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Bank of the Year Awards 2015 – Americas

From large global banking brands to smaller domestic lenders, the list of winners from the Americas is diverse. The full results and write-ups detail how each of them managed to stand out from the crowd. 
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Argentina: Santander Rio

One of the most profitable as well as challenging banking sectors in Latin America, Argentina, has proven profitable for Santander. The Spanish group’s local operation, Santander Rio, saw net profits rise by more than 40% in 2014, with a phenomenal 36% return on equity.

But what impressed The Banker’s judges most is the bank’s sustained dominance in both the private sector loans and deposits markets. In particular, Santander Rio improved the profitability of its operations catering to small and medium-sized clients. This is a highly regulated segment, where the government sets the minimum total loan amount to be made available to such clients and interest rates. Santander Rio managed to secure more small business accounts, such as payroll and training services, as well as help with clients’ international businesses. 

It also launched improved services for its high-income customers and simplified the way all customers can deal with the bank, whether at the branch or through its ATM network. Chief executive Enrique Cristofani is particularly proud of Santander Rio’s physical expansion in Argentina – a country he believes offers great opportunities despite the tough macroeconomic picture and regulatory framework.

“Gaining in scale was a key factor to maintain high income levels, and remain the first private bank [in Argentina] in terms of loans and deposits,” he says. 

“Santander Rio has a positive view on Argentina and that’s why the bank will be investing 18bn pesos [$2.11bn], to grow our business in the coming years. As of today, credit intermediation is still very low – 13% of gross domestic product. [But this can also mean] strong growth opportunities for almost every segment of the economy [through banking products such as] mortgages, infrastructure, mining and agro-industries financing, as well as investment banking activities.”

Barbados: Scotiabank Barbados

Banks in Barbados face the common challenge of a struggling economy and creaky public finances. A worrying level of public debt, which is higher than national output, has resulted in public sector cuts and layoffs that pushed the country’s unemployment rate to 13% and dampened further consumer confidence and demand. Despite this, Scotiabank has maintained its market share position in the country and has even improved it for certain products. 

As in other jurisdictions across the Caribbean, Scotiabank pushed ahead with a competitive mortgage programme in Barbados that attracted new customers away from the competition. It also expanded its credit card loyalty scheme with more generous rewards such as air miles to travel to popular destinations in the US, as well as cash-back options for higher end customers.

It also deployed a $50m fund dedicated to small and medium sized enterprises that has the potential to boost national output and create jobs. Through the fund, these firms will receive cheaper credit as well as equity investments at more beneficial terms. Furthermore, Scotiabank has been supporting a series of national initiatives around entrepreneurships that are dedicated to existing businesses, aspiring entrepreneurs and school children. 

The bank also improved its mobile banking services by adding an Android app to its existing offerings for the iPhone and Blackberry. At the same time, less tech-savvy customers can now rely on dedicated branch staff to guide them through digital services. As a result, both online and mobile banking users grew in numbers for Scotiabank Barbados over the past year. Thanks to its flexible strategy, Scotiabank closed 2014 with larger profits than the previous year and recorded a strong return on equity of 17.8%.

Belize: Scotiabank Belize

Banks operating in Belize face the double challenge of a stagnant economy and excess liquidity in the banking sector, making it a struggle for any bank to deliver returns. But Scotiabank not only closed 2014 in profit, it also reduced non-performing loans. This was done through tighter credit risk management, which limited delinquency, and better monitoring of collections and foreclosure programmes, which contained loan losses. 

Scotiabank’s strategy focused on making its products and services more cost efficient and collecting better customer data, so more cross-selling opportunities could be identified. The branch, for example, gained access to pre-approved credit lines that staff could present to selected customers. It also improved its treasury function so that interest-rate spreads were maximised, meaning it could offer more competitive interest rates across all products, in particular for residential mortgages. Alternative channels could also provide better services thanks to sustained investment in mobile and internet banking.

Scotiabank Belize’s managing director, Michael Shaw, says: “As we celebrate our success, we continue to build greater presence and relevance in our key markets by streamlining our business and marketing strategies. This year, we have focused on our premium products and introduced customers to competitive and different product options that best suit their needs.” 

He plans to roll this strategy into 2016 too, as the bank aims to offer competitive products, reduce operational costs and invest in technology as well as its staff.

Bermuda: The Bank of NT Butterfield & Son

While there is some level of optimism that Bermuda’s economy will enter 2016 in reasonable shape, there is no denying the fact that the past few years have been grim for the country, particularly on a macroeconomic level. Furthermore, local banks have been under additional pressure because of the all in demand within Bermuda’s financial services sector. 

Despite this, the Bank of NT Butterfield & Son closed 2014 with larger profits and an improved non-performing loans ratio. But the bank has not just focused on short-term results, it also had an eye on longer term business growth through the development of a strategy to satisfy shareholders, in which a repurchase of a large portion of shares from a single shareholder provided higher returns to all others. Meanwhile the acquisition of HSBC’s private and corporate business in the Cayman Islands, as well as HSBC’s private banking trust and investment operations in Bermuda, and the trust and fiduciary services business of Legis Group in Guernsey, improved Butterfield’s future prospects. 

The bank is determined to grow its presence and brand internationally. Indeed, it is a proud sponsor of the 2017 America’s Cup boat race, which will be hosted in Bermuda. 

“Against a backdrop of diminished lending opportunities locally, Butterfield used excess capital to buy out and cancel the shareholdings of a significant shareholder – an overseas bank – [improving] return on equity and earnings per share for continuing shareholders,” says Bank of NT Butterfield & Son chief executive Michael Collins. “The bank also secured sponsorship and official supplier status for the America’s Cup 2017 Bermuda, enhancing our community presence and international visibility.” 

Bolivia: Banco de Crédito BCP

Banco de Crédito BCP has been responsible for a number of notable initiatives in recent years, such as the creation of alternative channels, efforts to increase financial inclusion and a drive to improve services. Just as impressive is its most recent financial performance. Net profits were up 42% in 2014 on the previous year, return on equity was an improved 15.6% and the non-performing loan ratio stood at a low 1.4%. 

Furthermore, BCP launched a digital wallet service that helped to reach wider parts of the Bolivian population, invested in its web portal and increased transparency on fees charged to customers. It also partnered with the World Bank’s International Finance Corporation to extend credit to larger numbers of small and medium-sized enterprises (SMEs) and run workshops for these businesses across the country.

All of this was achieved at a time when stricter financial regulation was being introduced throughout Bolivia. Chief executive Marcelo Trigo says the bank’s efforts to adapt to the new environment have continued well into this year. “In 2015, BCP focused on adapting to the requirements of the new financial law [that regulates] the percentage of credits to be allocated in certain loan segments,” he says. “The bank met such credit segment requirements while keeping key profit indicators and low past due rates, and introduced products to [introduce newcomers to the banking system] through modern and user-friendly products such as our mobile wallet service and home banking platform.”

As for the future, Mr Trigo says: “Our main objective is to become the first option for financial clients, through constant technological innovation, and to improve the quality of customer service and products. Given the current legislation, SMEs provide a great opportunity [for growth].”

Brazil: Bradesco 

Improving profits and profitability while macroeconomic conditions deteriorate are impressive achievements. Coupling these with better efficiency and sound risk management as well as taking over a large competitor is definitely worthy of international recognition. Indeed, Bradesco has navigated Brazil’s economic lull by focusing on income generated through services, rather than credit products, and investing in technology so operations run quickly and smoothly and at a lower cost. 

Bradesco spent an impressive 5bn reais ($1.86bn) on infrastructure, information technology and telecommunications in 2014, which helped in the rollout of services such as depositing cheques through customers’ mobile phones or immediate transfers through ATM machines. 

Bradesco chief executive Luiz Trabuco Cappi is rightly proud of the bank’s financial results for 2014, which include net profits almost 26% up on 2013, return on equity of more than 20% and a non-performing loan ratio of 4.3%. He points to Bradesco’s financial solidity as one of the elements that differentiate the bank from its domestic competitors. “One of our main concerns was to keep the default indicators for the different credit lines, for corporate and individual borrowers, under control. Financial solidity is… an important ally in helping us get through this period of [economic] changes in Brazil,” he says. 

As Brazil is set to close 2015 in recession, keeping a healthy product book and the right risk tools is of particular importance for Bradesco. This will be ever more important as the bank will enter 2016 as significantly larger after its acquisition of HSBC’s local business. Mr Trabuco Cappi says that the former competitor adds a highly complementary portfolio to his bank. “Our main challenge is to carry out an efficient incorporation of HSBC do Brasil. We have great expectations as we see that the attendance network and client portfolio are complementary and this [will allow] us to offer new products and services,” he says.

British Virgin Islands: Scotiabank (British Virgin Islands)

A long-standing player in the Caribbean, Scotiabank (British Virgin Islands) weathered the economic troubles afflicting the region with nimble solutions for retail, wealth management and corporate clients. 

Its online service received a boost thanks to self-service areas within branches, as well as training provided at the branch on how to access and use online services. New products were created, such as variable rate mortgages that offer the option to switch to a fixed-rate product after only one year and at no cost, while campaigns that promised competitive rates and fees were launched to win customers from the competition. New, more flexible deposit products were also created with the idea to offer terms and channels that better suit customers’ preferences and needs. 

The bank’s corporate division strengthened its credit management with a new risk analysis tool, which also helped to offer more customised products than those currently available on the market. Cash management solutions were improved, as was the bank’s merchant network, which now utilises chip technology. 

Scotiabank also created a new feature for processing online wire payments for commercial customers.

The bank’s efforts on risk management and on compliance were strengthened further, clients’ profiles were regularly monitored to preserve their financial health, and early alerts and quick reaction times kept payment delays and delinquency levels low.

Scotiabank (British Virgin Islands) was also quick to adapt to the US’s Foreign Account Tax Compliance Act as well as to Basel III rules on deposits and on how these relate to capital coverage.

Thanks to such initiatives, Scotiabank recorded a 17.3% return on equity for 2014, higher than 2013’s 16.9%, a decreasing non-performing loan ratio of 2.31%, and a 53% cost-to-income ratio.

Canada: TD Bank

In its award entry to The Banker, TD Bank wrote that it must adjust to a world of slower revenue growth, faster competition and higher expectations. And it seems the lender has done exactly that – and more. While its main competitors struggled to expand profits, TD closed 2014 with pre-tax profits about 10% higher than in 2013. 

It also innovated across product lines – from e-wallets to digital cheque deposits – and expanded its geographical reach. The bank made it easier for clients with US interests to open a US account from any TD Canadian branch, for example. And the bank is expanding its footprint on the other side of the Atlantic, as it consolidates its UK acquisition of NatWest’s broker business into TD’s European division. 

TD Bank group president and chief executive Bharat Masrani believes that the bank’s secret is to focus on customers’ basic needs. “Our industry is changing at breakneck speed. But it is and will always remain a business about fulfilling human needs. Because at the end of the day, everyone at every stage of their life wants to feel secure, wants to pursue happiness, wants to be treated with respect,” he says. 

Mr Masrani recognises the importance of the bank’s staff to its current and future success. “I am thankful that our colleagues don’t stop thinking about how we can be better; how we can do better,” he says. “TD has a long-standing tradition of raising the bar and redefining what it means to be a leader in service and convenience. New technologies and collaborations promise us new ways to stand out. But we won’t innovate for innovation’s sake. Our focus will remain on serving the real needs of our customers and clients – seamless interactions, personal advice and human experiences. That’s how we will win in this new era of banking.”

Cayman Islands: Butterfield Bank (Cayman)

A solid performance and the acquisition of a large competitor were Butterfield Bank (Cayman)’s most obvious achievements in 2014. The lender closed the year with net profits one-third higher than the previous year and a return on equity just under 20% – well above other lenders operating in the country. 

This was achieved while integrating HSBC Cayman’s personal and corporate banking businesses. This resulted in a 24% increase in assets and substantial growth in net income of more than 32%, year on year, according to Conor O’Dea, president and chief operating officer of the Butterfield Group and managing director of Butterfield Bank (Cayman). 

Furthermore, the lender was the first in the country to introduce chip and PIN technology to its credit cards. It improved security on its digital channels and expanded its rewards programme. 

Butterfield has continued to invest in innovation throughout 2015, too. In June, it fitted merchants with wireless point-of-sale devices, a solution that when paired with the newly introduced chip and PIN technology is particularly useful in the tourism industry as a suite of restaurants and outdoor kiosks can now offer it to customers. At the same time, these small businesses benefit from the increased security the technology gives. Butterfield Bank (Cayman) is also set to play a larger role in the wider Butterfield group as some regional back-office functions are now carried out from the country. 

Butterfield’s declining cost-to-income ratio in the Cayman Islands gives hopes of wider efficiency across the group. “Butterfield has enhanced its position as a leading community bank in Cayman and we will continue to build upon that momentum,” says Mr O’Dea. “With our recent restructuring, a number of key group functions are now led from Cayman, which allows for streamlining and harmonisation of products and processes, and provides opportunities for greater efficiency across the Butterfield Group.”

Chile: Banco Santander Chile

Although Chile is one of Latin America’s most developed and stable banking markets, changes in regulation have caused more than a few headaches to local lenders. Despite the new rules and an economy experiencing slow growth, Banco Santander Chile closed 2014 with healthy financial results.

Chief executive Claudio Melandri is particularly proud of the expansion of the bank’s Select services, geared to high-income customers, which saw eight new specialist branches added to the existing 54 in the country. Furthermore, all retail clients benefited from better digital services and simpler processes at the branch. 

On the corporate side, Santander launched a training programme for small and medium businesses, and opened centres specifically to enable corporate clients to receive a more specialised service. At the same time, in the middle and back offices, stronger internal controls reduced the number of potential regulatory issues. 

These initiatives proved particularly successful and pushed up both profitability and credit quality, according to Mr Melandri. “One of our most important achievements during the year has been the development of our client segment management models, including the Select segment model for high-income individuals [and] the new branch model for middle-income individuals. In addition, the transformation of our middle-market corporate segment through a new commercial model has also been successful. We gained market share and improved our financial and non-financial results,” he says. 

Indeed, Santander reported a 25.3% increase in net profits in 2014, a return on equity of 22.5% and declining non-performing loan ratio – 2.8% compared with 2.9% in 2013 and 3.2% in 2012. Mr Melandri is keen to further cement the bank’s strengths in both the retail and corporate segments, creating better products and services to meet the specific needs of different segments.

Colombia: Bancolombia

One of Colombia’s leading banks, Bancolombia has posted impressive financial results, while launching strong local initiatives and growing its presence throughout Latin America. Net profits for 2014 were 24% up on 2013, while online and mobile banking initiatives have been launched, and the takeover of HSBC’s Panamanian operations was completed at the end of 2014. 

Chief executive Carlos Raul Yepes is keen to detail a series of products that beefed up Bancolombia’s savings account numbers, in the process bringing more Colombians into the banking system. These have involved savings accounts that can be opened from a mobile phone, pre-approved savings accounts, and partnerships with micro and small businesses in urban and rural areas. 

With Easy Taxi, for example, consumers can conveniently pay for their ride using a debit or credit card, while taxi drivers who have joined the initiative have automatic access to the simplified savings account, even if they had no previous banking relationships. The same account was offered to park rangers, who also benefited from BanCO2, a tailor-made payment system for their services. 

The bank is also proud of its far-reaching presence in Colombia, where it has three quarter of municipalities covered and is present in all Colombian states. It has also expanded in Central America, thanks to its new operations in Panama, which build on its existing businesses in El Salvador and Guatemala.

Its investment in technology is also spread across domestic and international businesses, with projects that have developed multifunctional ATMs this year and seen data centres opening in El Salvador and Panama.

As for the future, Mr Yepes says Bancolombia will focus on both strengthening relationships with customers and creating products that better fit their needs. “We do not want to sell products; we want to be allies, advisors and to offer products that people really need,” he says.

Costa Rica: Banco Nacional de Costa Rica

In 2014, Banco Nacional de Costa Rica not only closed its balance sheet with phenomenal profit growth, it also played an important role in supporting Costa Rica’s economy with social and environmental projects. In the mortgage market, for example, the lender focused on local currency products to reduce foreign exchange risk for customers that were used to US dollar loans. 

In energy, Banco Nacional has successfully provided financing to hydroelectric and wind farms, which will help Costa Rica become carbon neutral by 2020. In the micro and small and medium-sized enterprise (SME) segment, it has expanded the size of its loan portfolio and worked with female entrepreneurs and small exporters. Furthermore, the bank has made progress in its multichannel service and has implemented the first mobile payment services in the country with the support of local authorities.

Such initiatives helped to more than double net profits in 2014, which, more impressively, were achieved while Costa Rica’s economy had started to decelerate. “The main challenge [in 2014 was] the slowdown of the economy. Our customers have been more cautious,” says Banco Nacional de Costa Rica general manager Juan Carlos Corrales. 

“But we have been able to focus on [growth] areas, especially SMEs, mortgages and consumer credit. We have launched a new mobile phone electronic payment service, which will make paying easier and keep us on the front line of financial technology in the country.”

As for the future, Mr Corrales sees Costa Rica’s low banking penetration coupled with its growing population and urbanisation as the bank’s biggest opportunity for growth. “We plan to increase our market share in the SME segment, and to continue supporting energy and infrastructure projects. Our mission as a bank is to contribute to the growth of the country and to increase financial inclusion,” he says.

Dominican Republic: Banco de Reservas

Banco de Reservas has recorded record profits and improved its non-performing loan ratio for the past two years. A focus on cross-selling initiatives resulted in higher product penetration per client, while in retail it updated the branch business model and expanded the retail loan portfolio by 33% while more than doubling credit card issuances. On the corporate side, Banco de Reservas concentrated on high-value transactions, both in capital markets and syndicated loans. 

Such efforts resulted in a large bond issuance to US investors under the 144A/Regulation S rule, a first for a Dominican Republic bank, and in a loan portfolio 18% larger in 2014 than it was in 2013. The bank’s work more broadly benefited the country’s economy, with initiatives launched to attract foreign visitors, serve its citizens abroad and facilitate international trade. 

In the tourism sector, Bunco de Reservas created a business development unit to help develop hospitality projects across the country and contribute to the national goal of attracting 10 million tourists by 2020. Among these is the first Nickelodeon hotel outside the US, which is currently being developed in the eastern part of the Dominican Republic. The bank also created a remittance unit and launched an electronic factoring platform for its outward-looking clients.

As for its commitment to investors, chief executive Enrique Ramírez Paniagua’s focus for the next few years is on improving profitability further. “BanReservas will continue to focus on [top]-rated customers, allowing the bank to increase its financial performance while maintaining high asset quality and non-performing loans coverage,” he says. 

Mr Ramírez Paniagua has plans to increase the bank’s Tier 1 capital, which has been growing in the past two years.

Ecuador: Produbanco

In 2014, a change in regulation in Ecuador created a system of rules and supervision affecting sectors from credit to foreign exchange to insurance. Adapting to a new regulatory environment often means losing profitability, so it is particularly impressive that Produbanco closed 2014 with net profits more than one-third higher than in 2013. 

The bank also changed ownership in 2014, coming under the stewardship of Panama’s Grupo Promerica and merging operations. Banco Promerica Ecuador’s chief executive, Ricardo Cuesta, is keen to highlight the successful consolidation of the two institutions. “The result is rewarding. Produbanco is an organisation with experience, and a wide portfolio of products and services. The decision to join forces has made the most of market opportunities, as together we will be able to provide greater added value for our customers,” he says. 

The consolidation with Promerica allowed Produbanco to improve its terms of funding in the wholesale markets while maintaining its traditional strong savings and checking accounts. Furthermore, the lender expanded its initiatives in mobile banking as well as its products and services for small businesses. The bank is proud of its strong liquidity ratio, which is above Ecuador’s banking market average, and its solvency ratio, which is comfortably higher than the minimum required. 

Mr Cuesta says: “We have great expectations for [2016]. We will continue to work to the high standards we have always held, with the same reliability as ever, focusing on improvement, innovation and the development of new solutions to respond to all our customers’ needs.”

El Salvador: Banco Agrícola

Being a bank in El Salvador is particularly tough. Over the past decade, the economy has remained stagnant, while the country has continued to be afflicted by crime and violence. Banco Agrícola has provided support to small and large companies across the tourism, manufacturing, services and crafts sectors, and served retail customers with an extensive branch network.

The lender has invested to expand its alternative channels so that customers can now use 700 service points in addition to its branches. This has helped it to reach new clients, provide a better service to existing ones and improved banking penetration in the country. 

Judges were also impressed by Banco Agrícola’s technology projects. These included the creation of a larger data centre, the introduction of automation in wider parts of the bank and better security across its networks. The projects also allowed for major changes in the way customers can purchase banking products. 

Following the introduction of new legislation, the bank was the first to be authorised to accept electronic substitutes to handwritten signatures for the purchase of banking products. As a consequence, Banco Agrícola quickly added a self-service option to its ATMs so customers could purchase its salary advance product from such outlets. 

“High competition and slow economic growth have raised important challenges for us,” says chief executive Rafael Barraza. “[But] the adoption of the financial inclusion and electronic signature laws gives us the opportunity to innovate [and provide] new financial solutions for our clients. [We want] to continue deepening banking penetration in the country through more products and transactions in our network of financial correspondents and other channels.”

Grenada: Scotiabank Grenada

The economic troubles that have afflicted Grenada since the financial crisis have finally given way to some initial signs of growth. However, the local banking sector is still confronted by low consumer confidence and high levels of delinquency. 

Scotiabank Grenada remained committed to the market throughout the downturn and has readjusted its products to the current environment. In the depressed housing market, for example, it won over profitable businesses from competitors thanks to a competitive mortgage switch programme, and to a series of seminars and fairs to help customers’ financial education and promote the brand. As a result, and despite the tough environment, Scotiabank’s personal loans portfolio, which includes mortgages, not only remained stable, it marginally grew in 2014. 

The bank became more competitive in its credit card business too. With the growth of e-commerce, credit cards started becoming more readily available to consumers and increasingly similar to each other with their terms and services. Scotiabank effectively stood out from the competition thanks to a wide range of benefits, including a generous cash-back programme.

In addition to bringing in new customers, the lender put great effort into improving the profitability of existing ones through more targeted cross-selling activities and incentives to use additional banking products and services. 

Furthermore, the bank reduced the cost for cash management products so that they would be more affordable to small entrepreneurs, and expanded its training and mentorship schemes. Such efforts continued throughout 2015, with the launch of a $50m fund dedicated to small and medium-sized enterprises which has been used to subsidise the cost of financing for companies that have the potential to boost the economic output of Grenada and the eastern Caribbean region.

Guatemala: Banco Industrial

Banco Industrial’s excellent financial performance was accompanied by equally impressive investments in technology and the launch of new products. The lender leveraged its leading position as a foreign exchange provider, secured large syndicated loan transactions and expanded its remittances business. It created solutions for micro entrepreneurs, mass-affluent customers and mobile banking users. A stronger focus on alternative channels and a new cost-cutting strategy improved the bank’s efficiency ratio as well as customer satisfaction. 

All of this contributed to a net profit growth of 27% in 2014 compared with 2013, a return on equity of 21.7% and an improved cost-to-income ratio of 53.5%. All of this was achieved in a market that is becoming increasingly competitive as foreign banks take greater interest. 

“Competition has been more aggressive as foreign banks have entered the Guatemalan market, consolidating their position in the country and taking advantage of the low banking penetration. Interest rate margins have narrowed, especially in the corporate segment, in which we have a large market share,” says Luis Prado, the international division manager at Banco Industrial. “It has been challenging, [we had to be] more aggressive with interest rates, but domestic banks are still dominating the market in Guatemala.

“We will continue growing our participation in higher margin retail loans. We also see opportunities to grow our corporate loans through project finance in the agro-industrial sector.” 

As for the future, Banco Industrial’s holding company, Bicapital Corporation, has filed for an initial public offering on the New York Stock Exchange that it expects to launch in 2016. 

Honduras: Banco del País

Low growth and high levels of poverty characterise Honduras’s economy. More recently, the deterioration of the fiscal deficit prompted tax rises, which had a negative effect on employment and economic growth, according to Banco del País’s chief executive, María del Rosario Selman-Housein. 

“Our main objectives are increasing our market share as well as our profits but the economic outlook for the country has made reaching our growth and profit forecast a challenge,” she says. Despite this, the lender closed 2014 with net profits higher than in 2013 and a healthy return on equity of 21.18%. 

Key to this performance were initiatives that improved efficiency – Banco del País’s cost-to-income ratio is just 24.18%. These initiatives included the creation of a unit dedicated to the expansion of alternative channels and of the variety of products that can be offered through them, as well as a unit that specialises in small and medium-sized enterprises (SMEs). The bank also created services for clients that have operations outside the country. Banco del País’s debit and credit card networks saw a 21% growth in transactions, compared with just 7% on average over the whole banking system. 

 “Our main challenges have been increasing our efficiency standards without affecting customer service,” says Ms del Rosario Selman-Housein. 

“We worked hard towards increasing our productivity as well as improving our internal processes. We have broadened our offer of electronic and mobile applications, and [created] a new regional electronic platform for clients who also operate in El Salvador and Guatemala. We have successfully developed a completely new line of business for SMEs, which helped us increase our market share in this segment exponentially. We continue to strengthen our retail banking division, specifically in our credit card and consumer business, through strong alliances with leading local brands.” 

Jamaica: National Commercial Bank Jamaica

After two sovereign debt restructurings in the past five years and a series of structural reforms imposed by the International Monetary Fund (IMF), Jamaica’s economy is still shaky. Despite improved investor confidence in the local business sector and the sovereign, youth unemployment is still worryingly high and gross domestic product growth is flat. 

National Commercial Bank (NCB) performed well in this environment. It moved the trajectory of its net profits upwards, after drops in previous years, and closed 2014 with the figure 36% higher than it was at the end of 2013. At the same time, it moved its cost-to-income ratio downward, to 63.8%. 

NCB has also invested to create self-service areas in its branches, which increase the speed of service for customers and improve efficiency at the bank. Furthermore, it invested in technology to improve mobile banking and services delivered on the phone. It also partnered with the Inter-American Development Bank to create a training programme to encourage the growth of small businesses.

“During the past year, our main challenge was transforming our business to maintain and improve our performance in a difficult economic environment, and within the context of the necessary IMF programme of reforms that has guided our country’s fiscal policy,” says NCB group managing director Patrick Hylton. 

“The main successes achieved by NCB are our move towards digital banking and the new alternative channel options we provide, primarily through the implementation of our ‘Bank on the Go’ self-service ATMs. NCB remains the market leader in ATMs and point-of-sale machines, and this strategy has helped us improve performance and achieve higher standards of customer satisfaction.”

Mexico: BBVA Bancomer

One of Mexico’s largest banks, BBVA Bancomer recorded solid results for 2014, particularly in its corporate and consumer loans and deposit products. This was achieved despite slower-than-expected economic growth in the country. Of note was the bank’s investment in technology and the progress it made in serving wider parts of the population. A total of $3.5bn has been invested to renovate systems and terminals at branches and in business buildings, to launch a digital banking unit and complete the bank’s data processing centre, which can now serve financial transactions for all the group’s subsidiaries in Latin America.

The growing focus on alternative channels resulted in a major increase in the number of consumer loans granted though such media, which now represents 15% of the total consumer loan portfolio. Furthermore, the bank launched a mobile wallet solution for smartphone users. It also offers new digital products to low-end customers with the aim of attracting more users to electronic services – a strategy that will result in lower costs and greater online sales potential.

BBVA Bancomer’s branch services dedicated to small businesses continued to prove popular, as were credit cards that allow the separate management of personal and business finances.

BBVA Bancomer general manager Eduardo Osuna says: “We are developing a new strategic plan for the next four years. This plan will be based on a better customer experience, digital sales, new business models, [optimum] risk control and the optimisation of capital allocation, efficiency, ethics, reputation and social responsibility. It is aimed at [confirming] BBVA Bancomer as one of the best franchises of BBVA and to improve the quality of the service we offer to our customers.”

Nicaragua: Banco de la Produccion

It is not only international monetary policies, trade patterns and political uncertainty that are affecting economies in Latin America and the Caribbean. Climate activity has also taken its toll. The El Niño phenomenon has been changing weather patterns across the globe but has hit Central America particularly badly. 

Banco de la Produccion’s chief executive, Luis Rivas, names this as one of the main challenges that the lender has faced over the past two years as its agricultural clients saw output drastically cut by drought. The bank’s work with business clients proved effective, however. Loans to small businesses grew by 27.6% in 2014, while small business non-performing loans made up only 2.1% of the bank’s total portfolio. 

Banpro has also invested in technology and alternative channels. It has expanded on its merchant network and launched its first e-wallet – a new product in Nicaragua. As a consequence, by the end of 2014 more than one-third of all transactions ran through alternative channels, compared with one-quarter only three years earlier. The bank closed the year with an 18.6% annual net profit growth, 21.7% return on equity and non-performing loans of only 0.6%.

“Being able to develop and implement innovative alternative channels for our customers has been a great achievement for the bank,” says Mr Rivas. “Our non-bank correspondents have grown exponentially, as have transactions on this channel. Also, our e-wallet has a promising future and it will contribute to generating higher fee income. [In the future, we want to] give our customers a uniform experience using all our different electronic channels.”

Panama: Banco General

The largest bank in Panama, Banco General consistently provides a healthy income to shareholders, shows a solid capital base and runs efficient operations, and 2014 was no different. The lender closed the year with net profits 14.8% higher than in 2013, a return on equity of 20.72% and a cost-to-income ratio of 37.06%. The quality of the loan book was also impressive, with non-performing loans a small 0.84% of total.

One of the bank’s strengths lies in its solid client base, which provides a stable source of funding. Total deposits grew by 8.6% in 2014 and the 25.6% market share in retail deposits was the highest in Panama. At the same time, the bank’s strong asset quality confirmed its investment-grade rating by Standard & Poor’s and Fitch.

Banco General’s efforts to provide alternative channels have helped too, and made the delivery of its products faster and cheaper. 

Online banking services represented 29.3% of all transactions for Banco General in 2014, against 12.6% only five years earlier. Mobile banking, which was launched by the bank only in February 2013, had more than 145,000 users as of December 2014. Meanwhile, the introduction of automation in call centres improved efficiency thanks to client recognition technology and the automation of outgoing sales campaigns. 

The bank intends to expand on its physical network, too, by growing the number of merchants that can serve its banking customers. Small businesses received particular attention through a team dedicated to analysing their behaviour and needs with the ultimate goal of protecting companies’ finances and their ability to meet repayments.

As for the future, Banco General aims at improving its analysis and segmentation of retail, wealth management and corporate clients to provide better service and increase its cross-selling capabilities.

Paraguay: Sudameris Bank

Since its takeover by private equity firm Abbeyfield Group a decade ago, Sudameris Bank has approached lending conservatively, basing decisions on sector knowledge, risk analysis and repayment capacity rather than collateral. This strategy had proved successful. But the slow economic growth of Paraguay, as well as the worsening conditions of its neighbouring major trade partners and of Latin America in general, slashed growth assumptions for many of Sudameris’s clients. 

The bank successfully and quickly adapted to the new environment by offering businesses better trade finance, as well as import and export products. Furthermore, investment in technology resulted in an upgrade of the lender’s internet banking platform, allowing all retail and commercial clients to carry out any type of operation through the bank’s online portal. Thanks to these initiatives, the lender closed 2014 with a 28% net profit growth and a return on equity of 19%.

On the capital front, Sudameris has placed itself comfortably ahead of the new capital requirements soon to be introduced in Paraguay. The bank has been steadily raising capital over the past few years through the capitalisation of retained earnings, which strengthen its Tier 1 capital ratio, and through the issuance of subordinated convertible bonds to raise its Tier 2 capital ratio. 

Abbeyfield chief executive Sebastien Lahaie says: “Sudameris Bank has been able to read correctly the changes [affecting] our market – lower consumption and lower commodity prices, among others – allowing us to help our clients dealing with the new challenges that the region is facing.

“Having Argentina and Brazil as our main neighbours always creates a certain level of uncertainty. [But economic and political] problems in Brazil will present opportunities for Paraguay to become an alternative production centre for companies working in the region looking for a more stable base. We are working to attract such companies.”

Peru: Interbank

Peru’s low banking penetration poses a serious obstacle to the country’s economic growth. But initiatives by both government and private sector firms are set to improve the situation. Interbank is proud of its focus on retail customers and digital platforms, which have the potential to reach wider parts of the Peruvian population. This strategy also responds to the growing needs of the country’s expanding middle class and has proved highly profitable, too. 

Interbank closed 2014 with a 25.5% return on equity and net profits 9.5% higher than in 2013 – despite a slower growing economy. Furthermore, its non-performing loans (NPLs) were relatively low at 2.5% of the total portfolio. Chief executive Luis Felipe Castellanos says: “In the past year we have operated in a lower gross domestic product growth environment, with increased NPLs across the system and higher funding costs, yet [there was still] the need to continue increasing financial inclusion in Peru.”

Interbank upgraded its mobile banking app, and invested in new software and credit modelling solutions to provide more accurate credit decisions through its alternative channels. It also introduced a model to measure the profitability of individual branches and ATMs so that resources could be allocated accordingly. This contributed to higher incomes but also to better efficiency – the bank’s cost-to-income ratio decreased to 46.6% last year. 

Mr Castellanos wants to push ahead with a more efficient, digital and smarter Interbank in the future. “Our focus continues to be centred on people,” he says. “We need the best talent in order to continue the transformation of our platform towards digital services. The local market will continue to grow and the emerging middle class in Peru will demand more financial services. We need to be prepared for new ways of doing banking and delivering our services.”

Puerto Rico: Banco Popular de Puerto Rico 

The repayment of the government funds that supported Banco Popular de Puerto Rico after the financial crisis was a significant achievement for the lender, which closed 2014 with a much stronger capitalisation as well as much higher net profits than in 2013. This is a major achievement, especially as Puerto Rican fiscal and economic conditions are far from ideal. In 2014, the bank restructured its presence in the US, resulting in the sale of operations in Illinois, Florida and California, and the centralisation of certain back-office functions in Puerto Rico and New York. 

Banco Popular de Puerto Rico’s chairman and chief executive, Richard L Carrión, says: “We have operated in a weak economy in our [local] market for nine years and we have continued to deliver positive results by refocusing our business as necessary. We completed the restructuring of our US operations and we are encouraged by the results we are seeing. We continue to enjoy strong capital levels relative to our peers and regulatory requirements, [and we] were able to reinstate a quarterly dividend for our shareholders.”

The bank also ramped up its efforts in alternative channels. It attracted more users to online and mobile banking, launched social media campaigns and increased the number of ATMs that provide deposit services. “The improvement of the retail network will not stop here,” says Mr Carrión. He plans to improve service as well as the efficiency of operations through better platforms. 

Mr Carrión also sees potential in the loan market and the bank’s newly restructured US business. “Future opportunities could include selective loan portfolio purchases, continued growth in our US operation, commercial lending growth by targeting specific niches, and the ongoing transformation of our retail delivery network [which will lead] to customer convenience and greater operational efficiency,” he says.

Trinidad and Tobago: First Citizens

The oil and gas-driven economy of Trinidad and Tobago has been hit by the slump in oil prices in the past couple of years, which has reduced the sector’s demand for loans. At the same time, high liquidity generally present in the local market has kept interest rates down. Achieving any meaningful growth has been a challenge for the country’s banks. 

First Citizens closed 2014 with better returns on equity and non-performing loans (NPLs) than the sector’s average, at 10.27% and 4.54%, respectively. It managed to expand its loan portfolios and investment products both domestically and across its operations in the Caribbean region – the lender serves five countries through 32 branches and 110 ATMs – while also retaining a conservative approach to risk and expense management. Of note is First Citizens’ new governance code, which deals with insider trading and conflicts of interest, and which is aimed at reducing reputational risk for the group. This is of particular relevance now that the lender is listed on the local stock exchange.

“Despite the challenges [in Trinidad and Tobago], we have been able to grow our loan and investment portfolio while simultaneously focusing on asset quality to improve delinquency ratios and NPLs,” says group chief executive Karen Darbasie. “Our fee-generating businesses including electronic banking and local capital markets, both debt and equity, have grown. In addition, we are seeing the positive impact of past investments in our businesses in Barbados and Costa Rica.” 

Ms Darbasie is keen to focus on digital products in the future. “As spreads remain compressed, we will focus on our non-interest income products, which have shown good growth within the past year, with specific emphasis on our electronic banking platform,” she says.

Uruguay: Banco de la República Oriental del Uruguay

Uruguay enjoys one of the highest per-capita income levels in Latin America but still suffers from low banking penetration. To help remedy this, the country’s government passed a financial inclusion law in 2014 that requires wages and pensions to be paid into an account in the formal financial system. This has obvious benefits for Uruguay’s banks but, says Julio César Porteiro, president of state-owned Banco de la República Oriental del Uruguay (BROU), also comes with the responsibility of meeting government’s expectations. 

BROU’s work to assist retail customers as well as the local business community has not gone unnoticed. The number of BROU customers continued to grow in 2014, in line with the government’s financial inclusion goals, and this figure now represents one-third of the country’s population and more than half of the banking system’s total customers. 

The bank increased its geographical presence and service coverage with a larger number of outlets, more ATMs as well as larger numbers of telephone, internet and mobile banking services. Mobile banking users can now pay for their bills and public utilities through their smartphones. Furthermore, BROU promoted the use of its debit cards and expanded the list of retailers where they can be used – something that also helps to meet the country’s financial inclusion goals. 

Mr Porteiro says: “BROU is the main financial institution in Uruguay, and as such it aims to lead the financial inclusion process that is taking place in the country. This has [put pressure on] the bank [as it requires] constant efforts and ongoing improvement in products and processes in a highly competitive market. Together with maintaining a comprehensive offer of products and services, our bank focuses on expanding the loans granted to the [productive] sector, specifically to small and medium-sized companies, a key sector for the social and economic development of Uruguay.”

US: Wells Fargo

The US economy still presents a number of challenges to local banks, not least because of the long-standing low-interest-rate environment. At the same time, consumer confidence is at a record high since the financial crisis and, although the housing market has not returned to its pre-crisis peak, home ownership remains an aspiration for most Americans. 

Seemingly unfazed by an uneven macroeconomic picture, Wells Fargo produced yet another year of record earnings in 2014, with net profits of more than $23bn, while maintaining its traditionally cautious management style. It expanded both its deposit and loan portfolios, grew its number of customers, improved credit quality and risk management practises as well as capital and liquidity levels. In particular, capital levels increased even as the bank 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.

Furthermore, along with Blackstone, the bank purchased most of the assets of GE Capital Real Estate in a transaction that has given Wells Fargo a stronger presence in commercial real estate in the US, the UK and Canada.

The bank is proud of its commitment to small and medium-sized enterprises (SMEs). It set a five-year goal to extend $100bn in new small business loans by 2018, of which about one-quarter has already been disbursed. Its commitment to SMEs resulted in the launch of a start-up accelerator programme where Wells Fargo mentors and connects selected early-stage companies with business and tech leaders inside the bank. 

The bank’s technology focus has been felt across its alternative channels too. For example, Wells Fargo is piloting a service on its mobile app that redirects customer securely to an advisor when needed. This is done through a phone icon and without the need to re-authenticate the customer, improving level of service and overall user experience.

Venezuela: Mercantil Banco Universal

Venezuela is something of an unusual banking market. While the economy has turned for the worse, with recession predicted for 2015, a number of factors are keeping the country’s banking sector highly profitable. 

Mercantil Banco Universal closed 2014 with net profits 44.5% higher than the previous year and a return on equity of 50.1%. But what impressed The Banker’s judges most was the lender’s initiatives to provide better service to customers as well as to strengthen risk management. Mercantil provided a new online service to its corporate clients that cuts loan assessment and disbursal times – the first such service for working capital available in the Venezuelan market. Businesses can now also set up foreign exchange orders online and collect payments on bills and utilities electronically. 

The focus on alternative channels was equally felt by retail customers, who benefited from new self-service points and new online tools. Customers responded well to such initiatives and the number of electronic transactions grew by 15% in 2014.

Mercantil’s well-diversified deposit base is a great source of stable funding, and this also grew further last year. As of December 2014, the bank registered a higher growth in the number of accounts than its peers; it reached a market share of 20.7% in savings accounts.

Mercantil Banco Universal’s chief executive, Nelson Pinton, says: “Mercantil was able to maintain a diversified, high-quality loan portfolio, anticipating changes in economic conditions and reducing concentration in [riskier] economic sectors. As a result, the bank preserved sound credit portfolio quality and recorded significant provision levels. Mercantil will continue financing the Venezuelan productive sectors by growing its loan portfolio, [while] preserving its prudent provisioning policies, so to protect future income.”

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