The Bank of the Year winners from the Americas.

Argentina: Santander Río

Running a business in Argentina, whether in the financial sector or elsewhere, is not always straightforward. Discredited official inflation data makes planning more arduous and sudden changes in regulation can potentially harm businesses. Last year, Argentina’s banks were faced with new rules that capped interest rates charged on certain loans to most lenders, while also demanding that half of such loans were directed to small and medium enterprises (SMEs). 

Santander Río successfully turned these challenges into an opportunity to increase its penetration in the small business sector and in turn achieved a greater share of payroll services business from its SME customers. The bank also retained its market leadership in private sector loans and deposits, and closed 2012 with an exceptional return on equity of more than 40% and also strengthened its Tier 1 capital, which rose by almost 43% year on year.

Chief executive Enrique Cristofani says: “We were able to balance our short-term objective, which is to continue to be the most profitable and efficient private sector bank in Argentina, with our long-term mission of focusing on investment to improve our products and service quality, and expand our business in order to capture new customers, most of them currently unbanked.”

Despite peculiarities in the Argentine market, Mr Cristofani remains optimistic about its potential and plans to focus Santander Río’s efforts on capturing individuals who currently make a limited use of banking products, as well as growing the bank’s presence in the profitable and lower risk mid-size corporate segment. 

“We expect loan demand to grow at a good pace, along with economic activity. Argentine financial credit quality indicators remain exceptional, and both families and companies have an extremely low level of indebtedness. Our objective is to continue to lead credit growth with a focus on middle-market companies,” says Mr Cristofani.

Bahamas: CIBC FirstCaribbean International Bank (Bahamas)

Despite the ongoing economic challenges facing the Bahamas and the Caribbean region as a whole, CIBC FirstCaribbean International has managed to consistently deliver a good return to shareholders over the past few years – close to 10%. In addition, it has maintained non-performing loans under control and improved its cost-to-income ratio. 

A variety of investments made sure that service to customers was improved. Rick Parkhill, chief executive of CIBC FirstCaribbean International, which includes a number of operations across the Caribbean, is particularly proud of the bank’s extended automated banking machines (ABM) network, both in the capital, Nassau, and across the country, giving easy access to international tourists wishing to withdraw US dollars. 

“In spite of the economic outlook for the Caribbean and many of its trading partners, with only modest growth forecast for many of the countries in which we operate, we see a positive future for CIBC FirstCaribbean in the Bahamas. Our focus is on the development of our branch network and ABM expansion, including the installation of dual currency ABMs and the introduction of new products tailored to meet the needs of our various customer segments,” says Mr Parkhill. 

Among these new products and services is the new Visa Debit platform, which now provides faster transactions whether executed at local or international points of sale, and a new set of retail products for employees of some of its corporate clients; something that has increased the bank’s penetration in the local market.

“Although [2012 was] a challenging year, we have continued our commitments to the community,” says managing director Marie Rodland-Allen. “[Next year] our sales approach will be more focused. Some branches are being upgraded and we also aim to introduce mobile banking,” she says.

Barbados: CIBC FirstCaribbean International Bank Barbados

Despite Barbados’s challenging economic conditions, CIBC FirstCaribbean International Bank has continued to grow the business and improve financial results. Thanks to better portfolio management and warning systems on deteriorating client credit circumstances, the bank was able to close 2012 with higher profits, deliver a good level of returns to shareholders and significantly reduce bad loans. 

“Improved results were largely driven by aggressive management of delinquencies and non-performing loans,” says Rik Parkhill, chief executive of CIBC FirstCaribbean International, which oversees a number of operations across the Caribbean. “We enhanced our oversight and governance processes to improve portfolio management and insight in order to encourage the early identification of deteriorating credit circumstances and allow for timely and effective remedial intervention. We also lowered risk tolerance and set higher standards in our credit adjudication processes.” 

Better revenues were also the result of CIBC FirstCaribbean’s diversified product offering and more tailored approach. “The bank diversified its revenue streams by placing additional focus on its treasury products. Retail and business banking and wholesale banking competed aggressively for loans within the market whilst helping businesses to survive as the island continued along the path of economic recovery,” says Mr Parkhill. 

Mr Parkhill plans to continue refining the bank’s product offering in the future, so that it matches the changing needs of clients in Barbados’s tough economic environment, as well as increasing its market share. “We will continue to focus on delivering tailored financial solutions to our different segments of customers. Our intention is to aggressively go after business in the Barbados market, partnering with our customers.” 

Bermuda: The Bank of NT Butterfield & Son

In a competitive market and low interest rate environment, Bank of NT Butterfield & Son’s chairman and chief executive Brendan McDonagh is proud of the bank’s cleverly tailored and innovative products, which have helped keep margins high. The bank’s strategy indeed delivered good results and after returning to profitability in 2011, Butterfield improved core earnings further last year – although net profits were lower. 

The bank also continued to move its Tier 1 capital upwards and managed to reduce the high cost-to-income ratio it had in the past. Cost was driven down by a more streamlined and centralised management of certain functions, such as expense management. Thanks to its more stable balance sheet, Butterfield was in a position to distribute dividends to shareholders.

“Butterfield is contending with a protracted period of economic difficulty in our retail markets,” says Mr McDonagh. “Higher unemployment and concerns about the timing of economic recovery have changed consumer behaviour, affecting transaction volumes and demand for credit. Despite market challenges, Butterfield’s core earnings increased by 45% in 2012. We have streamlined operations to manage expenses and upgraded electronic banking services for customers. Improved profitability and a strong capital position facilitated the reintroduction of common dividends and the implementation of share buy-back programmes.”

The bank will also benefit from the creation of a common banking platform for its retail products that has improved support services and cut costs. A new liquidity management product was also created for insurance and reinsurance firms, as well as other large institutional clients. So far it has attracted new deposits worth more than $370m.

“We will adjust systems, structures and product offerings to take maximum advantage of rate changes and economic recovery,” says Mr McDonagh.

Bolivia: Banco de Crédito de Bolivia

Part of Peru’s Banco de Crédito del Perú, Banco de Crédito de Bolivia refined its strategy last year and concentrated its loan portfolio on small and medium enterprises (SMEs) and retail banking, substantially growing each product. In particular, its auto loans and credit cards businesses expanded by 29% and loans to smaller companies rose by 27%. 

The focus on the SME segment also led to the creation of a forum to gather entrepreneurs’ success stories and to serve as both a networking and knowledge centre. At the same time as expanding such businesses, Banco de Crédito de Bolivia kept bad loans under control, recording the lowest non-performing loans ratio of the past four years, while also maintaining a high coverage ratio. 

Further, leveraging on the microcredit expertise of its Peruvian parent, Banco de Crédito de Bolivia partnered with two agencies in the cities of La Paz, the capital, and El Alto, to finance micro-entrepreneurs. The plan is to extend the network to other cities in Bolivia, which would all run operations through the technology and know-how of Edyficar, Banco de Crédito del Perú’s microfinance operation. 

The bank closed 2012 with good levels of net profits, although slightly smaller than the previous year, and a high return on equity of 16.6%. Its non-performing loans ratio was 1.2% and cost-to-income continued its descending trajectory – the ratio was 55.8% in 2012 against 63% and 71.2% in the previous two years.

Costs were reduced thanks to more efficient processes. The bank’s recent initiative to evaluate and revise internal procedures delivered excellent results last year. Speed of service and staff productivity improved significantly, particularly in the retail banking and the SME segments. 

Banco de Crédito de Bolivia also continued to invest in technology. This allowed for larger numbers of transactions to be carried out through electronic channels and, earlier this year, the lender launched a smartphone application, the first to do so in the country.

Brazil: Itaú Unibanco

Disappointing economic data has afflicted bank profitability in Brazil. However, despite closing 2012 with slightly lower net profits, Itaú Unibanco generated a very healthy 18.4% return on equity, while keeping its cost-to-income ratio and non-performing loans under control. The bank moved its focus to lower-risk products such as real estate finance where transactions are supported by bigger collaterals, and financing of large corporation and payroll loans, away from the previously booming and now high-risk consumer loan segment. The payroll loan business, in particular, is set to continue delivering interesting results. Itaú created a new lower-risk payroll loan business through the joint venture with Brazilian specialist BMG Banco and it plans to grow this portfolio to 30m reais ($13m) within five years. 

Chief executive Roberto Setúbal says: “[In the past few years], the main challenges have been adjusting the bank to a scenario of persistently lower growth rates since 2011; dealing with high levels of customer delinquency due to the increased personal leverage in Brazil; and operating at lower rates of interest since the reduction in the country’s benchmark interest rate. 

He adds: “Our strategy was redirected towards originating products with lower risk, increasing our revenue from service fees and focusing on efficiency. As a result, we have seen an improvement in the quality of our credit portfolio thanks to greater selectivity in the offering of credit, reducing risk.”

Mr Setúbal is keen to reduce risk further in 2014, as well as improving efficiency throughout the bank. Of the 10.4bn reais Itaú announced it would invest in technology, 2.3bn reais will be used to install a new data centre, improving the quality of information and service to clients. 

“We intend to continue to direct our efforts towards gains in efficiency and increasing revenue from a lower-risk credit mix,” says Mr Setúbal.

British Virgin Islands: Scotiabank British Virgin Islands

In the current tough economic environment afflicting the Caribbean region, Scotiabank’s business in the British Virgin Islands closed 2012 with higher profits, better return on equity and a stable non-performing loans ratio. 

“Scotiabank British Virgin Islands was faced with continued strong, protracted global and local economic headwinds. This was coupled with ongoing uncertainty around the direction of the economy; increased levels of unemployment; heightened competition, increasing business complexity and the ongoing need to keep pace with evolving needs of our clients,” says managing director Jason Waters. 

The bank overcame such challenges by creating new carefully designed products, including specific solutions for small businesses and self-employed individuals, as well as a mortgage ‘health-check’ for retail customers. The prudent management of resources and solid capital base reinforced Scotiabank’s reputation and helped it win new clients and expand existing relationships. 

Customers affected by the economic downturn have been offered prompt financial advice and debt consolidation solutions. A new centralised collection unit has helped to keep levels of delinquencies low and new training programmes mean that staff can match clients with the best fitting product.

In addition to a dire macroeconomic picture, Scotiabank was faced by more stringent regulation in its offshore business. The bank’s solid, internationally recognised name helped again to attract new offshore business, while the group’s international network broadened clients’ investment options, which now include new gold- and silver-based products. As for the future, Scotiabank plans to further extend clients’ investment options and provide better relationship management.

“We will be launching five new no-fee mutual funds, precious metals and a new adjustable rate mortgage,” says Mr Waters. “We’ll also be introducing a new business banking officer role aimed at providing a better client experience, more efficient processing and improved relationship management.”

Canada: Scotiabank

Traditionally a bank that had been favouring organic growth over expansion through acquisitions, Scotiabank could not shy away from taking over ING’s Canadian business, which made the Toronto-based lender the third largest in terms of deposit market share, and was the main driver of growth in residential mortgages and deposits, as president and chief executive Brian Porter points out. The group’s income was also supported by strong international operations and an additional carefully considered acquisition abroad.

“Our Canadian operations had strong earnings and by acquiring ING Canada, we became the third-largest Canadian bank in terms of deposit market share,” says Mr Porter. “Internationally, we benefited from growth in our diversified geographic platform across high-growth markets. We also completed strategic acquisitions, including a 50% stake in AFP Horizonte, Peru’s third-largest pension fund manager.”

Scotiabank closed 2012 with net profits 21.3% higher than the previous year and a healthy return-on-capital ratio, just under 20%. Since the financial crisis, the bank has indeed proved to be one of the few lenders out of the developed economies that have turned global market instability and a general lack of liquidity into advantages, relentlessly growing and strengthening the business. 

Scotiabank is set to continue to do so now that most international financiers face depressed macroeconomic data, low interest rates and heavier regulation, as well as rising levels of personal debt in Scotia’s home market. “[Last year] we continued to operate against a backdrop of slower global economic growth, a low interest rate environment and higher Canadian consumer indebtedness, increased competition and regulatory changes. But with challenges come opportunities, which we used to achieve strong results and very good revenue growth reflecting the value of our diversified business model and our focus on customers,” says Mr Porter.

Cayman Islands: Butterfield Bank (Cayman)

Despite some initial signs of economic recovery, banks in the Cayman Islands are still faced with slow corporate activity and high unemployment. Last year, however, marked a turnaround for Butterfield Bank, which after a loss in 2010 and a timid recovery in 2011, successfully doubled its profits in 2012 and brought its return on equity up to 11.88%. The bank says that core earnings increased by more than 150% in 2012. Although still high at 72%, its cost-to-income ratio decreased and non-performing loans adjusted to just over 2%. 

In the Cayman’s densely populated banking market, Butterfield fought off competition by introducing new products in the retail space and updating its online channels. Its mobile applications are also being improved to link with smart phone platforms, and a social media strategy is being defined to make more effective use of increasingly important communication channels such as Facebook and Twitter.

“Over the last 12 months, Butterfield in Cayman introduced a number of new retail products – notably a suite of mobile banking apps and new credit card products featuring airline rewards – that have been enthusiastically received in the local market,” says Conor O’Dea, senior executive vice-president of international banking for the Butterfield Bank group. “Cayman has a relatively large number of banks for a jurisdiction of 56,000 people, but despite competitive pressures and economic difficulties, we managed to grow deposits and posted strong profits.”

Mr O’Dea is optimistic about Butterfield’s growth prospects in the Cayman Islands: “As Cayman’s economy continues to recover, we are well positioned to assist with construction financing and the provision of complete banking and wealth management services to locals and expats who are returning to work in a reinvigorated international business sector.”

He adds: “Having made significant organisational changes over the last two years, we are of the right size and structure, and in the right locations to effectively manage increasing customer activity. Our previous investments in technology have enabled us to improve efficiency and electronic banking services for customers.” 

Chile: Banco de Chile

One of Chile’s best capitalised banks, last year Banco de Chile strengthened its presence in the consumer, microfinance and small businesses sectors, improved its long-term credit rating, which is now A+, according to Standard and Poor’s, and diversified its funding base thanks to access to new markets. In particular, with increasing competition and the introduction of more stringent consumer protection regulation, Banco de Chile improved its appeal to consumers, as well as its profit margins, with the introduction of an IT platform that enables customers in remote areas to carry out transactions at local retailers.

This has created more than 1000 points of service across the country and the ability to channel basic functions for current account holders through the platform in the future. Initiatives for small and medium enterprises (SMEs) also proved fruitful and new loan preapproval procedures, as well as reduced bureaucracy and greater use of government-backed and well-established lease and factoring products, resulted in an 18% increase in the SME loan business.

Chief executive Arturo Tagle is proud of the bank’s achievements, which include a return on equity of more than 23% and declining cost-to-income and non-performing loans ratios: “Last year was marked by fierce competition; the challenge of adapting our business mix in order to maintain the net interest margin. Despite low inflation and high competition from banks and debt [capital] markets, we maintained an outstanding income-generating capacity. For us, profitable growth is the key and then we strived to maintain a fair risk-return equation.” 

Greater focus on diversifying funding sources and efficiency will be crucial next year, as weaker economic data is expected. “Next year will be very challenging. We expect lower dynamism for the local economy and a weaker demand for credits. In this scenario, differentiation is crucial,” says Mr Tagle. 

Colombia: Banco de Bogotá

A leading bank in Colombia, Banco de Bogotá has been steadily growing its market share in particular in the credit card business, where brand partnerships with airlines and mobile phone companies contributed to a 114% rise of new issuance in 2012. The newly created mortgage business reached more than 190 towns across the country, while stronger and better defined payroll loans and banking insurance products for its retail customers and structured finance offering to corporate clients also contributed to beefing up the bank’s bottom line.

Banco de Bogotá closed 2012 with net profits almost 16% higher than the previous year and a healthy 18% return on equity, while it also continued to diversify its funding base and expand its Tier 1 capital by 15% over assets that have grown by 17%. 

The bank has been growing its presence in Central America too, more recently with the acquisition of BBVA’s business in Panama and Grupo Financiero Reformador in Guatemala this year. It also invested in its IT systems to improve efficiency and has strengthened its risk management practices.

Chief executive Alejandro Figueroa Jaramillo says: “We strive to present our customers with a regional business proposal leveraged on our strong franchise, financial soundness and experienced risk management. Our regional presence spreads over 11 countries, providing financial services to more than 15 million customers.” 

He continues: “In Colombia, we will continue our strategy of further penetration in the retail segment – mortgage, credit card, banking insurance, payroll loans – while maintaining our leading position in commercial banking. In Central America, we will be focused on the integration of Grupo Financiero Reformador and BBVA Panama to our operations. These acquisitions will consolidate our regional presence in Central America by strengthening our corporate banking operations.”

Costa Rica: Lafise 

Lafise cleverly and quickly changed its business model to capture business lost by international banks withdrawing from the country and Latin America in general. Traditionally, a lender that serviced medium to large corporations, Lafise swiftly added new consumer products to its offering, such as car loans, credit cards and mortgages. 

A new wealth management unit was created to target individual clients that had been previously using the bank for their businesses’ payroll and treasury management needs. In the corporate space, the bank added factoring and other products targeted at smaller businesses. Investments in technology complemented the efforts to build retail operations from scratch, and included the creation of online and mobile phone channels for clients. Lafise also improved its existing banking network, which can now handle the substantially larger number of transactions, originating both from the corporate division and the new retail operations.

A larger penetration in Costa Rica’s market meant that deposits grew year on year by a phenomenal 60%. Lafise’s efforts resulted in profits up almost 50% year on year, a growing return on capital, which went to 11.5% from 8.9%, a drop in cost-to-income and non-performing loans ratios at 69% and 1.51%, respectively. Attention was paid also to the bank’s capital base, where Tier 1 capital expanded by almost 20% on assets that grew by just over 26%.

“For the past three years, we had a very challenging task ahead of us: we needed to become a retail and commercial bank in a very short time, while at the same time maintaining profitability and sound financial indicators. We needed new products, new channels and innovation. This meant that we had to build it fast, very cost efficiently and generating revenues in the short term. We relied primarily on innovation and moved fast when we detected an opportunity,” says Mario F Hernandez, chief operating officer. 

Dominican Republic: Banco Popular Dominicano

Investments in investment and retail banking helped Banco Popular Dominicano strengthen its position in the local banking market. Its new internet banking platform Banca 360° integrated services to corporate clients and gave easier access to financial advice, public offerings and credit syndication services. 

In the retail space, chip technology was included in a new Visa debit card, the first of its kind by a local bank, while a new smartphone application and loyalty programmes with United Airlines, Continental and Copa Airlines helped boost the use of Banco Popular’s credit cards, further strengthening the bank’s leading position as a main issuer of MasterCard and Visa credit cards. 

Banco Popular’s corporate loans segment also grew, undoubtedly helped by the bank’s continued commitment to training for small businesses through its partnership with the Dominican Industrial Association. More than 1000 small and medium enterprises (SMEs) joined the training programme in 2012. SMEs were also offered a new credit card tailored to their specific needs.

Banco Popular closed 2012 with higher net profits, assets and Tier 1 capital. Its return-on-equity ratio was more than 20% and non-performing loans well under 1.5%.

Chief executive Manuel A Grullon is keen to point out that such results were achieved while a new fiscal law increased the tax burden on businesses and financial institutions in particular, which forced the bank to improve efficiency. He says that despite such regulatory changes, new products and the upgraded infrastructure will allow the bank to continue its growth and serve the Dominican Republic’s economy.

“[The bank] is ready to continue its process of financial growth and expansion in the region, to become stronger and more competitive... in the market, more committed to its clients and to the country’s long-term economic and social development,” says Mr Grullon. 

Ecuador: Banco de la Producción, Produbanco

Laws introduced in 2012 have had a big impact on Ecuador’s banking market last year. The composition of liquidity reserves must now include at least 60% of domestic assets, from the previous 45%, forcing lenders to move out of foreign instruments with high liquidity and quality and into domestic ones. Restrictions on collateral for mortgages or car loans were also introduced, as well as new taxation for private-sector banks and credit cards administrators.

Despite the new challenging environment, Produbanco closed 2012 with net profits 22% up on the previous year and with a return on equity of more than 20%. The bank’s strategy was based on a new method to segment its markets, refining its product offering in both retail and corporate banking, and focusing on the more profitable, longer-term customer relationships. 

The bank created points of service in 20 affiliated agents where bank customers can carry out transactions remotely and in a more agile manner. It also increased the number of self-service terminals to almost 300, which include ATMs and terminals for telephone banking. 

Further investments were made to modernise core banking systems to handle a larger number of transactions in the future; more easily develop mobile applications and exchange information with customers and third parties; and, crucially, increase security.

Chief executive Abelardo Pachano says: “We implemented a new service model in agencies, making the bank more agile and flexible to fit the needs and preferences of each of our segments. Also a new methodology of segmentation allowed us to deepen customer relationship and product offering.”

He adds: “We want to consolidate our presence as leaders in the market and deliver innovative products through a variety of channels. We are committed to sustainable development and we are planning the creation of [environmental] products.”

El Salvador: Banco Agricola

The smallest country in Central America, El Salvador has suffered sluggish economic growth in past years, with gross domestic product only rising about 1.5% in 2012. The country is still struggling to shake off its tumultuous past, riddled by wars and natural disasters that weakened its infrastructure and agriculture sector. In spite of this, a good number of foreign banks are fiercely competing to serve the densely populated country. 

Banco Agricola, part of Colombia’s Grupo Bancolombia, last year strengthened its leading position in both loans and deposits, and achieved the largest net income in the market and the highest return on equity among local and foreign lenders. It also improved its leading position in the remittances market, where it now has a 25% market share, and improved its standing in the credit card and banking insurance markets.

Much of this success is due to Banco Agricola’s efforts to deepen its client relationships by making services available through a network of banking correspondents. A focus on service to improve branding and customer loyalty also helped the lender.

Banco Agricola improved services available through its ATMs, providing not only remittances payments, loans and credit card services, but also allowing transfers between clients’ own accounts and to third parties’, as well as the payment of deposits – the first service of its kind in the country.

“Slow economic growth, new fiscal policies and aggressive market [practices] on loan and deposit interest rates have been the most significant challenges we faced last year,” says chief executive Rafael Barraza. “Nevertheless, thanks to our business model and a responsible risk management [strategy], we increased our loan and deposit portfolios, confirming our leadership in the country. The [banking] correspondent model and [focus on branding and] service, together with other initiatives, helped increase the bank’s loan and deposit market share by 40% and 80%, respectively.” 

Guatemala: Banco Industrial

The largest bank in Guatemala by assets, Tier 1 capital and loans and deposits market shares, Banco Industrial continues to be also among the most profitable, with a return-on-equity ratio of just under 22%. 

Such levels of profitability were reached thanks to an increased focus on more profitable and less served loan segments, such as of micro, small and medium enterprises where the loan portfolio grew by 11% in 2012. A clever funding strategy helped to keep costs down. While the main source of funding remain the naturally low-cost, short-term deposits, Banco Industrial switched short-term credit lines with local and international banks for longer-term issuances in the international capital markets, taking advantage of the low interest rate environment. Such issuances included the bank’s first senior bond worth $500m, which lead managers described as the largest ever non-sovereign debt offering from a privately owned Central American issuer. The bond was so well received that the notes were 15 times oversubscribed, pushing the initial pricing down to 5.50%. 

Luis Fernando Prado, international division manager, is confident the bank will retain its leadership, despite sluggish economic growth and increasing competition. Bancolombia has this year completed the acquisitions of Grupo Agromercantil, while another Colombian banking group, Grupo Aval, has agreed to buy Grupo Financiero Reformador. Mr Prado is also keen to expand operations in the region.

“We achieved 24% growth in our loan portfolio in the last 12 months, despite increased competition and a moderate growth of the Guatemalan economy. We plan to grow higher margin sectors, such as family remittances and microfinance. In addition, as a way to consolidate our operations, we are targeting Panama as part of our expansion plan throughout Central America,” he says. 

Guyana: Scotiabank Guyana

New international regulation such as the US’s wide-reaching Foreign Account Tax Compliance Act or a revised anti-money laundering law being discussed in Guyana’s parliament, is changing the country’s financial sector. 

This November, finance minister Ashni Singh was reported to say that Guyana could be labelled a high-risk country for financial transactions if such new legislation were not strong enough and noted that he had already seen a delay in banking and money transfer transactions. 

During such uncertain times, Scotiabank still delivered excellent results. It closed 2012 with net profits nearly 20% higher than the previous year, while also beefing up its capital base – Tier 1 capital was 35% larger than in 2011 on assets that grew by 11%. 

Much of this expansion was due to the creation of new products. Deposit accounts that respond to clients’ behaviour, for example, by reducing fees for customers that mainly use electronic banking, proved to be very fruitful and reduced cost while also increasing revenues. Further, new solutions for higher income customers were introduced and closer co-operation between retail, commercial and wealth management departments made sure cross-selling opportunities were not missed. 

As for its peers, Scotia paid even greater attention to its compliance department and while making sure the bank is in line with new rules, it also tried to keep cost of compliance down by automating the production of regulatory reports.

Perception as well as regulation can impact financial institutions. Scotiabank invested in new marketing initiatives to keep brand value high. It also launched a social media strategy and a philanthropic initiative to build houses for underprivileged families. This saw staff as well as customers and the general public working together.

Honduras: Banco del País

One of the poorest countries in Central America and with a population with great income disparity, Honduras poses many challenges for bankers. Chief executive María del Rosario Selman-Housein is keen to highlight Banco del País commitment to microbusinesses as well as its charitable efforts to support the wider community: “[Last year] we continued with our trademark credit programme developing banking services for microbusinesses in Honduras and organised a fund-raising event in favour of a national public hospital in great need, which brought together more than 9000 volunteers, strengthening the commitment and sense of belonging of our company’s volunteer programme.” 

Banpaís, as it is known, should be delighted by its financial achievements too. The bank’s loan portfolio grew by 10% in 2012, while non-performing loans were a mere 0.85% of the total portfolio and much below the national average, thanks to careful risk management. In particular, the bank expanded its mortgage portfolio and targeted various socioeconomic groups with relevant offerings in payday, cash-advance and general personal loans. 

Alliances with the local well-known pharmacy chain, Simán, and the Honduran University of Technology, entitled certain clients to new credit cards, which helped add 11,500 credit card clients to the bank’s portfolio. Further, a partnership with Western Union gave a boost to the remittances business too, which grew by 44% year on year.

Banpaís also kept costs under control by monitoring the efficiency and quality of its operations, and achieved a cost-to-income ratio of just over 25%. The bank closed 2012 with net profits almost 17% higher than the previous year and with a very healthy 22.4% return on equity. It also strengthened its capital position, with Tier 1 capital almost 40% higher than the previous financial year on assets that expanded by just over 7%. 

Jamaica: Scotiabank Jamaica

Earlier this year, Jamaica had to embark on the restructuring of its locally owned sovereign debt for the second time in three years. As for many others, Scotiabank was also hit by the debt exchange. Despite this, a slow economic recovery coupled with currency depreciation and new tax rules, the bank closed 2012 with net profits unchanged from the previous year and a good 16% return on equity. 

These results are due to growth in the corporate business, where a larger number of project financing and syndication loans were closed; in transaction banking, which increased the type of services and electronic products to local and regional business customers; as well as in the retail segment, where mortgages reached the highest volumes since the creation of the bank’s specialist Scotia Jamaica Building Society 18 years ago. 

Further, new deposit products designed to encourage savings contributed to a 40% increase in the monthly average number of new accounts, while auto loans increased by 34% thanks to partnerships with the car industry and the Jamaica Used Car Dealers Association. The bank retains the largest ATM network in the country, with a total of 230 machines, 40 of which are dual currency. Its online banking offering includes cross-currency payments, while the bank has made provisions for third-party transfers to be allowed in the near future.

“Scotiabank Jamaica continued to deliver strong results, notwithstanding a challenging operating environment characterised by slow economic growth, waning business and consumer confidence and rising operating costs,” says Jacqui Sharp, the bank’s chief executive. “We were impacted primarily by the devaluation of the local currency, the introduction of new asset and consumption tax measures and our participation in the national debt exchange [part of Jamaica’s sovereign debt restructuring], which resulted in a reduction in interest income.”

Mexico: Banorte

One of the few emerging markets in the world that is embarking on significant reforms, such as the long awaited changes in the energy and financial sectors, Mexico hosts one of the most promising banking markets in Latin America, with growing wealth, a large population but relatively low banking penetration. 

Banorte, the largest locally owned lender by both assets and Tier 1 capital, has been strengthening its presence in the local financial market and has positioned itself not only as a leading banking group, but also as a dominant player in the pension and insurance markets. After the successful integration of smaller competitor Ixe, Banorte took over Afore Bancomer in 2012, becoming the leader in Mexico’s pension fund management industry. Earlier this year, it bought Italian insurer Assicurazioni Generali’s 49% stake in its own insurance and annuities subsidiaries. 

“These strategic initiatives pose the challenge of transforming the bank while running it at the same time,” says chief executive Alejandro Valenzuela. “We need to generate revenue and cost synergies and integrate operations of recent acquisitions, [automate] processes, become a more client-oriented institution and upgrade our risk management systems, while continuing to enhance our market position as one of the leading and most profitable financial institutions in Mexico.”

Indeed, Banorte proved to be a highly profitable institution in 2012. It closed the year with net profits 28% higher than the previous 12 months and a healthy 14.3% return on equity – undisturbed by the integration of Ixe and in line with previous ratios.

As for the future, Mr Valenzuela is determined to increase its customer base and cater for the still large part of the population that is currently excluded from the financial sector. “We want to take advantage of the opportunities arising from the low banking penetration and the coming financial reform, which could boost credit and economic growth,” he says.

Nicaragua: Banco de la Producción

Thanks to a series of improvements in various business functions and products, Banco de la Producción closed 2012 with its highest ever net profits, as well as sharply declining non-performing loans.

Chief executive Luis A Rivas highlights some of the bank’s successes: “Net profits reached a new record high in 2012 with an outstanding 25% growth rate and a noteworthy 21.6% return on equity. We achieved remarkable credit growth accompanied with diligent credit risk management: a 27% increase in the credit portfolio while reducing non-performing loans expenses.”

Changes in the organisation of the credit department were responsible for such growth. A new division was introduced to specifically manage and deepen relationships with clients; segregation between the sales and credit analysis functions was reinforced; and additional staff were hired to deliver a better, more responsive service. Diligent risk management made sure that the expansion of the loan portfolio was not followed by rising delays in loan repayment or delinquencies. On the contrary, non-performing loans declined to 1.9% in 2012 from 2.9% and 3.2% the bank recorded in the previous two financial years. 

By and large, the bank’s risk management should be commended and delivered excellent results in other parts of the business, such as a 33% rise in profits from foreign exchange without impairing the overall risk profile of the bank. Further, the bank created a specialised data centre, the first of its kind in Central America, as Mr Rivas points out, which has helped in providing a more reliable service and faster resolution of technology issues affecting, for example, power supply and wiring systems. Mr Rivas is also proud of the bank’s commitment to the local community, which resulted in the sponsorship of initiatives ranging from dealing with women’s health issues, particularly in the lower income part of society, and education, culture and sports programmes across the country.

Panama: Banco General

One of the fastest growing countries in the Americas, Panama recorded phenomenal 10.6% growth in gross domestic product in 2012 – and a 7.6% growth year on year in the second quarter of 2013. Its economy is blessed by the business generated by its canal, which connects the Atlantic and the Pacific Oceans and is due to complete its expansion in 2014. 

Panama’s open-market policies have encouraged much foreign direct investment as well as the development of Central America’s key financial hub in the country’s capital. It is not surprising, therefore, that banks in Panama are thriving. Banco General, Panama’s largest locally owned lender by both assets and Tier 1 capital, closed last year with record net profits, which were almost 13% higher than the previous period, a return on equity of more than 20%, and decreasing cost-to-income and non-performing loans ratios. The personal loan, mortgages and credit card businesses grew by about 9.5%, 9.8% and 18%, respectively, thanks to bigger sales teams. Corporate loans also grew by 9.6%. In wealth management, the integration of the bank’s two brokerage businesses generated efficiencies and ultimately higher commissions. 

The bank’s business growth was complemented by a robust balance sheet, thanks to highly liquid US dollar-denominated fixed-income investments, a highly diversified portfolio, strong loan loss reserves and a stable and diversified retail deposit base. Its capital position was also strengthened – Tier 1 capital and assets grew by about 5.5% and 13.8%, respectively, according to data by Banco General and The Banker Database.

The lender’s wide physical presence is formed by a network of 327 ATMs, the largest in the country, as well as 60 branches; while its online channels have been growing and are being used for growing numbers of transactions. Beside its leading role in the local banking sector, Banco General has also expanded regionally and has operations in Mexico, Guatemala, El Salvador, Colombia, as well as Costa Rica.

Paraguay: Banco Itaú Paraguay

Often banks that expand in foreign markets are accused of picking and choosing the best customers, dedicating very little capital to the venture and therefore not contributing much to the development of the country. But the growth of Brazilian lender Itaú Unibanco into Paraguay has to be commended. Over the past few years, it has not only poured significantly larger capital into Paraguay, it has also embarked on a number of wide-reaching and successful initiatives. 

Itaú strengthened new strategic alliances with major retail companies such as supermarket chains and mobile phone operators to provide special benefits to customers; refined its auto loans, mortgages, travel and medical equipment financing to better suit clients’ needs; it added 36 points of service in the country, adding to its 27 branches and to its conspicuous ATM network of 250 machines – further, the bank’s ATMs can now link up to two different transmission networks, serving larger numbers of users. Itaú also developed its online offering and created products such as international online transfers and factoring running on electronic channels, as well as expanding online banking to a 24-hour service, and creating applications for smartphones.

Itaú was careful to complement business growth with careful risk management and keep a healthy balance between commercial and consumer loans. It also plans to grow an agricultural and cattle-breeding loan portfolio, serving farmers that were badly hit by a severe drought last year. Greater emphasis will be also put on the payroll payments and the credit card businesses.

The bank closed 2012 with net profits almost 21% higher than the previous year and a generous 41% return on equity. Its Tier 1 capital continued to grow, at rates of 10% and more than 1000% in 2012 and 2011, respectively. Assets also expanded by about 16.5%.

Peru: Banco de Crédito del Perú

Despite slowing economic growth, Banco de Crédito del Perú (BCP) successfully closed 2012 with net profits almost 15% higher than the previous year and a return on equity of more than 26%. The bank focused on the most profitable clients in its various segments, without losing its determination to also include larger numbers of individuals and micro-entrepreneurs in the country’s banking system. To this end, more than 1000 points of service were opened across the country, accounting for almost half of the total non-branch network present in Peru. As BCP continues to expand its services to new clients and clients with lower income, risk management practices have been strengthened to reduce the potential rise of non-performing loans.

Stricter underwriting policies and improved scoring models also have been introduced, particularly for credit cards and products for small and medium enterprises. It was thanks to these initiatives that non-performing loans were kept to less than 2.5%.

In investment banking, BCP consolidated its regional platform, which now includes BCP Capital and majority stakes in Chile’s IM Trust and Colombia’s Correval, and which aims to offer comprehensive investment banking solutions in all three countries. 

BCP chief executive Walter Bayly says: “In the past year, BCP has intensified its efforts to develop our retail banking business, a sector that has become an important driver of growth. [In 2013] BCP has continued to consolidate its leadership in all segments in which it operates, both in terms of loans and deposits. It has also successfully managed the higher risk in the growing new client portfolio. BCP’s initiatives are focused on penetrating new segments [which are not yet part of the Peru’s banking network], while maintaining a healthy portfolio quality through the further sophistication of its risk management tools and policies.”

Puerto Rico: Santander Puerto Rico

Despite Puerto Rico’s tough macroeconomic conditions, Santander Puerto Rico’s return on equity for 2012 remained in double digits at more than 10%, while the decline in net profits was contained to a small 5%. At the same time, the bank reduced the non-performing loan ratio to 5.32%, a number still high but trending down from the 5.79% and 7.26% it recorded in 2011 and 2010, respectively. Tier 1 capital and assets grew by 11.4% and 8%, respectively.

“The complicated economic environment that negatively impacted the banking sector in Puerto Rico has been the main challenge in recent years. To address this, we took a number of initiatives to improve our performance in three important areas: capital, liquidity and asset quality,” says chief executive Fredy Molfino.

The loyalty programme launched alongside Puerto Rico’s fast growing airline JetBlue Airways, helped turn around Santander’s previously declining credit card business. Mr Molfino points out that in 2013, while competitors had been losing business, Santander’s credit card portfolio grew by 4.4%. 

Further, the bank created a smartphone application to allow customers to transfer funds between accounts, including to third-party accounts within the bank or other institutions in Puerto Rico and the US – although transfer services to other banks are charged $3, this is the lowest rate in the country. Customers can also use the app to request cash advances and electronic statements.

Encouraged by these successes, Mr Molfino is determined to grow the business further. “Santander Puerto Rico’s growth plan focuses on five strategic businesses: wealth management, consumer banking, institutional and corporate banking, insurance and the affluent segment. We aim to be the leading financial services provider and a key player in growth segments, while maintaining a strong commercial structure.”

Trinidad and Tobago: Scotiabank Trinidad and Tobago

Scotiabank believes that economic growth in Trinidad and Tobago will be driven by small businesses, for which the lender has created a dedicated sales team – the only one of its kind in the country. It also created a series of seminars for small and medium enterprises (SMEs) and, with the government support, it launched a TT$100m ($15m) fund to support smaller exporters. Greater attention also had to be paid to other areas of the bank to counterbalance the effects of sluggish macroeconomic data and new regulations that require lenders to set aside larger amounts of capital as a buffer for potential losses.

New cash management products were launched and cross-selling practices were encouraged to generate larger business volumes, particularly in wealth management. The ongoing investment in technology delivered a more agile online and mobile banking service to customers. Further, the migration of all back-office support functions from the branch network to a centralised unit provided great improvements in terms of efficiency and gave Scotiabank a sound footing to develop the business. Thanks to these initiatives, the bank’s return on equity was a healthy 18.5% in 2012, while net profits were unchanged from the previous year.

“The launch of our premium banking service and improvements in our SME segment were notable highlights. However, the improvements in customer service and efficiency gained by transferring back-office support functions to a centralised shared-services hub were probably our most significant successes,” says managing director Anya M Schnoor, who points out that the bank will continue to invest in new product initiatives. 

“Our plan remains the same [for the future]: continue to focus on our customers and provide them with relevant solutions to meet their financial goals. We will do this by continuing to invest in our [staff] while developing new and differentiated services and products across our various business lines.”

Uruguay: Santander Uruguay

One of the most stable economies in Latin America, Uruguay hosts a peculiar banking system, where half its banking market is in the hands of the state-owned bank and private-sector lenders fiercely compete for the remaining share. Santander has consistently improved its position among such private-sector players. 

In 2012, the bank grew its loans and deposits businesses by 18% and 9%, respectively; it gained a 19.4% share of the credit card market and a 26% market share of international bank transfers. Other successes include the financing of large energy projects and leading a large deal for state oil and cement company Ancap to purchase and install new machinery. In the agricultural sector, Santander signed an agreement with the national milk co-operative to finance a number of investments in the productive systems of dairy companies.

Unsurprisingly, the bank’s 2012 net profits grew by a phenomenal 169% from the previous year, while return on equity shot up from the disappointing 3.6% it recorded in 2011 to a better 9.2%.

“In an extremely competitive local market, Santander remained the leader of the private sector; it has maintained its position in corporate [banking] and its focus on the retail business,” says chief executive Jorge Jourdan. “The goal for [2013] has been to consolidate our position in Uruguay, generating profits for our shareholders and value for our customers, while at the same time continuing to be [a leading institution for] transparency and regulatory compliance. The key elements of our strategy are the quality of our customer service and our [offering] to each segment of the market.” 

The bank aims to develop its offering to retail customers and small businesses. “Santander plans to continue to develop and improve its retail banking services, with emphasis on payment methods, and products for small and medium enterprises,” he says.

US: Citibank

In the US, Citi is not in every city by any means and doesn’t intend to be. But it is in the important ones; places such as San Francisco and Miami that have a global footprint. The aim is to serve the global market inside the US and expand in centres where there are large upwardly mobile populations connected to the world and needing a state-of-the-art banking service. The bank aims to satisfy this demand with its global network (having a presence in 102 countries) and its huge steps forward in digitisation.

The bank has put a huge effort into rebuilding since the crisis and its capital and liquidity buffers now stand among the very best in the industry. Says chief executive Michael Corbat: “We made progress on our execution priorities of improving operational efficiency, reducing the drag on earnings from our non-core assets in Citi Holdings, utilising our deferred tax assets (DTA), and becoming known as an indisputably strong and stable bank. 

 “We demonstrated strong expense discipline; at the end of the third quarter, expenses we were down 4% year over year. We’ve reduced non-core Holdings assets to just 6% of our balance sheet and significantly reduced the losses in Holdings. We’ve also utilised $1.8bn of our DTA year to date. Finally, the capital we’ve generated this year has increased our Tier 1 common ratio to an estimated 10.5% on a Basel III basis as of the end of the third quarter. We were very gratified when the regulators didn’t object to our proposed capital plan.”

The bank has set very clear targets around return on assets, and equity and efficiency ratios. There are detailed scorecards with clear metrics to assess the performance of the company’s top 400 managers. The City Velocity platform gives clients access to capital markets intelligence and services across equities, futures, foreign exchange, emerging markets, rates, credit commodities, securitised markets, municipals, prime finance and research. 

Venezuela: Banco Mercantil Universal

In Venezuela’s volatile market, Banco Mercantil Universal continued to generate large profits while also expanding its capital base and assets. A growing return-on-equity ratio and an increase in the quality of its loan portfolio were made possible thanks to the bank’s conservative business approach and careful risk management practices. 

Mercantil has traditionally been serving a diversified client base, which include retail customers as well as a good number of large corporates and smaller businesses, and has a low concentration on specific economic sectors. The variety of products on offer also helped in keeping risk under control, as did good customer knowledge and  credit controls.

Last year, the bank intensified its cross-selling activities, boosting its credit card business. Mercantil was the first bank in Venezuela to introduce chip technology for credit cards. The move has significantly reduced fraud; in 2012 the bank’s fraud cost to assets was 0.059% compared with 0.075% the previous year. Online banking was also made more secure. Currently, more than 90% of total transactions are carried out using an electronic channel, and Mercantil plans to expand this even further.

The reach of Mercantil’s physical network is also commendable and includes 269 branches, 1367 ATMs and 48,670 points of service. Further, the bank has developed a programme to include wider parts of the population into the banking system, the Mercantil Aliado programme, which is formed by 292 points of service across the country. 

Chief executive Nelson Pinto says: “The bank was able to achieve continuous loan portfolio growth in a highly competitive market, while preserving a sound credit portfolio. Key factors for achieving this are the bank’s consolidated structure and risk management, and having a highly capable and experienced management and staff.”

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