The best banks of the past 12 months from the Asia-Pacific region.

 
 
 

Afghanistan, Afghanistan International Bank 

Afghanistan International Bank (AIB) has won this year’s Bank of the Year award for Afghanistan on the back of innovative initiatives, both in its home market and in foreign countries.

AIB opened an account with State Commercial Bank of Turkmenistan to make payments related to oil imports more efficient. This measure will help fuel imports meet Afghan and NATO military needs and support institutions including UN agencies and non-governmental organisations.

At home, AIB is working with the Afghan Credit Guarantee Foundation – a charity registered in Germany – to increase Afghan small and medium-sized enterprises’ (SMEs’) access to finance. The scheme provides SMEs with a partial credit guarantee. In the case of AIB loans, the maximum coverage is 72%. The German Federal Ministry for Economic Co-operation and Development and the US Agency for International Development provided the scheme’s initial funding.

AIB is also in talks with the International Finance Corporation for the multilateral bank to take an equity stake in the lender of up to 15% in two tranches. 

The award also recognises the bank’s ability to navigate a tricky banking sector such as that in Afghanistan. “AIB has strived to apply world-class standards of governance and compliance in the very difficult business and security environment that exists in the country. Needless to say, many organisations and individuals have contributed to the success the bank has enjoyed; this is especially true of our shareholders who have been very supportive of the board of supervisors and management over the years,” says Tony Barned, CEO at AIB.

“There is no doubt that more challenging situations lie ahead, but we are confident that the bank’s inherent strengths will allow it to prosper and overcome any obstacles which may present themselves.” 

Bangladesh, Standard Chartered Bank Bangladesh

This year, the Bank of the Year award for Bangladesh rewards Standard Chartered Bank Bangladesh’s work in capital markets, trade finance and financial inclusion.

The lender was able to achieve these results despite strong pressure on margins at home and volatility in the global environment, according to Naser Ezaz Bijoy, CEO at Standard Chartered Bank Bangladesh. “Despite these challenges, our bank has remained focused on driving commerce and prosperity for Bangladesh, and we remain the leading international bank and one of the highest tax payers in the country’s banking sector,” he says.

“Our balance sheet momentum continues to be robust, and we remain the most profitable bank in Bangladesh. Further gains have been made in safeguarding the bank against financial crime compliance and anti-money laundering risks.”

The bank is helping to boost financial inclusion by running a financial literacy programme and working with mobile payments company bKash to facilitate payments to corporate clients. 

Supporting infrastructure and trade is also a priority. “We continue to play critical roles in the country’s infrastructure development, facilitating foreign trade and payments through the China and Japan trade and investment corridor, while following through our strategy of driving cross-bank collaboration and referrals by banking the ecosystem of our clients,” says Mr Bijoy. Standard Chartered is the first foreign bank in Bangladesh to launch a supply chain finance programme, which targets corporate clients’ dealers and suppliers.

The lender is also expanding its network with two new business development offices in the export processing zones of Karnaphuli and Commila and a new flagship retail branch in Agrabad, Chittagong.

In the capital markets sphere, Standard Chartered printed Bangladesh’s first zero-coupon bonds and interest rate derivatives.

Brunei, Baiduri Bank

Brunei’s Baiduri Bank has been able to maintain strong performance indicators while offering new products in the capital markets sphere and for small and medium-sized enterprises (SMEs) in a market that was heavily hit by the latest drops in oil and gas prices.

“Brunei has for the past few years been facing a slow economy caused by the prolonged low oil and gas prices. The banking environment in 2016 and 2017 continued to be challenging due to reduced expenditure by the government and oil and gas industries,” says Pierre Imhof, CEO of Baiduri Bank. 

“Our conservative lending policy for both retail and corporate banking coupled with very strong recovery efforts have helped the bank to achieve a higher level of profitability with a much-reduced non-performing loan [NPL] ratio than the previous year.” Indeed, the lender’s NPL ratio dropped from 1.43% in 2015 to 0.24% in 2016.

Taking over HSBC’s accounts in 2016 was a further milestone for Baiduri Bank. “Following our successful purchase of the retail banking portfolio of the Brunei branch of a Singapore bank in 2015, we actively targeted customers from an international bank after it announced its withdrawal from the market in April 2016. Our aggressive takeover of accounts helped the bank to grow our total assets by 31% in 2016 over the previous year,” says Mr Imhof.

Baiduri’s efforts to support local SMEs is also noteworthy. The bank launched micro accounts for micro-enterprises and SMEs as well as online payment platform MerchantSuite to help SMEs issue invoices and receive payments. 

Mr Imhof aims to continue taking advantage of the government’s focus on local business development and economic diversification initiatives. “[They] present new opportunities for the banking sector,” he says.

Cambodia, Cambodian Public Bank

In an increasingly competitive banking sector, Cambodian Public Bank stands out for its efforts in growing deposits, its new lending products, innovative fintech programmes and its network expansion.

Despite lower interest rates on deposits, Campu Bank grew customer deposits by 16.5% year on year to $1.2bn in 2016 and low-cost current account deposits by 10.2% to $329.3m in the same period. 

The bank also supported the government’s efforts to reduce Cambodia’s reliance on US dollars. In November 2016, Campu Bank launched small and medium-sized enterprise loans in Cambodian riel at competitive interest rates and with flexible repayment terms.

“The ongoing launch of new products and services, namely mobile banking, loans in the national currency and the collection of tax services, coupled with security enhancement against malware attacks, has positioned the bank to stay ahead of the competition,” says Tan Sri Dato’ Sri Dr Teh Hong Piow, chairman of Campu Bank. In June 2016, Campu Bank became the first foreign-owned bank to collect tax on behalf of the Cambodian government.

In the fintech space, Campu Bank launched a mobile app and a mobile top-up service allowing subscribers of telecommunications provider Smart Axiata to recharge their phones on the lender’s internet banking platform. “In 2018, the bank is committed to launch more digital products and services such as an e-wallet and also tie-up with payment service providers to provide a wider range of products to our customers,” says Mr Piow.

Campu Bank will also expand its network by opening at least three branches within Phnom Penh, taking its total number of branches to 30. Beyond Cambodia’s borders, the bank wants to promote cross-border business referrals and the cross-selling of products through its parent bank’s regional presence in Indo-China, according to Mr Piow.

China, China Citic Bank 

China Citic Bank, historically focused on investment and corporate banking, won the Bank of the Year award in China thanks to its notable pivot towards retail.  

In 2016, the bank maintained a strong corporate banking business and reduced the cost of corporate deposits while expanding its retail business significantly. Retail banking now makes up more than a quarter of operating income and half of its intermediary business income. 

Personal loans grew 43.9% during 2016, while credit cards now contribute 77% of bank profits. Beyond China, China Citic Bank now serves 1.4 million individuals and recorded Rmb233.6bn ($35.2bn) in assets under management. It also targeted high-end retail customers by providing managers of family wealth exclusive financial products. 

In terms of international expansion, China Citic Bank acquired an administrative approval from the China Banking Regulatory Commission (CBRC) to upgrade its London representative office to a branch. The lender also set up a representative office in Sydney and prepared the establishment of its Hong Kong branch. China Citic Bank’s memorandum of understanding with Kazakhstan’s Halyk Bank is set to lead to the first acquisition of a Kazakh lender by a Chinese joint-stock bank. 

In the technology area, China Citic Bank obtained CBRC approval to establish online bank AiBank together with Baidu, a Chinese search engine. 

China Citic Bank’s own digital transactions were also on the rise, and mobile banking customers and active mobile banking users grew 53.87% and 129.76%, respectively, year on year in 2016. Personal online banking users grew 28.1% in the same time period.

Hong Kong, Bank of China (Hong Kong)

Bank of China (BOC) (Hong Kong) posted strong performance indicators while continuing to offer new products as well as programmes targeting the more vulnerable segments of Hong Kong’s population. 

BOC (Hong Kong)’s net profit growth in 2016 was substantial. If profits from discontinued operations and gains from the disposal of equity instruments are included, the bank’s profits grew 105.7% year on year to HK$55.5bn ($7.1bn). Meanwhile, Tier 1 capital grew 30.9% to HK$159.3bn in the same period.

At home, the lender is supporting Hong Kong’s elderly with flexible retirement finance. BOC (Hong Kong) participates in Hong Kong Mortgage Corporation’s reverse mortgage programme. The bank also offers a Senior Citizen Card Scheme involving preferential interest rates on time deposits and a fee waiver on gift certificates.

BOC (Hong Kong) has also grown its business beyond Hong Kong’s borders. 

“Our stellar performance was achieved by making remarkable progress in transforming BOC (Hong Kong) from a local bank into an internationalised regional bank through asset restructuring of Bank of China and BOC Hong Kong in the Association of South-east Asian Nations [Asean] region; and by deepening local market penetration through upgrading our branch service capabilities, driving innovation and fintech development, and enhancing business diversification,” says Chen Siqing, chairman of BOC (Hong Kong). 

Indeed, the lender’s Asean-related loan portfolio doubled year on year to more than HK$50bn in 2016. BOC (Hong Kong) predicts double-digit growth in this space in 2017.  

BOC (Hong Kong)’s international push will be driving the bank’s future strategy. “BOC (Hong Kong) sees great business opportunities ahead, especially those arising from the Belt and Road initiative, renminbi internationalisation, the Guangdong-Hong Kong-Macau Bay Area construction and mainland [China] enterprises going global,” says Mr Chen.

India, Yes Bank 

Yes Bank registered strong financial results in the financial year 2016/17, while launching notable fintech initiatives. In that period, Yes Bank’s net profits increased 31.1% year on year while Tier 1 capital and assets rose by 73.9% and 30.1%, respectively. Return on equity also improved, growing from 19.9% to 21.5%. Although the bank’s non-performing loans ratio rose from 0.76% to 1.52%, this remains one of the lowest among both privately owned and state-owned banks in India. 

The bank raised a total of $1.2bn in Tier 1 capital in 2016/17 via India’s largest private sector, local currency-denominated qualified institutional placement and Basel III-compliant additional Tier 1 bonds. 

The lender also demonstrated a willingness to diversify and derisk its lending portfolio by focusing on secured lending in retail and small and medium-sized enterprises. In March 2010, the bank’s corporate portfolio accounted for 94.7% of total loans while in March 2017 this proportion was 32.3%.

On the digital front, Yes Bank became the first bank in India to launch a universal payments interface, a payments system operated by the National Payments Corporation of India, and pioneered a vendor financing product using blockchain technology for Indian consumer electrical equipment manufacturer Bajaj Electricals. Yes Bank also became the first Indian lender to launch an application programming interface (API). Today, it has more than 200 corporate clients on API banking.

The bank has boosted financial inclusion in India, with its flagship scheme, the Yes Livelihood Enhancement Action Programme, so far providing microfinance services to 1.8 million families across 19 Indian states.

Indonesia, Bank Central Asia 

Bank Central Asia has shown strong initiative in the fintech space while maintaining strong performance indicators and supporting infrastructure development in Indonesia. 

In 2016, the bank launched a pilot project for the Smart Branch mobile app, aimed at reducing the time spent opening bank accounts and, ultimately, the time customers spend in branches. Bank Central Asia also started developing its Digital Form app for customers to input data for deposit transactions independently, as well as CS Kiosks, a self-service system for debit card replacements and registration. 

Bank Central Asia is not getting rid of its bricks-and-mortar branches, however. Instead, expansion of its physical network is focusing on smaller, more compact branches and kiosks supported by automated services.

The bank combined this technological development with increasing financial inclusion in Indonesia. It has developed branchless banking services that support financial literacy programmes launched by Indonesia’s Financial Services Authority and central bank.

Meanwhile, the lender’s 2016 performance indicators remained solid. Net profits grew 14.4% year on year to Rp20,606bn ($1.5bn). Tier 1 capital rose 25.8% to Rp110,246bn while assets increased by 13.9% to Rp676,739bn in the same time period. While the bank’s non-performing loans ratio grew from 0.7% in 2015 to 1.3% in 2016, this proportion is low relative to the rest of Indonesia’s banking sector.

In infrastructure, Bank Central Asia participated in the construction of several airports operated by state enterprise Angkasa Pura, as well as in the development of the State Electricity Corporation’s transmission network in Sumatra. The bank also helped finance bridging funds for the Pandaan-Malang toll road.

Japan, Mitsubishi UFJ Financial Group 

Mitsubishi UFJ Financial Group (MUFG) maintained a strong performance, especially in the project finance space, while launching new technology schemes and modifying its business model.

The bank won the Bank of the Year award in a market that has become hard to navigate for banks. “The environment in which we operate is challenging. The introduction of negative interest rates in Japan and rapid digitisation means change is happening faster than expected, and in unexpected ways. In order for us to achieve sustainable growth, we must reimagine our business model,” says Kanetsugu Mike, deputy chairman of MUFG.

Part of the change in MUFG’s business model involved the creation of a new position – the chief digital transformation officer – who will be managing about Y200bn ($1.78bn) in digital investment. The bank, however, is already well placed when it comes to digital advancement. It employs artificial intelligence (AI) in its Virtual Assistant app to respond to customer queries. 

Mr Mike says that integrating AI across the bank will be the most important initiative of the next 12 months. “We want to deliver solutions for our clients that put them first,” he says.

Meanwhile, MUFG’s international business also performed strongly. “In the past year, our international business has grown significantly, with more than 40% of MUFG’s revenue coming from overseas. Given the challenging operational environment in Japan, I do feel that this has firmly cemented our position as a global organisation, and a peer of some of the world’s biggest banks,” says Mr Mike.

MUFG also maintained a strong position in the project finance sector. It ranked first globally in project finance for the fifth year running and sixth globally in syndicated lending.

Kazakhstan, ForteBank 

As in other countries in the Commonwealth of Independent States region, Kazakhstan saw its economy hit by the plunge in oil prices and the problems that have affected Russia in 2015 and 2016. In Kazakhstan, gross domestic product (GDP) growth slowed in this period, from 4.3% in 2014 to 1.2% and 1.08% in the following two years. 

Despite this weak economic backdrop, ForteBank increased its profitability from Tg7.4bn ($22.2m) to Tg11.7bn in 2016 and grew its assets and capital levels to
some Tg172bn.

Forecasts for Kazakhstan’s economy for 2017 are promising, with GDP growth of 3.3% predicted by the International Monetary Fund, and ForteBank expects the year to bring some additional positive developments.

“This year is an important year for the bank,” says Magzhan Auezov, ForteBank’s chief executive. “We built on a solid foundation following the successful merger with Temir and Alliance and focused on clients and products,” he says. “In a weak market, we managed to substantially grow revenues across all segments and moved many products to mobile platforms and online.”

In the past year, ForteBank has seen a strong increase in its client base and the number of people using its mobile app – allowing the bank to grow its business without adding much cost. Within 12 months of launch the bank reached about 100,000 additional clients using its mobile banking app.

In the second quarter of 2017, ForteBank launched a service – a first in Kazakhstan – allowing private individuals to transfer money through social networks, while legal entities can make use of the new ForteX system for online foreign exchange transactions. 

Going forward, ForteBank aims to focus on further product development and online services, according to Mr Auezov. “We see growth potential across retail and small and medium-sized enterprise sectors and will focus our energy there,” he says.

Kyrgyzstan, DemirKyrgyz International Bank CJSC

Kyrgyzstan’s economy was blessed with high growth rates of about 10% in 2013, but since then Kyrgyz banks have had to adapt to a reduction in gross domestic product growth to 4% and lower, and face increasing competition across the sector. But despite that, DemirKyrgyz International Bank has continued to invest in technology and the quality of its services, making it Bank of the Year in Kyrgyzstan. 

In 2016, DemirKyrgyz improved its online banking operations. It was the first bank to accept tax payments of individuals through online banking – a project that was realised together with state tax service. 

The bank further started testing real-time payments with several companies, and in 2017 DemirBank was aiming to open access to Swift payments to a wide range of customers. 

To increase the availability of banking services to the majority of the population, DemirBank is permanently investing in the development of its wide network of branches, cashpoints and point-of-sale (POS) terminals all over the country, according to Sevki Sarilar, chairman of the management board and general manager of DemirKyrgyz International Bank. He adds that DemirBank has the “biggest market share for ATMs, POS terminals and card activity” in Kyrgyzstan, currently “more than 50%”.

DemirKyrgyz is one of the European Bank for Reconstruction and Development’s (EBRD’s) partners under the EBRD Trade Facilitation Programme, and also works with the development bank in promoting loans for sustainable projects. 

The lender further offers loans and other products to small and medium-sized enterprises and launched an affordable housing mortgage loan programme with the State Mortgage Company.

Going forward, DemirKyrgyz plans to “increase investments in the development of new digital banking products” and enhance its contribution in enlarging and promoting non-cash payments in Kyrgyzstan, says Mr Sarilar.

Macau, ICBC Macau 

Technological advancements were at the core of ICBC Macau’s positive performance in the past 12 months.

It is noteworthy that the bank was able to invest in and deliver a new internet finance strategy despite a recovery from a rocky performance in its home and neighbouring markets. “China’s economy operated steadily in general with easing downturn pressure and Macau is on the way of recovery. In face of such complicated changes and challenges, the bank has managed to make progress while maintaining stability, implemented reform and innovation, and overcome difficulties,” says Zhu Xiaoping, chairman of ICBC Macau.

On the technology front, the volume of transactions and traffic on ICBC Macau e-Mart – the first e-commerce platform to be launched by a Macau bank – has accelerated. The lender also aims to attract more customers from mainland China to develop online financing. 

“The bank advanced the internet finance development strategy, namely e-ICBC 3.0, and upgraded and improved the architecture of internet finance with e-commerce platform ‘ICBC Mall’ as the main pillar. The sound e-banking service systems covering internet banking, mobile banking, telephone banking, SMS banking and [social media mobile application] WeChat banking provided all features of financial services, e-commerce and payments,” says Mr Zhu.

ICBC Macau also promotes financial inclusion in its home market. It has built up a market share of more than 70% in mortgage loans to local residents buying public housing. In 2016, the lender also offered scholarships to universities including University of Macau, the Macau Polytechnic Institute and Macau University of Science and Technology.

In the future, the bank will be focusing on Macau’s efforts to diversify its local economy and on cross-border initiatives such as the Belt and Road and the Big Bay Area projects, says Mr Zhu.

Malaysia, CIMB

CIMB maintained solid financial results while strengthening its international operations and developing new financial technology products at home and across south-east Asia. 

Net profits jumped up by 25.1% year on year in 2016, reaching RM3.56bn ($858m) after two consecutive years of negative growth in profits. 

In 2016, CIMB Group posted its highest ever annual operating income. Tier 1 capital also increased, reaching RM21.38bn after a 5.2% year-on-year increase, while assets rose by 5.2% to RM485.77bn. 

CIMB demonstrated its international operations were able to bounce back after resolving past asset quality issues in its Indonesia, Thailand and Singapore units. This was part of Target 2018, a strategy launched in early 2015.

In 2016, CIMB rolled out a digital transformation plan across its key markets of Malaysia, Indonesia, Singapore and Thailand, and CIMB Group implemented a new core banking system, 1Platform, across the entire region. Today, almost 95% of the group’s banking transactions are carried out outside branches. CIMB revamped its online webpage while offering a mobile payments app, CIMB Pay, across south-east Asia. In Vietnam, CIMB introduced the use of robotics in the bank’s internal processes to reduce faults and turnaround times.

On the corporate banking front, CIMB established the Regional Corporate Loan Management System, which shortens the approval process for corporate loans across all of the bank’s markets. 

Greater adoption of technology and the streamlining of less profitable businesses also led to CIMB Group’s total staff numbers dropping to below 39,000 by the end of 2016, compared with about 40,500 the previous year. 

Mongolia, XacBank 

XacBank has demonstrated an ability to navigate a local market historically at the mercy of commodity price cycles while launching new programmes in the green, financial inclusion and payments fields. 

“In [Mongolia’s] difficult operational environment, XacBank’s reputation as one of the best governed and safe local banks has been reinforced. For the past five years, the bank has maintained very strong capital adequacy and abundant liquidity positions at 18% and 40% on average, respectively. Our risk coverage ratio was far greater than 80%. A new risk management framework has been implemented to support robust growth in market share in the near future,” says Bold Magvan, CEO of XacBank. The bank also launched a new core banking system, which has improved the management of customer transactions through its internet banking platform.

In 2016, XacBank became an accredited entity of the Green Climate Fund (GCF). The GCF has given XacBank $20m in concessionary loans to promote the use and production of efficient and renewable energy in the domestic market.

The International Financial Corporation extended a syndicated senior loan facility of $108.5m to XacBank, together with eight international financial institutions, arguably a further testament to the lender’s strong and reliable position in the market. 

XacBank is also very active in boosting financial inclusion in Mongolia. In 2016, the bank’s social and financial education programmes for children were officially included in the national high school curriculum. 

What is more, in 2016 XacBank became the first bank in Mongolia to offer ATM services free of charge and cut interest rates for all consumer and business loans. Now, all XacBank loans have a maximum interest rate of 2%.

Myanmar, KBZ Bank

KBZ Bank operates in a difficult environment, with Myanmar’s banking and financial markets still in the early stages of development. “Determining how to best help the nascent economic development of the country – when 80% of the population [is] still unbanked – while aggressively trying to address some of the lowest branch and ATM penetration rates in the world [was a challenge in the past 12 months],” says Mike DeNoma, CEO of KBZ Bank.

Notwithstanding these hurdles, the lender has grown its physical network aggressively. “To support the economic development of the country, we have increased our physical branch presence by 25%, growing by 100 units to 500 branches. We grew the ATM network by more than 350 machines to over 1000. On the digital side, we more than tripled the customers of our market-leading mobile offering,” says Mr DeNoma.

KBZ Bank also became the first Myanmar bank to set up operations abroad when it set up three representative offices in Thailand, Singapore and Malaysia.

In the cards space, KBZ Bank launched the payWave credit card, the first contactless payment credit card issued in Myanmar. The contactless theme is also at the heart of KBZ Bank’s new peer-to-peer service, which enables a KBZ customer to authorise a banked or unbanked person to withdraw a predetermined amount from any of the bank’s ATMs using an authorisation code and PIN sent via text message. 

Financial inclusion will remain at the heart of the bank’s future strategy. “With only 20% of the adult population having a bank account (but 90% having a smartphone with dual SIM), our plan is to accelerate innovation along the digital and physical value chains, dramatically increasing participation in the financial system, helping Myanmar become a leading mobile first nation within five to 10 years,” says Mr DeNoma.

Nepal, NMB Bank 

NMB Bank won the Bank of the Year award in Nepal because it was able to increase a foreign investor’s stake and sustain a strong performance in a market that has suffered heavy blows in the past two years.

The biggest challenges involved “low economic growth, plummeting trade activities with a disruption of supplies due to [the 2015] Indian border blockade coupled with a deceleration in remittance inflows on the back of drops in oil prices in the Middle East and Malaysia, wherein most of our migrant population is concentrated,” says Sunil KC, CEO of NMB Bank. Nonetheless, NMB Bank’s net profits grew by a substantial 122.57%, year on year, in 2016.

Two key achievements for the bank are the Netherlands Development Finance Company (FMO) increasing its stake to 20% and NMB Bank becoming a member of the Global Alliance for Banking on Values (GABV). 

“[Being associated] with FMO and GABV helped the bank differentiate itself from the competition,” says Mr KC. 

NMB Bank also benefited from merging with four local financial institutions in 2015. As a result, its branch network increased from 29 to 69 and in 2016, its Tier 1 capital increased year on year by 109.56%. The merger also helped the lender reach out to Nepal’s remote areas through a microfinance subsidiary.

In the financial inclusion space, NMB Bank partnered with the United National Capital Development Fund to provide energy access to 25,000 households. The lender also partnered with UK-funded programme Sakchyam Access to Finance to provide financial access to victims of the 2015 Nepal earthquakes through branchless banking units.

NMB Bank is looking to expand its network further in light of Nepal fully implementing a federal government system after elections in December 2017, says Mr KC.

New Zealand, ASB

ASB won the Bank of the Year award in New Zealand thanks to a strong performance in the digital space, both in terms of transaction volumes and the introduction of innovative products. 

“Over the past year, ASB has made a significant advancement in digital performance, surpassing an ambitious goal set three years ago to have 50% of all sales generated via digital channels,” says Barbara Chapman, CEO of ASB. “Importantly, we achieved this while maintaining our focus on delivering outstanding customer experiences across all of our channels, both digital and traditional.” 

Significantly, ASB was able to achieve this result despite facing difficulties in its home market. “Like all banks globally, ASB is facing the combined challenges of a changing market, rapidly evolving technology, heightened customer expectations and increased regulatory scrutiny,” says Ms Chapman.

“Against this background, we continue to adapt our strategy and our business to ensure we make the right choices to enable a balanced set of outcomes for our people, customers and our shareholders.” 

Managing and satisfying customer expectations will remain a key focus for the bank. “A key part of our strategy is [based] around ensuring every experience a customer has with ASB is ‘unbeatable’, whether via our digital channels, or in person,” says Ms Chapman. 

To this end, ASB aims to make internal and customer-facing systems and processes simpler.  

“At the same time, ASB continues to have a strong commitment to supporting financial literacy, with a particular focus on initiatives for children and youth,” says Ms Chapman. Indeed, ASB’s digital money box, Clever Kash, which works off of the bank’s mobile app, has so far reached more than 37,000 children in New Zealand.

Pakistan, Allied Bank

Allied Bank’s 2016 performance has stood out for its growth, both domestically and abroad, and for new initiatives in the payments and digital sectors. 

“During the year the bank crossed the Rs1000bn [$9.5bn] and Rs100bn thresholds in total assets and equity, respectively, with a capital adequacy ratio of 20.84%. Achieving a 1:1 ratio in terms of 1150 branches along with 1150 ATMs was also a major milestone accomplished during the year. A dedicated Digital Banking Group was also formed during the year, which shall further augment the bank’s transition into digital banking,” says Tahir Hassan Qureshi, CEO of Allied Bank. 

The Digital Banking Group will help the lender develop new digital financial products. One such product is the Payment Hub, which offers digital bulk payments and cash management services. In the digital space, Allied Bank has also launched PayPak debit cards, which have helped reduce dependency on international payment companies for domestic transactions while promoting financial inclusion. Mr Qureshi says the bank will continue to build a hybrid banking model of bricks-and-mortar branches and digital products to reach Pakistan’s vastly unbanked population.

It is notable that Allied Bank has been able to achieve these results despite challenges in its home market. “Allied Bank has faced its main challenges from the external front, primarily driven by multi-faceted factors including stringent taxation laws promoting an undocumented economy, energy shortages and twin deficits, which constrained lending growth despite the easing out of monetary policy by the State Bank of Pakistan. Accordingly, the country has one of the lowest private sector credit-to-gross domestic product ratios in Asia,” says Mr Qureshi.

Beyond Pakistan, Allied Bank acquired a licence to establish a representative office in China that will help it capture business opportunities associated with the China-Pakistan Economic Corridor. 

Philippines, BDO Unibank 

Capital markets transactions, the expansion of the bank’s rural banking platform as well as posting strong financial results characterised BDO Unibank’s positive performance in the Philippines in 2016. 

“We invested in strategic initiatives for the bank’s future growth. These include strengthening our life insurance business [BDO Life], launching our online stock trading services [BDO Nomura Sec-urities],and expanding our rural banking platform,” says Nestor Tan, CEO of BDO Unibank. In 2016, BDO opened 15 new branches in rural areas, taking the total number to 125. 

Mr Tan is keen to continue expanding BDO’s presence in the more financially excluded areas of the country. “We are looking to continue expanding in the provincial, underserved market to take advantage of growth opportunities in this sector. We are encouraged [by] the growth in this sector given the rapid growth and rising urbanisation in areas outside metropolitan Manila, the low banking penetration (about 70% of the population is still unbanked) and the country’s favourable demographics,” he says. 

On the capital markets front, BDO reinforced its capital base via a chunky $1.2bn stock rights offer issued in January 2017. “[This was] recognised as the largest equity capital markets transaction by a Philippine bank to date,” says Mr Tan. 

This deal helped BDO face new market challenges. “I would say that the operating environment posed three challenges in 2017.  [The] first was to comply with the increased global regulatory requirements and local macro-prudential directives intended to strengthen the banking industry. Second was the competition from the entry of foreign banks, directly or indirectly through local partners, and third was the uncertainties typically associated with any change in administration,” says Mr Tan.

Singapore, DBS

Technological development and innovation was at the centre of DBS’s strong performance in Singapore, which helped the bank win the country’s Bank of the Year award. 

“In August, we launched Digibank in Indonesia, Asia’s third most populous country. Digibank is a groundbreaking mobile-led bank that is paperless and signature-less, and brings together an entire suite of innovative technology to enable customers to enjoy a whole new way of banking. This launch follows the successful rollout of Digibank in India last year, and it has since acquired 1.6 million customers in 18 months,” says Sim S Lim, Singapore country head at DBS. 

In Singapore, the bank launched POSB Smart Buddy – the world’s first tech savings and payments programme that teaches students about money management by tracking savings and spending digitally by using wearable technology such as watches. The programme was launched in 19 Singaporean schools and has 6000 participating students.

DBS also launched POSB Jolly, an app designed for low-income, foreign workers in Singapore. The app offers remittance services, phone top-ups and balance checking. POSB Jolly’s simple design also helps overcome language barriers.

“We recently launched the world’s largest banking application programming interface [API] developer platform, with more than 50 successful collaborations to date. By making available a wide array of APIs for other brands, corporates, fintechs and software developers to plug into, we see potential to significantly accelerate the bank’s digital ambition and customer impact,” says Mr Lim. 

In the future, DBS will continue to grow its digital products as well as its international presence. “We recently received approval to establish a locally incorporated wholly owned subsidiary in India... We will be completing our acquisition of ANZ’s retail and wealth business in Indonesia over the next year, enabling us to grow our business significantly,” says Mr Lim.

South Korea, KEB Hana Bank

The South Korean market posed a number of challenges to KEB Hana Bank in 2016. “As the low interest rate trend persisted, it became harder to recover net interest margins, while the prolonged economic slump raised the possibility of corporate insolvency in certain sectors, necessitating pre-emptive risk management. In addition, we needed to respond swiftly to changes in consumer behaviour and demands, as exemplified by Kakao Bank, the internet-only bank that is taking the market by storm, and the proliferation of fintech companies,” says Ham Young-joo, president of KEB Hana Bank. 

However, the lender still posted a year-on-year net profit increase of 26.8% in 2016, as well as a 9.9% growth in Tier 1 capital and a drop of 0.37 percentage points in its non-performing loan ratio in the same time period. 

KEB Hana Bank’s success was also down to it reinforcing its integrated synergies, according to Mr Ham. “The integration of IT systems and the cross-appointment of employees – policies enacted after the merger of KEB and Hana Bank in September 2015 to consolidate its internal base and create synergy – have begun to bear fruit over the past year. We believe that another of KEB Hana Bank’s successes has been shaping a new organisational culture marked by collaboration and mutual respect, as well as a customer-oriented sales philosophy,” he says.

The bank was equally successful abroad. As of the end of 2016, it operated a significant overseas network among South Korean banks. KEB Hana Bank’s international achievements include converting its Mexico City office to a subsidiary and opening a branch in Gurgaon, India. The lender also made equity investments in a Singapore-based reinsurer and in a China-based asset management company, while acquiring a securities business licence in Hong Kong in April 2017.

Sri Lanka, Hatton National Bank 

Hatton National Bank’s (HNB’s) strong financial results stood out among Sri Lankan banks in 2016. The lender registered a year-on-year net profit growth of 35.36% and a Tier 1 capital increase of 24.06% while cutting its non-performing loan ratio from 2.43% to 1.8% in the same time period. 

“We experienced transformational growth, culminating with HNB ranking as the most profitable private sector banking group in Sri Lanka last year,” says Jonathan Alles, managing director and CEO of HNB.

“Our strategic focus enabled us to record outstanding balance sheet growth and one of the highest net interest margins in the industry, while improving our operational efficiency as evidenced by a significant drop in our cost-to-income ratio to 42.5%, [a reduction of] 340 basis points.” 

After centralising its retail and small and medium-sized enterprise (SME) credit processing, HNB set up a new central security repository and a new system for centralised disbursements. The lender also set up SME cells in its regional units, which contributed to a 25% growth in SME lending to SLRs161bn ($1.05bn).

On the digital front, HNB appointed a chief digital officer in 2016. A year later, the bank launched five digital branches. It also expanded the number of ATMs offering a number of digital banking services. Today, 60% of deposits are made through these ATMs and 76% of customer withdrawals are made through digital channels.

In the future, Mr Alles is keen to take advantage of Sri Lanka’s developing economy. “As Sri Lanka progresses towards upper-middle-income status, we see enormous potential in the SME and retail segments and in funding large-scale development projects. We are well placed to capture the growth potential in the country,” he says.

Taiwan, First Commercial Bank 

International expansion, programmes to improve financial inclusion both at home and abroad as well as strong support of small and medium-sized enterprises (SMEs) defined First Commercial Bank’s (FCB’s) strong performance in Taiwan in 2016.

“The bank remained Taiwan’s number one and largest SME lender for the sixth consecutive year, which enhanced [our] net interest margin,” says president Grace ML Jeng.

In March 2016, FCB became the first bank in Taiwan to set up a fintech company – Turn Cloud Technology – via a joint venture. “By combining technology and financial services, we are able to provide customers with fully integrated innovative financial service offerings,” says Ms Jeng.

Beyond Taiwan, FCB opened sub-branches in Phnom Penh and a branch in Manila. “The bank has been actively developing its overseas presence in recent years and has become one of the most internationalised banks. In [total], the bank has 35 overseas operating units. With the continuing expansion of our network, overseas operations [have] become [a major] revenue contributor. In 2016, the bank’s consolidated pre-tax profit increased by 7.6% to a record high of $635m, about 30% of which was [generated from] overseas operations,” says Ms Jeng. 

FCB’s overseas units also promote financial inclusion. In Cambodia, the bank has a mobile clinic programme providing local residents with general medical services, surgical procedures and dental care, among other offerings. So far, nearly 3000 people have benefited from this initiative.

International expansion will continue to shape FCB’s strategy. “We will continuously expand our Asia-Pacific regional network and leverage electronic transaction capabilities to respond to changes and meet new challenges. Echoing the overseas expansion, we aim to create more cross-border business opportunities through seamless inter-branch collaboration worldwide,” says Ms Jeng.

Thailand, Siam Commercial Bank 

New technology products and investments were at the core of Siam Commercial Bank’s strong performance in Thailand in 2016. In the past year, the bank has transformed the entire institution, focusing on its internal processes, products or helping staff adapt to new technologies.

As part of its technological transformation, Siam Commercial Bank founded Digital Ventures with a $50m investment. Its main functions are corporate venture capital, the development of digital financial products and running an accelerator. 

The first aspect involves investments in tech start-ups. Through Digital Ventures, Siam Commercial Bank made investments in Singapore-based Golden Gate Ventures Fund and in Ripple, a US blockchain payments system. This was the first time that a Thai financial institution invested in enterprise-level blockchain technology.

The second aspect of Digital Ventures includes research and development of Siam Commercial Bank’s own financial technology products, in areas such as blockchain and machine learning. Third, Digital Ventures’ accelerator provides advisory services and funding for Thai and south-east Asian fintech start-ups. 

The bank is also involved in promoting financial inclusion. It has renewed its focus on developing accessible financial services, including credit products for low-income customers or for small business entrepreneurs. Its network of more than 1000 branches and 9700 ATMs across Thailand helps Siam Commercial Bank reach out to the unbanked groups in the country.

Siam Commercial Bank reported strong financial results in 2016. Tier 1 capital grew 11% year on year to Bt294.6bn ($8.9bn) while assets grew 5% to Bt2913.02bn in the same period. The lender also managed to cut its non-performing loans ratio from 2.89% in 2015 to 2.67% in 2016.

Turkmenistan, The State Bank for Foreign Economic Affairs of Turkmenistan 

With another year of profit growth and innovative products for its clients, the State Bank for Foreign Economic Affairs of Turkmenistan is Bank of the Year in the country.

In 2016, State Bank recorded a 31.7% increase in assets due to an inflow of facilities to client accounts, as well as new lines. In the past year, State Bank started offering a range of services in co-operation with MasterCard, and since 1994 it has issued Visa cards – making it the only bank in the country to offer international cards.

The lender is introducing digital solutions and all of its corporate clients have taken up State Bank remote banking solutions. The bank further provides text message and email information services, for example, on money movements in customers’ accounts and on the remaining account balance, while corporate clients have the option to track their transfers and get statements on balances through the internet. These services are a first in Turkmenistan. 

To improve the service for its customers, State Bank has also opened two additional branches: one in the regions and one in the capital. Both branches are directed towards the development of retail business and the improvement of servicing State Bank’s individual customers. By the end of 2017, the lender aims to open one more branch office in the country’s new airport.

Going forward, State Bank wants to increase the number of access points for customers. Its information service is already working 24/7. Consultation services are delivered to customers through its branches, over the telephone and through email. 

In accordance with the requirements of national legislation and recommendations of international organisations, State Bank is implementing anti-money laundering policies and has introduced the ‘know your customer’ concept. 

Uzbekistan, Asia Alliance Bank

After years of economic growth about 8%, gross domestic product expansion dipped slightly to 7.8% in Uzbekistan in 2016, and is expected to slow further, to about 6%, in 2017 and the next few years, according to figures from the International Monetary Fund. 

In this environment, Asia Alliance Bank enjoyed a growth in assets of 7.8% in 2016, and significant improvement in Tier 1 capital of about 25% to UZS193.4bn ($23.9m). 

Asia Alliance Bank has shown an impressive ability to generate capital from internal sources, according to its chief executive Ikram Abdukakhorov. This, as well as its “stable level of funding” due to an increase in the deposit base and thanks to additional resources from international financial institutions, “enabled us not only to ensure a smooth transition to the new requirements of Basel III, but also to maintain strong capital stock and liquidity for further expansion of our activities,” says Mr Abdukakhorov.

The lender further diversified its business and strengthened its franchise, while growing its loan book less aggressively – something rating agency Moody’s saw as a positive when it upgraded the bank’s rating from B3 to B2 in December 2016.

At the beginning of 2017, Asia Alliance Bank’s loan portfolio made up about 62% of its assets, while the non-performing loan ratio was below 1% of gross loans.

“In the coming year, we will focus on further improving our financial stability and the implementation of measures to strengthen our capital and funding base,” says Mr Abdukakhorov. 

“We will also seek to expand the range and quality of our banking services through the extensive use of advanced information and communication technologies, as well as our e-banking system and cashless payments using plastic cards.”

Vietnam, Saigon-Hanoi Bank

Strong financial results, the acquisition of a consumer finance company and a significant contribution to improving financial inclusion in Vietnam defined Saigon-Hanoi Bank’s notable performance in 2016. 

The lender’s net profits grew 13.7% year on year to VND1156bn ($50.4bn) in 2016, while Tier 1 capital and assets increased by 17.45% and 14.29%, reaching VND11,706bn and VND233,947bn, respectively. The bank managed to cut its cost-to-income ratio from 47% to 45% in the same time period. 

Saigon-Hanoi Bank also increased its customer deposit base by almost 20% in 2016, at a time when the average growth in Vietnam’s banking sector totalled 14%. 

The acquisition of Vinaconex-Viettel Finance Company was one of 2016’s most notable events for Saigon-Hanoi Bank, which set up a 100%-owned subsidiary consumer finance company as a result. Thanks to this deal, the lender’s charter capital grew by VND1000bn, helping to increase its equity and capital adequacy ratios. This transaction was well timed for a market such as Vietnam, which has a youthful population of 90 million.

Saigon-Hanoi Bank also doubled its trade finance credit line with the Asian Development Bank to $50m. This will help the bank offer more trade finance products to corporate clients, especially small and medium-sized Vietnamese importers. The lender is one of 11 Vietnamese banks involved in the Asian Development Bank’s trade finance programme. 

Supporting financial inclusion was at the heart of Saigon-Hanoi Bank’s work in 2016. As of March 2017, the agriculture sector accounted for 40% of the bank’s total outstanding loans. It also offered subsidised loans to the Vietnam Food Association and loans to rural business households that are adopting new manufacturing models or using technology in agricultural production and exports.

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