The Banker’s Bank of the Year awards continue to go from strength to strength, even as banks the world over face increasing challenges. This year, we made awards in 152 countries.

A glance over the many hundreds of entries we received for this year’s Bank of the Year awards shows common issues confronting banks from every region and continent. Many have to deal with economic slowdown and the problems caused by a low-interest-rate environment. 

Then of course there is regulation, and while the largest banks have the biggest hill to climb, all institutions have to deal with issues such as know your customer and anti-money laundering. Sometimes there are local issues such as the percentage of the balance sheet that must be lent to a particular sector. 

 

Finally there is technology – both the costs of implementation but also the need to get it working correctly to meet the demands of an online and mobile age.  

But banks are rising to these challenges and winning – making many of them highly deserving of recognition. This year, as in 2014, we made awards in 152 countries. The highest number of submissions came from Africa, followed by the Americas and Asia-Pacific. 

Winners from across the globe will be attending this year’s black-tie dinner in London in early December.  ​

Global and regional winners

Global, Wells Fargo

John Stumpf, chief executive, Wells Fargo

John Stumpf, chief executive, Wells Fargo

The notion of what constitutes the world’s best bank has changed over the years. In the pre-financial crisis era, such accolades were usually reserved for lenders that had a substantial physical presence both in their domestic market and, crucially, abroad. 

With the identity crisis that followed, most of those largely international banks have retreated back to their home markets. So financing the world’s economy is left to strong regional or national banks, and their ability to serve clients across the world even without heavy local operations. Prudent risk management, relationships with strong international correspondents and solid balance sheets are therefore key to international success in contemporary banking. 

And they are obvious characteristics of Wells Fargo, whose success has been confirmed by yet another year of record income. The world’s fifth most profitable bank, it closed 2014 with pre-tax profits of just under $34bn. It also scored a profits-on-capital ratio of 21.88%, according to The Banker Database, and a return on assets of 2.01%. This figure is almost 10.5% larger than the previous year. 

Wells Fargo’s Tier 1 capital is the eighth largest in the world and continues to expand, supporting the bank’s growth. In particular, capital levels increased, even as the lender returned more equity to shareholders – a total of $12.5bn was returned through dividends and net share repurchases in 2014, up 74% from a year earlier.

The Banker is impressed by Wells Fargo’s diversified and balanced sources of revenue, in terms of the combination of spread income and fee income, which helped it achieve its strong results. The bank sustained its results even in periods of low economic growth. Its equal focus on growth and risk management was also noticeable, as were its significant investments, and efforts to contain cyber threats and operational and credit risks.

Headquartered in San Francisco, Wells Fargo has come a long way from the stagecoach company founded in 1852, from where it traces its origins as well as its logo. Domestically, Wells Fargo has built a strong and stable deposit and loan business. Its diversified model helped grow profitability during the protracted low-interest-rate environment and the current patchy economic recovery of the US. 

Abroad, Wells Fargo’s solid balance sheet and long-term commitment to clients have supported its international business. The bank’s transaction banking services are well known in South America, where it has strong relationships with local lenders. Furthermore, it has expanded its presence in commercial real estate in the US, the UK and Canada, thanks to the purchase of GE Capital Real Estate’s assets, alongside investment firm Blackstone. Its remittances service reaches communities in Latin America and the Caribbean as well as Asia, thanks to partnerships with lenders in China, India, the Philippines and Vietnam.

“The low-interest-rate environment continues to be a challenge for us and our financial industry peers, although we benefit from our diversified model,” says chief executive John Stumpf. “[Last year] we saw strong growth in areas like deposits and loans, what we consider to be the core building blocks of long-term shareholder value creation. We will continue to put our customers at the centre of everything we do. To improve the customer experience, we are developing and introducing new technologies that make it easier to bank with us and reduce risk. Another continuing focus is driving diversity and inclusion throughout our organisation, so that we reflect the communities and customers we serve.”

Western Europe, Nordea Bank

As western European economies slowly recover, interest rates are at an all-time low. While the European Central Bank has lowered its headline rate to 0.05% in September 2014 and started quantitative easing in January 2015, other western European banking sectors, such as in Denmark and Sweden, have already had rates below zero for some time. Nordea Bank’s Nordic network has adapted well and thanks to that stood out as The Banker’s winner in western Europe.

Nordea’s subsidiaries picked up country awards in Denmark, Finland and Norway – nearly all western European countries it classes as home markets. And despite the low rates, the group managed to grow across the board. Group net profits increased by 7% in 2014 to Ä3.33bn, putting return on equity at 11.6%. 

Across its markets, Nordea focused on technical innovation and multiplatform offerings, allowing customers to book remote meetings – also beyond branch opening hours – an offer that is increasingly being taken up.

“Digitalisation is one of the main drivers for change in banking,” says Casper von Koskull, group chief executive at Nordea Bank. “The rapid change in our customers’ preferences towards using online and mobile solutions, as well as increasing operational regulations, is transforming our industry. We have continued to launch new solutions to make it easier for customers to engage with us and our simplification programme is on track.” 

To further catch up with changes in customer behaviour, new versions of the bank’s mobile application and its online bank were launched in 2014, with new functions that provide customers with a better overview of their financial situation. 

Nordea was the largest wealth manager in the Nordic region in 2014, having merged its operations in the four Nordic countries in a joint fund domiciled in Finland.

“Our assets under management reached new records, supported by strong fund exports,” says Mr von Koskull. “On the corporate side, Nordea consolidated its position as the leading bank for large Nordic corporates… A strengthened culture and relentless execution will allow us to unlock the full potential of our relationships and competencies for the benefit of our customers and employees.”

Central and eastern Europe, Bank of Georgia

The countries of central and eastern Europe have had a tough few years. The geographical, and in some cases historical, proximity to a turbulent Russia caused gross domestic product growth in many countries to slow in 2014, with some expected to turn negative in 2015.

In this difficult environment, coupled with additional regulatory burdens more generally imposed on banks, only few of the larger regional players have turned a profit. Bank of Georgia is one of those lenders. 

With a 15% increase in net profits and return on equity of 18.5%, the bank did well in 2014. And what is more, Georgia’s largest bank kept its cost-to-income ratio close to 40% and lowered its non-performing loan ratio.

A challenger bank in the region, Bank of Georgia has in Belarusky Narodny Bank (BNB) a successful subsidiary in Belarus, while it also operates a representative office in Hungary and co-operates with Saxo Bank in Russia. BNB focuses on banking for small and medium-sized enterprises (SMEs) as well as catering for SME owners, a successful niche in which most other banks in Belarus are lagging behind

Bank of Georgia provides asset and wealth management products to clients in eastern European countries through its office in Budapest and offers investment banking and investment management services through its subsidiary Galt & Taggart in Georgia. In October 2015, the bank signed its latest agreement with Russia’s Saxo Bank, which allows its customers, through subsidiary Galt & Taggart, to explore investment opportunities through an adaptive trading experience.

Bank of Georgia closely co-operates with international financial institutions such as the European Bank for Reconstruction and Development (EBRD), which formerly held a 5% equity stake in the bank. With EBRD support, Bank of Georgia and BNB provide different financial products, such as credit lines for SMEs in Belarus and trade finance facilities and innovative services such as factoring in Georgia. 

In 2015, Bank of Georgia further refocused its business. Having been the owner of 36 healthcare centres and 1907 hospital beds in Georgia in 2014, the bank spun-out these operations through an initial public offering on the London Stock Exchange in November 2015. And with the acquisition of Privatbank’s Georgian operations, the bank further reinforced its position in the country.

Asia-Pacific, KEB Hana Bank

Banks in South Korea are struggling with low economic growth, low interest rates and low net interest margins. But South Korea’s KEB Hana Bank is beating this lull with a sensational domestic merger, while expanding significantly in the Asia-Pacific region. 

With developed markets in the West underperforming, top Asian banks no longer aspire to be global banks. Their goal is to become regional banks focusing on Asia-Pacific, which is home to some of the fastest growing economies in the world. 

Hana Bank’s finalised historic merger with state-owned Korea Exchange Bank (KEB) shook the South Korean market this year. Many strong banks in this sector are on the lookout for mergers and acquisitions (M&A) as a source of growth, considering that the financial markets and economy offer little excitement. But with the KEB deal, Hana snatched one of the remaining M&A opportunities in a highly saturated South Korean banking sector. 

This merger has also given the bank more muscle to escape an unattractive market at home and sustain an aggressive international expansion strategy. 

“In accordance with the goal of Hana Financial Group to achieve 40% profit attribution from [our] overseas business by 2025, KEB Hana Bank will accelerate overseas business in order to maximise growth opportunities. In addition, Hana Bank will make efforts to converge financial services by utilising fintech more actively,” says Young joo Ham, chief executive of KEB Hana Bank.

In Indonesia, the lender launched PT Bank KEB Hana Indonesia – an entity integrating Hana Bank’s and KEB’s former Indonesian operations – in early 2014. Since then, the Indonesian entity recorded a 40% jump in profits and the number of clients now exceeds 100,000, up 70,000 since December 2013.

The South Korean lender also joined KEB’s and Hana Bank’s originally separate China operations in December 2014. The renminbi business is now available in 30 branches across the country. In a rare move for South Korean banks, KEB Hana Bank appointed a Chinese national as chief executive of its China operations, to localise its business further.

KEB Hana Bank is also currently building on its existing operations in the Philippines, Vietnam and Myanmar. The next new destination could be Cambodia, which has long been a target for the bank.

Americas, BBVA

A long-standing player in Latin America, BBVA has built a strong and profitable franchise in key markets across the region – from Mexico, Colombia, Peru and Chile, to Argentina, Bolivia and Venezuela. Its US operations have also grown in substance, with a good presence in the southern belt of the country. 

BBVA is reaping rewards from its commitment to the more market-friendly countries in the region, which are now grouped in the Pacific Alliance trading bloc. In particular, its Mexican business, BBVA Bancomer, grew in corporate and consumer loans as well as in deposits, despite the lower-than-expected economic growth. 

But it is not just BBVA’s geographical spread that is impressive; what is more remarkable are the bank’s plans on how to sustain profitability. Of note is the lender’s progress in technology, something that will ultimately benefit all clients, from retail, to wealth management to corporate. Its forward-thinking attitude is felt across the franchise but a prime example comes again from Mexico. 

The group launched a fintech challenge last year that allowed external developers to analyse business transaction data from its operations in the country – the first time a bank has ever done this. Making real-life transaction data available outside the bank, with the necessary security protections, grants extra importance to the exercise. This goes beyond presenting a prize and can draw conclusions that are more immediately applicable to its business.

BBVA’s ambition is indeed to be seen as Latin America’s top digital bank and it is investing $2.5bn in its local operations – 40% of which is directed towards technology and the rest to improve infrastructure and distribution networks. 

Such commitment to the region will continue to support clients through the current tough economic climate. “The most important challenge for BBVA in Latin America during 2015 has been the deterioration of the economic environment,” says Ignacio Lacasta, head of Mexico and South America. “We will continue to strengthen the franchise in our Latin American markets, deepening our relationship with customers in a sustainable way. All our Latam franchises are developing a strategic plan for the next four years. At the same time, we will continue to carry out our digital transformation roadmap.”

Middle East, Emirates NBD

This year’s regional winner for the Middle East, Emirates NBD, has pursed an almost peerless approach to digital and technological innovation over the past 18 months. This strategy has positioned the bank not only as regional leader but as one of a handful of lenders globally that can lay claim to being a pioneer in the development of new technology. Emirates NBD became the first bank in the Middle East, Africa and Asia to introduce mobile cheque deposit technology in 2015, while it also became the first bank in the world to sign up to Visa’s Mobile Location Confirmation Service, designed to reduce unnecessary purchase declines when travelling.

In addition, the lender became the first bank in the central and eastern Europe, Middle East and Africa region to sign on to Visa’s Digital Enablement Programme, which connects financial institutions to technology companies to accelerate the development of payment and commerce services. Meanwhile, the introduction of the bank’s DirectRemit offering in 2014 provides toll-free cross-border remittances to India, the Philippines and Pakistan in just 60 seconds via online, mobile and ATM channels. This service has led to bank customer remittances to these countries to increase by a factor of 10. 

“Key areas we intend to focus on are technology and innovation to transform and automate many processes and services across our business lines. Customer centricity and ease of doing business with reduced costs will be of core importance, which will be the key differentiator to attract and retain customers.  We also intend to drive diversification of our asset portfolio and will continue to seek to expand our footprint in identified regional markets,” says Shayne Nelson, chief executive of Emirates NBD. 

Beyond these developments, Emirates NBD is emerging as a regional banking leader through an increased physical footprint. The acquisition of BNP Paribas’ Egyptian unit, completed in 2013, has positioned the bank well to benefit from one of the most promising banking markets in the region. In its first full calendar year in 2014, total revenues grew by 14% while deposits jumped by 16%. The bank is now the eighth largest private lender in the country. Elsewhere, Emirates NBD is also pursuing organic growth opportunities in existing markets, including Saudi Arabia.

Africa, Nedbank

When it comes to regional growth plans, South Africa’s Nedbank is not short of ambition. In 2014 alone it made a number of bold moves to expand its presence across Africa, including the completion of an initial 36.4% acquisition of Banco Único in Mozambique with the intention of securing full control later in 2016. 

Meanwhile, in October 2014, Nedbank exercised its option to subscribe to a 20% shareholding in Ecobank Transnational for $493m. Together, these moves offer the banks’ clients services in a total of 39 African countries and new reach across east and west Africa. 

“We will focus on growing in attractive segments and building our pan-African banking franchise as we deliver on our vision to be Africa’s most admired bank by our staff, clients, shareholders, regulators and the communities in which we operate,” says Mike Brown, chief executive of Nedbank. 

To strengthen its client proposition and operating efficiency across the countries of the Southern Africa Development Community (SADC) region, Nedbank has implemented a standardised operating model through the Flexcube IT system. This upgrade is part of the bank’s wider commitment to information and technology innovation and development across its African network. 

Indeed, Nedbank has worked hard to optimise its IT initiatives. Through its ‘rationalise, standardise and simplify’ strategy, the bank is decreasing its number of core systems from 250 to 60. In 2014 alone, 18 were decommissioned, bringing the total to 74 by late 2015. 

These programmes, and others, contributed to Nedbank’s overall success in 2014. Return on equity was 17.2% while the bank’s cost-to-income ratio was 56.5%. Net profits jumped by 14% in local currency terms, while assets and Tier 1 capital increased by 8% and 2.8%, respectively. 

Meanwhile, in August 2013 Nedbank entered into a strategic business co-operation agreement with the Bank of China in order to promote business flows between China and Africa. This successful partnership has already concluded a number of deals, including funding the entry of a new player in the Southern African cement industry, Mamba Cement.

Financial inclusion, The Co-operative Bank of Kenya

Submissions to The Banker’s financial inclusion award always make for an interesting read. About 50 applicants from all over the world took part, detailing initiatives that ranged from the adoption of clever technology in Namibia, Mexico, Colombia and India, to serving ex-army personnel in Nepal, to dealing with gender issues in Sri Lanka or disability in Spain, to just to mention a few.

Out of such a rich group of contenders, this year’s accolade goes to the Co-operative Bank of Kenya, in recognition of the impressive work and progress made by the lender and, more broadly, of the contribution that this model of banking can make to economies and people’s lives.

The Co-operative Bank was founded in 1965, two years after Kenya gained independence, by local co-operative societies that experienced difficulties in accessing credit from existing banks. Since then, it has grown to serve more than 10 million members, about one-quarter of the country’s population.

Aside from providing credit to small and micro entrepreneurs, the bank serves as a consultancy and insurance agency to co-operative societies, which many households in Kenya rely upon for a number of financial transactions. The bank’s work ensures that such societies are solid, financially literate and well run, so that they can safely continue their capillary work through the country. This consultancy model has already been replicated elsewhere in Africa. The lender has entered into a partnership with South Sudan’s government and there are plans to bring the consultancy model to Uganda, Rwanda, Tanzania and Ethiopia, too. 

Of note is also the bank’s mobile banking service, Mco-op, which allows Kenyans to open an account, withdraw cash, make payments and request or repay a loan through mobile phones, all without the need to visit a branch. In particular, aside from improving the ease and speed of service, the withdrawal function reduces the often very high cost associated with the issue and use of debit cards. The service is based on codes released on customers’ mobile phones that are usable on the bank’s ATMs and agency network.

So far, there are more than 2.2 million registered users and the product has supported over 5.2 million transactions, while some Ks700m ($6.7m)-worth of loans has been disbursed. “It is our firm belief that the co-operatives are a strategic vehicle for the sustainable delivery of banking services to the vast majority,” says Co-operative Bank of Kenya chief executive Gideon Muriuki.

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