank’s cost-to-income ratio has remained stable in recent years, reflecting the efficiency of its operations under testing circumstances. Meanwhile, the Bank of Palestine’s return on equity hit 16% in 2013, a marginal decrease on the 17.4% recorded in 2012.

The bank has pursued growth by engaging the demographic potential of the Palestinian people, focusing on under-banked groups and leveraging opportunities to service young people and women. Moreover, the Bank of Palestine is also prioritising innovative advances in mobile and digital banking. Its subsidiary, Palestine Payments Co (PalPay), an e-payments provider, conducted 8 million transactions in 2013 alone.  

The Bank of Palestine is also expanding its branch and ATM network in order to cater to rural and under-banked groups. Moreover, as 90% of Palestinian businesses are micro, small and medium-sized enterprises, the bank has developed significant expertise, including non-financial support, in dealing with these entities. A similar approach has been taken in fostering greater financial inclusion for young people and women in Palestine, where the bank is hoping to create greater economic opportunities through the provision of support and so-called soft ‘innovation loans’, among other measures. 

Looking ahead, the bank is eyeing opportunities abroad, particularly related to Palestinians living overseas. “To complement our efforts in reaching out to the Palestinian diaspora, Bank of Palestine is in the process of opening representative offices at the Dubai International Finance Centre in the United Arab Emirates – home to more than 250,000 Palestinians – by the end of 2014, and in Santiago, Chile – home to about 500,000 Palestinians – by 2015,” says Hashim Shawa, chairman and general manager of the Bank of Palestine. 

Qatar: Qatar National Bank

In Qatar’s highly competitive banking market, Qatar National Bank (QNB) emerged as the winner for this year’s country award. The bank maintained its impressive growth trajectory from previous years with a series of headline-grabbing figures, including a 20.89% rise in total assets in its 2013 figures. This builds on the 21% gain from 2012, preceded by a 35% increase in 2011. The bank’s rate of expansion has been matched by a corresponding growth in profitability as net profits rose by 8.02% in 2013 to hit $12.54bn.

However, QNB’s success was not limited to its financials alone. The bank has been proactive in engaging with new market segments both domestically and overseas, as well as revamping existing services to enhance its customer engagement for retail and corporate clients. In particular, the bank relaunched its segment offering for small and medium sized enterprises. Specialist business banking sales and services are available through QNB’s branch network offering tailored products including vehicle leasing, insurance solutions, cash management, e-trade and business financing. 

Other key developments include the expansion of the bank’s asset management division, which now includes a commodity fund, a 100% capital protected structured note and a debt fund, and the upgrade of QNB’s cash management system across the bank’s global network. 

“Maintaining the growth in assets, loans, operating income and profits that have underpinned our recent robust financial performance has been an ongoing priority in 2014. As the dominant bank in Qatar with an approximate 45% market share of assets, it is imperative that we continue to develop our product offering, enhance our customer service and provide the best service network available to customers,” says Ali Ahmed Al-Kuwari, acting group chief executive of QNB.

Saudi Arabia: National Commercial Bank

National Commercial Bank (NCB), Saudi Arabia’s largest lender by both Tier 1 capital and total assets, was the standout entry in this year’s country award. Net profits surged by 21.69% for 2013 as the bank pursued a strategy of income diversification, while assets and Tier 1 capital increased by 9.2% and 8.9%, respectively. This impressive performance was augmented by NCB’s efforts to improve the efficiency of its operations and execute geographic expansion, while establishing new business groups and departments.

In terms of its core activities, NCB saw notable improvements to its retail banking business in 2013. The bank’s customer base grew to 3.5 million, while transactions increased to 151.7 million, of which 91.4% were conducted through electronic channels. Yet, it was NCB’s corporate division that enjoyed the most impressive year-on-year gains. Net income jumped from SR893m ($238m) to SR2.59bn, an increase of 219%. Meanwhile, total assets grew 14.2% to SR103bn. This substantial growth emerged in part due to the bank’s strong involvement with several of the country’s major infrastructure development projects. 

“Throughout all NCB’s operations, thinking about customers and how we can improve their experience permeates everything we do. Our goal is to work in unison to deliver unmatched performance and execution of all the services that our customers expect. As a result, 2013 has been NCB’s best year by all measures of performance, with every business segment growing impressively as we developed a new culture of productivity and accountability,” says Saeed Al Ghamdi, chief executive of NCB. 

Internationally, NCB has developed its presence in Turkey, through its subsidiary Turkiye Finans Katilim Bankasi, opening 68 new branches in 2013. Moreover, NCB became the first Saudi lender to establish a presence in mainland China through the opening of a representative office in Shanghai.

United Arab Emirates: Abu Dhabi Islamic Bank

In a competitive country category, Abu Dhabi Islamic Bank’s (ADIB’s) strong financials, ambitious expansion plans and high level of innovation all lent themselves to its success in winning the Bank of the Year for the United Arab Emirates. Tier 1 capital increased by 16.4% in 2013, rising from Dh3.3bn ($879.5m) to Dh3.4bn, while total assets and net profits rose 20% and 20.7%, respectively. This strong year-on-year performance was underpinned by an impressive return on equity of 20.2%, up from 17.7% in 2012. 

“Receiving The Banker’s award for the best bank in the UAE is an important milestone for Abu Dhabi Islamic Bank. It recognises ADIB’s achievements as a progressive, client-focused bank that is open to all customers,” says Tirad Al-Mahmoud, chief executive of ADIB. 

Notably, ADIB expanded its presence across the UAE significantly in 2013 following the acquisition of Barclays’ retail unit. This comes as the bank looks to strengthen its position in the domestic market and pursues its objective of becoming a top-tier retail bank. Moreover, the acquisition fits with ADIB’s goals of securing a greater share of the expatriate and non-Muslim customer base in the country. As such, the Dh726.4m acquisition provided ADIB with an additional 110,000 customers across the country. 

“The acquisition and successful integration of Barclays’ UAE retail operation in 2014 was a sign of this ambition. And the bank’s work on widening its physical network, providing a straightforward online banking service through a user-friendly app, has created the infrastructure to allow for smooth expansion,” says Mr Mahmoud. 

The bank’s strategy is reaping significant benefits. Between 2011 and 2013, ADIB’s compound annual growth rate in terms of customers has been 10.7%, while growth in ATMs and branches hit 22.2% and 5.3%, respectively. These numbers have provided ADIB with the third largest branch network and the second largest ATM network in the country, despite being ranked seventh in terms of total assets, according to The Banker Database.

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