Bank of the Year Awards 2014 – Asia-Pacific

Afghanistan: Afghanistan International Bank

Although the Afghan banking sector still faces a number of challenges, Afghanistan International Bank (AIB) has managed to renovate its business model, add new operational lines and solidify international collaborations in the past 12 months.

AIB became the only Afghan private commercial bank with which Commerzbank was willing to retain correspondent banking relationships and dollar clearing accounts after a round of due diligence this year. 

The bank has also successfully integrated Standard Chartered’s Afghanistan business – which it acquired in 2012 – into its structure. 

The country’s challenging security environment is keeping business limited to specific sectors or business centres, making it hard for banks to develop significantly. However, AIB has upgraded its services to maximise client reach. Its ATM network – which now accepts any major card – has expanded by 50% in the past 12 months. AIB’s ATMs initially clustered in Nato bases or restricted areas, such as embassy compounds. 

Expanding customer scope has been a further AIB objective this year. In addition to consumers and small business, the bank has also jumped on the Islamic finance bandwagon. With this business growing and expanding rapidly worldwide, AIB introduced an Islamic banking window in 2014. It has received a licence to establish these operations and is currently preparing products and services to expand this business in Afghanistan.

Despite being in a challenging banking sector, AIB remains bullish about domestic growth opportunities. “We intend to play our role fully in the development of Afghanistan as the leading domestic private sector bank. We will continue to expand our outreach through the provision of 21st-century products and we look forward to the reinforcement of our relationships with the international banking community,” says Khalilullah Sediq, CEO and member of the management board at AIB.

Australia: Westpac

At a time when mainland China is opening up its financial sector in a cautious yet significant manner, Westpac has been quick to capitalise on these developments. It received a general derivatives licence for its Shanghai and Beijing branches and approval to establish a branch in the China (Shanghai) Pilot Free Trade Zone sub-branch this year. 

Westpac has also set up a structured commodity finance business in China, which generated its first deal in December 2013. 

In reinforcing the group’s business ties with mainland China, Westpac has also become one of only two Australian banks to acquire a licence for direct trading in New Zealand dollars and renminbi this year.

Westpac has also demonstrated exemplary efforts in corporate sustainability. “We were delighted this year to be recognised as the global leader in sustainability at the World Economic Forum in Davos and as the most sustainable bank globally by the Dow Jones Sustainability Index. A proud example of our engagement with the community this year was our new $100m scholarship fund for Australians of all ages and walks of life,” says Gail Kelly, Westpac’s CEO.

Internally, the bank’s structure has also changed. Heavy investments in wealth management and insurance have improved cross-selling and have helped the bank tap into Australia’s expanding superannuation savings pool. Technological development has also helped Westpac attain the lowest cost-to-income ratio among Australia’s three big banks – at least 3 percentage points below its peers. 

In terms of future objectives, Ms Kelly wants to focus on customer servicing initiatives further. “We are stepping up on our customer-centred strategy to provide a real ‘service revolution’. This work is fundamentally changing how we support customers and enhance their experience. Our aim is to empower our customers with simple and easy banking to help them achieve their financial goals and aspirations,” she says. 

Bangladesh: Standard Chartered Bangladesh

Last year was not an easy one for Bangladesh, with elections spurring street protests and socio-political instability throughout the country. Business and banks were also affected. Standard Chartered Bangladesh, however, maintained its positive performance streak, which has characterised the bank’s past four years of business in the country. Net profits, assets and Tier 1 capital figures all improved annually between 2011 and 2013. Percentage changes between 2012 and 2013 were, respectively, 14%, 20% and 10%.

Standard Chartered is the oldest and largest foreign bank in Bangladesh. But in the past 12 months it has worked towards innovation not only through new products, IT sophistication or expansion. Events have played a key role too. 

“Standard Chartered Bangladesh continues to lead the industry with innovative products and services and also thought leadership. We have organised the Bangladesh Investment Summit in Singapore. We have come up with the inaugural Standard Chartered Agrow Awards to promote and inspire the farmers of Bangladesh. We have also held the fifth Standard Chartered-Financial Express CSR Awards to promote corporate social responsibility in the corporate sector,” says Jim McCabe, Standard Chartered Bangladesh CEO.

Mr McCabe believes that greater internet usage in Bangladesh signifies a bright future for digital and online banking. In wanting to improve customer experience, the bank improved its online banking services as well as its branches.  

With the Bangladesh economy continuing to grow, Mr McCabe believes the country’s banking industry will be key to assisting local companies to develop. “We remain committed to help channel investments in the priority sectors such as energy, power and infrastructure and to help our clients ride the economic wave for the benefit of all concerned,” he says.

Brunei: Bank Islam Brunei Darussalam

Bank Islam Brunei Darussalam (BIBD) has stood out in Brunei for its strong business performance, its rebranding and its efforts to expand abroad.

Tier 1 capital and assets grew year on year by 7.8% and 4.5%, respectively, in 2013. Non-performing loans also remained low, with this figure dropping from 3.4% in 2012 to 2.6% in 2013.

BIBD has focused heavily on acquiring new customers to tackle challenges in the domestic banking sector and strong competition from foreign banks. Introducing sharia-compliant products as well as collaborations with major local and international companies were key to BIBD’s development.

The bank also underwent successful rebranding coupled with revolutionised service culture standards and operational structures. At the core of this redirection was a stronger commitment to catering to Brunei’s Islamic values. This resulted in BIBD’s ‘Bruneian at Heart’ branch concept, aimed at establishing a stronger personal relationship with the bank, and highlighting its national identity.

BIBD has also revamped its wealth management offering. In an effort to diversify its service from the rest of the market, BIBD launched the Perdana branch, which caters to high-net-worth customers.

In addition to strong improvements with regards to IT, BIBD has also made a significant push in corporate banking. The bank has been involved in providing contract-based long-term financing to local contractors in the oil and gas sector, in collaboration with the ministry of energy. BIBD also has the largest small and medium-sized enterprises portfolio in Brunei, which it services by supporting government initiatives.

Cambodia: ABA Bank

Like many other countries in south-east Asia, Cambodia’s impressive gross domestic product (GDP) growth – 7.2% in 2013 –makes it an extremely appealing market. But its banking sector is still relatively immature in aspects such as market depth, bank funding opportunities and infrastructure.

Askhat Azhikhanov, CEO of ABA Bank, says: “ABA’s main challenges have been providing stable and diversified funding, building infrastructure for new branches and sustaining interest margins against the background of higher competition in the Cambodian banking market. Due to the growth of the bank in 2014, the capital adequacy became another challenge as well.” 

ABA Bank has nonetheless performed positively. Its cost-to-income ratio has dropped, assets have grown by 45% in the first 10 months of 2014, heavily fuelled by geographical expansion targeted at increasing customer reach, and the bank has set up 12 new full-service branches in the country. In the past 15 months it has increased the number of branches by 109%. ABA also launched the first self-service points in Cambodia.

In terms of international co-operation, ABA Bank increased its share capital by 48% thanks to the July 2014 share subscription transaction with National Bank of Canada (NBC). “This co-operation lets us sustain robust growth rates, support Cambodian export-import operations and further accelerate the branch network expansion while maintaining adequate capital levels,” says Mr Azhikhanov. NBC acquired 9.99% of ABA Bank’s total share capital.

Potential for growth is still significant thanks to Cambodia’s high GDP growth, and ABA Bank is looking to service those firms which are bound to develop within Cambodia. “Expansion will help us to further support the micro, small and medium-sized enterprises segment, which is the main driver and backbone of the Cambodian economy,” says Mr Azhikhanov.

China: ICBC

ICBC has demonstrated an impressive ability to identify and capture diverse growth trends within the Chinese market, which is currently undergoing a number of economic and financial sector reforms.

In particular, the bank has worked towards assisting the government’s policy to spur Chinese companies’ development. Indeed, ICBC’s loans have a strong focus upon industries and projects meeting China’s industrial policies, transformation and upgrading requirements.

The bank also reorganised its internal operations, improving service efficiency and customer experience via business process reengineering and the centralisation of middle- and back-office operations. 

ICBC has been focusing on financial asset services that are knowledge- and technology-intensive. In 2013, for instance, income from investment banking services, including mergers and acquisitions and reorganisations, rose by 43%. Meanwhile, income from physical precious metals, pensions and private banking grew by more than 70%. This is in conjunction with the bank’s goal to transition from being an asset-holding bank to an asset management bank.

A credit card business upgrade has also been on ICBC’s agenda. In the past 12 months, it has launched new products including the Global Travel Card and expanded its premium and platinum card offerings. ICBC also launched instalment payments for purchasing cars, electrical appliances, general merchandise, education and travel.

Its online and mobile banking efforts have also been significant. ICBC boosted mobile banking products by combining new mobile internet technology, additional mobile terminal functions and new trends in network communication. In conjunction with digital development, ICBC has initiated its ‘intelligent branches’ project and extended its services to the commodity trading market and to major county regions.

Hong Kong: Standard Chartered

Hong Kong continues to offer interesting business opportunities, particularly as mainland China continues to open up its financial sector. The past year, however, has not been a smooth one for the special administrative region. “The global economic slowdown has contributed to a more cautious credit environment. Emerging markets suffered from less favourable sentiment which affected transaction flows,” says Standard Chartered’s Hong Kong CEO, Benjamin Hung.

Standard Chartered has continued growing despite these challenges. Last year marked Standard Chartered’s 10th consecutive year of record income growth in Hong Kong.

Together with HSBC, Standard Chartered is at the forefront of the offshore renminbi business. On the capital markets side, the UK-based bank launched an innovative global discount note programme with supranational borrower International Finance Corporation in February 2013. This has expanded renminbi investment products while supporting the internationalisation of the currency.

In the renminbi business, Standard Chartered has been working hard to compete with Hong Kong competitors such as HSBC. “We captured many opportunities arising from the renminbi internalisation and wealth flow within greater China,” says Mr Hung. Standard Chartered now offers renminbi services in more than 35 countries and regions outside China.

Standard Chartered also launched the first ever Renminbi Globalisation Index, which traces the use of the currency in payments, foreign exchange and offshore renminbi volumes. It became the first bank to be granted a quota by People’s Bank of China – of Rmb3.3bn ($538.56m) – for renminbi cross-border lending. The bank also launched renminbi dual-currency credit and debit cards to facilitate cross-border transactions. 

Standard Chartered has also worked to combine its different networks to offer cross-selling and cross-border solutions to its clients. This has worked particularly well for its private banking business, which is focusing on capturing growing wealth across Asia and in servicing Standard Chartered’s existing corporate client network.

“Our strategy is to bank the people and companies driving investment, trade and the creation of wealth across Asia, Africa and the Middle East. Our markets are some of the most exciting and dynamic in the world, with excellent long-term growth prospects,” says Mr Hung.

India: Axis Bank

Despite India’s liquidity crunch in mid- 2013 and tough macroeconomic conditions, resulting in high inflation at 9% and low investments, Axis Bank has demonstrated strong profitability, innovation, growth in assets and Tier 1 capital while reinforcing its local community services through its public fund, Axis Bank Foundation (ABF).

The bank maintained over 20% growth in profit after tax during the 2014 financial year while hitting $1bn profit after tax for the first time in its history. Assets for the 2014 financial year grew by 12.5% and Tier 1 capital by 14.2%, when compared with 2013. 

Since 2006, Axis Bank has invested a portion of its earnings for social development through ABF. “We are very happy to see that we have been able to leverage the bank’s profit to change society, support [peoples’] livelihoods and have a meaningful impact,” says Shikha Sharma, CEO at Axis Bank.

ABF has set up nearly 100 programmes with a number of local non-government organisations to create sustainable livelihoods for those in need. These initiatives have involved education, training and care for children with disabilities, natural resource management in agriculture and credit and micro enterprise development. ABF is currently running 39 programmes. 

“ABF aims to create more than 1 million sustainable livelihoods by 2017, with 60% of the beneficiaries being women,” says Ms Sharma.

Differentiating the bank’s loan portfolio has been a further achievement for Axis Bank in the past 12 months. Retail loan penetration is significantly lower in India compared with other emerging economies. Axis therefore looked to fill this gap.

“Lending to this segment became a key focus area,” says Ms Sharma. “By launching innovative products, [efficiently using] our channels and tapping the existing liability customer base, Axis Bank has been able to significantly improve its retail advances portfolio from 19% of total advances in March 2011 to 45% in June 2014.”

The bank also launched the Axis Mobile app. This is the first digital platform allowing Axis customers to access all their services in one view. Axis’s mobile banking transactions grew by 156% in volume terms and 521% in value terms between 2012 and 2013. The bank’s mobile app rapidly achieved more than 1.5 million downloads.

Indonesia: Bank Rakyat Indonesia

Bank Rakyat Indonesia (BRI) remains the largest lender in the Indonesian market. Despite a huge population of 240 million, banking penetration in the country remains relatively low. But BRI’s impressive Rp430,600bn ($35m)-worth of extended loans as of the end of 2013 places the bank as a leading lender in Indonesia, and it is well positioned to cater to the country’s vast unbanked population. All of this has come while maintaining a profitable business, with BRI’s net profits increasing year on year by 14.2% as of the end of 2013.

BRI is one of four key Indonesian banks (the others being Bank Mandiri, Bank Central Asia and Bank Negara Indonesia) that is majority owned by the country’s government. This quartet alone holds 40% of the country’s banking assets.

Microfinance and the retail business account for the bulk of BRI’s significant lending. As of December 2013, 30.7% of the bank’s total loan portfolio was in the microfinance sector, with an average loan size of Rp20m, making BRI the biggest microfinance institution in the world.

BRI calls its microfinance business ‘Community Banking’. The bank is present in every Indonesian sub-district and has 7300 outlets overall – some of which are directly within traditional markets or economic centres.

BRI has also successfully boosted its technical services. It focused on growing its ATM network between 2011 and 2013, reaching almost 20,000, the highest number in Indonesia. BRI’s ATM placement targets rural areas, in an attempt to minimise cash movement in the country.

E-banking is another BRI frontier, especially as Indonesia has a very young population (in 2014, it is estimated that 59.4% of the country’s population was between 15 and 54 years of age). BRI’s e-banking operations generated 78.5% of its fee income in 2013.

Indonesia is one of the leading four countries in the world when it comes to mobile phone usage, meaning that mobile banking presents huge opportunities. The number of BRI mobile banking users increased by 72.8% between 2012 and 2013, during which time the number of mobile transactions grew by 80.5%. The value of these transactions rose by 173.8%.

Japan: SMBC

Sumitomo Mitsui Banking Corporation (SMBC) has successfully reinforced both its consumer and corporate client network, meeting demand for diversified retail products and small and medium-sized enterprise (SME) development.

SMBC’s extensive network of branches in Japan, especially in Tokyo and Osaka, contribute to its considerable client reach. As of March 31, 2014, the bank had 439 branches in Japan overall, 74 of which include ‘SMBC Consulting Plazas’, which are areas providing consultancy services on asset management and housing loans with extended operating hours.

SMBC’s internet banking take-up has also been impressive. By the end of March 2014, 13 million individuals had signed up to this initiative. In addition to consumer clients, SMBC has been supporting the restructuring and financing of Japan’s SMEs to help revitalise the country’s economy. The bank is expanding its research and advisory teams at home, and to help internationalise Japanese corporates, SMBC itself is expanding its advisory teams globally.

On the wealth management side, SMBC acquired Société Générale Private Banking Japan in October 2013. This translated into SMBC Trust Bank, a wholly owned subsidiary focusing on wealth management.

As Japan continues to be a key investor in the Association of South-east Asian Nations region, SMBC is looking to expand its infrastructure finance and trade finance operations in the region. Transaction banking business, including ancillary financing, will remain key to service investment within Asia, where commercial flows are growing together with the region’s economic development.

To broaden its network further, SMBC established three new representative offices in Santiago (Chile), Chonburi (Thailand) and Ulaanbaatar (Mongolia), while Sumitomo Mitsui Finance & Leasing and SMBC Consumer Finance set up offices in Chengdu and Chongqing, both in China. In aiming for a full-scale commercial banking franchise in Asia, SMBC has invested in Indonesia’s PT Bank Tabungan Pensiunan Nasional.

SMBC split its banking and securities operations into SMBC and SMBC Nikko Securities in November 2013. The latter is purely dedicated to syndicated loans, and advises on corporate bond issuance as well as wholesale securities business such as equity, debt underwriting and merger and acquisition advisory.

Kazakhstan: Eurasian Bank

The global financial crisis hit Kazakh banks particularly hard. A high non-performing loan environment, coupled with low returns, exacerbated long-standing inefficiencies in the banking sector. Yet some Kazakhstan-based lenders took this opportunity to improve their operations by implementing greater risk and cost controls while striving for more diversified growth. The most successful of these has been Eurasian Bank, which since the 2009 crisis has enjoyed a stellar period of growth off the back of a refined strategy and the arrival of a new management team. 

The bank’s Tier 1 capital increased by 23% in 2013, while total assets grew by 25%. Most impressively, Eurasian Bank’s net profits soared by 34% over the same period, building on the 63% increased recorded the year earlier. Meanwhile, the benefits of the bank’s cost control strategies became clear in 2013 as its cost-to-income ratio fell from 55.2% to 51.4%. 

Moreover, Eurasian Bank’s loan portfolio has grown at 29% a year since 2009. This compares with a sector average of 8%. This development, in the context of Kazakhstan’s banking sector fundamentals, is even more remarkable given that the bank’s non-performing loans are marginally over 9%, compared against a sector average of 31%. 

Eurasian Bank’s strategy to aggressively expand the share of retail business on its balance sheet has been another cornerstone of its recent success. 

“This has led to one of the highest returns on average equity on the market, at more than 20%, and leading positions in markets such as car financing. At the same time we limited the share of retail to 50% of our business in order to maintain a healthy balance together with the less risky corporate business, and we continuously improve our risk management processes for comfortable growth,” says Michael Eggleton, chief executive of Eurasian Bank.

Kyrgyzstan: KICB

Kyrgyz Investment and Credit Bank (KICB) has once again landed the Kyrgyzstan Bank of the Year country award following a strong set of results in 2013, coupled with the introduction of innovative new services. The bank achieved net profit growth of 8.5%, building on the highly successful profit increases witnessed in 2011 and 2012. Meanwhile, total assets and Tier 1 capital enjoyed similarly positive momentum, increasing 21.5% and 19.2%, respectively. 

In 2013, KICB initiated a number of programmes to bolster its position in the small and medium-sized enterprises markets, including offering more competitive medium- to long-term credit to corporate clients. Moreover, as it strengthens its position in the retail market, the bank is prioritising mortgage and personal loans to drive growth, while it also offers specific energy-saving and agricultural loans in this space, in partnership with national and international agencies. These developments have been pursued in conjunction with an impressive innovation drive. KICB has introduced a customer relationship module to its operations, a platform that provides the bank with a complete picture of the relationship it shares with each customer. 

Moreover, the development of its ‘Middleware System’ has enabled KICB to connect its existing software and IT applications, used in day-to-day operations, to ensure greater connectivity, data sharing and communication between these systems. Together, these innovative measures are providing the bank with the kind of competitive advantage necessary to navigate Kyrgyzstan’s challenging banking market. 

In June 2014, KICB launched its first mobile banking operation. In a country with mobile phone penetration in excess of 90% and a challenging geography, this will enable greater customer engagement and financial inclusion. At present, bank account penetration stands at about 4% in the country. Moreover, KICB is one of the first banks in the central Asian region to launch mobile banking services. 

Laos: Australia and New Zealand Banking Group Laos

Laos, as is the case with many countries in the Greater Mekong Delta, has nascent yet very promising financial markets. Indeed, foreign banks are increasingly looking to step into the market early to take advantage of growing opportunities, such as the servicing of much-needed infrastructure projects.

Australia and New Zealand (ANZ) Banking Group falls into the ‘early bird’ category. Keen on establishing a widespread banking network throughout the Asia-Pacific region, ANZ is rooting its presence in Laos despite the market’s challenges. 

“A slowdown of infrastructure projects in Laos created a challenging operating environment for many of our clients this year. This translated to a softening of borrowing needs as compared to the past two years, as a result of project delays or the halting of existing ones,” says ANZ Laos CEO Tammy Medard.

“What ANZ Laos should be most proud of is the connectivity we offer our clients through linking them to any one of our 32 other country offices. For example, our Singapore office continues to provide global markets and structured finance solutions to major government bodies and hydropower projects operating from Laos. Similar examples exist with our Australia, UK and regional Mekong offices,” she adds.

ANZ Laos’s profit performance has rocketed since first setting up. Net profits increased from $374,000 in 2011 to $2.05 in 2013. The bank also heavily cut its cost-to-income ratio, from 95% in 2011 to 78% in 2013, while bolstering its return on equity, which grew from 2.45% in 2011 to 9.1% in 2013.

Ms Medard sees further growth ahead. “With Association of South-east Asian Nations’ [Asean’s] economic integration planned for December 2015 and Laos hosting the Asean meetings in 2016, there is a positive momentum of improvement building from the National Assembly and our ministries,” she says. 

Macau: ICBC Macau

Financial institutions in Macau are fairly dependent on mainland China’s economic prosperity for growth. This meant business was bumpy in 2014, when the mainland’s gross domestic product growth rate slowed.

According to ICBC Macau’s chairman of the board, Zhu Xiaoping, China’s slowing economic growth, the fragile and unbalanced global recovery and conflicting currency policies were the bank’s key challenges. Increasing competition within the local market was also testing.

However, ICBC Macau’s net profits, assets and Tier 1 capital all grew between 15% and 22% in 2013 when compared with 2012’s figures. Return on equity also grew from 13.77% in 2012 to 14.91% in 2013. ICBC Macau is well placed to be a key component within east Asia’s banking network. The bank focused on the construction of multi-channels to extend its 24-hour-a-day financial services from Macau to mainland China, Hong Kong and Portuguese-speaking countries around the world in which it is present.

The bank also reinforced local operations and client servicing through growing research and development and e-banking initiatives. Its number of self-service branches as well as ATMs in Macau grew to 25 and 219, respectively. Additionally, the bank’s new mobile app now allows its Macau-based customers to coordinate their accounts across all ICBC subsidiaries.

With optimistic views of China’s growth, Mr Zhu envisions growth for ICBC Macau. “China will accelerate its economic restructuring while ensuring stability in economic development; the renminbi will play an important role in global markets in 2014,” he says.

Regional co-operation is a further objective for ICBC Macau. “Macau’s economy will maintain growth in the process of integration of Guangdong, Hong Kong and Macau. We shall grasp opportunities brought by these events as well as internet financing by using our technological advantages,” says Mr Zhu.

Malaysia: CIMB

Already a key player in Malaysia’s banking sector, CIMB’s international expansion, digital banking services throughout Asia and recent acquisitions make it even more pivotal to the country’s financial sector.

“Our greatest challenge was to enhance scalability and efficiency of the business as we grow our operations in the midst of market volatility and heightened competition. However, CIMB continues to play a significant role in Malaysia and remains the largest broker of Bursa Malaysia,” says Tengku Dato Zafrul Tengku Abdul Aziz, the CEO of CIMB Group.

CIMB’s reach throughout Asia is noteworthy. In March 2013, CIMB Group completed full acquisition of Royal Bank of Scotland’s cash equities and investment banking operations in Hong Kong, Australia, India, South Korea and Taiwan. The bank now has more than 110 analysts covering over 1100 stocks across Asia and can execute merger and acquisition and capital market deals in key Asia-Pacific markets. CIMB’s cross-border deals rose from 30 in 2012 to 73 in 2013.

In Malaysia, Indonesia, Singapore and Thailand, CIMB’s growth is defined by significant digital banking expansion. Products include Octosend (a service allowing customers to transfer money using mobile phone numbers or email addresses), CIMB Kwik (Malaysia’s first account in which a customer can apply for a loan without going to the branch) and Plug ‘n’ Pay (Malaysia’s first card-based mobile payment solution). “Our enlarged investment banking franchise continues to leverage on our expertise as Association of South-east Asian Nations experts with an Asia-Pacific reach,” says Mr Aziz.

One of CIMB’s future goals is strengthening human capital. “We aim to keep attracting the best talent through various programmes such as ‘The Complete Banker’, CIMB Fusion and our CIMB-Insead collaboration,” says Mr Aziz. 

Mongolia: Golomt Bank

Sound asset liability management allowed Golomt Bank to achieve sky-high net profit increases in 2013, despite a stuttering global economy.

“Sluggish growth globally and in China, which has a direct impact on the Mongolian economy, as well as delays in major mining projects and plunging foreign direct investment were tough on the [Mongolian] banking system as a whole,” says Ganbold Galsan, CEO of Golomt Bank.

However, Golomt Bank managed to increase net profits by 117% in 2013 on 2012’s figures. The financial institution’s overall deposits also grew considerably and reached $1.31bn in 2013 – the largest deposit share (22.6%) in Mongolia’s banking system.

Golomt Bank strongly supports local small and medium-sized enterprises via collaborations with the Ministry of Industry and Agriculture. Golomt is the only Mongolian commercial bank funding SMEs in the wool, cashmere, greenhouse, dairy farming and garment industries via the Chinggis bond (Mongolia’s sovereign bond) proceeds.

The bank has also been active with regards to credit cards. It introduced a debut MasterCard enabling tughrik payments worldwide and the American Express Gold Card. “Honouring our reputation of being the most innovative bank in Mongolia, we have made a number of advances such as issuing the first American Express card,” says Mr Galsan.

Golomt Bank seeks to capitalise on further domestic development. “In the long run, we are confident that aside from the mining sector development, there will be strong growth in Mongolian infrastructure, agriculture and manufacturing,” says Mr Galsan.

Internationalisation is also on the agenda. Golomt has signed a memorandum of understanding with China Minsheng Bank to reinforce business links with the mainland. It has also signed a co-operation agreement with South Korea’s Daewoo Securities for the joint funding of large-scale projects and has become a founding member bank of UnionPay International to contribute in expanding global settlement services.

“Our bank will be putting great effort into entering international markets to attract investment. We aim to become a strong local bank with a sound global presence. The governance of the bank is reaching international standards, which will increase our competency globally,” says Mr Galsan.

Myanmar: Kanbawza Bank

Myanmar still has a relatively immature banking sector that is largely playing catch-up with the rest of south-east Asia. However, it remains one of the most interesting emerging economies which international investors and banks alike are eyeing very closely – mainly for its vastly untapped customer pool.

Less than 20% of the population has access to financial services, and only 5% use formal banking services. There are slightly over 1000 private bank branches to serve a population of more than 60 million.

Kanbawza Bank (KBZ) – which accounts for 35% of Myanmar’s market share – is on track to fill these gaps. Over the past 18 months, it has increased its branches from 102 to 270. Its number of ATMs has also risen from 120 to 191.  

However, obstacles remain. “Capacity building has been a main challenge. The acute shortage of skilled and experienced personnel made recruitment and retention challenging. A strategy on human capital is now in place to build our capabilities and strengthen effectiveness,” says U Aung Ko Win, KBZ’s chairman.

KBZ has recruited foreign and Myanmar bankers with international experience to increase skills and facilitate knowledge transfer. The bank has two training schools which train 300 employees each month.

Leading up to 2013, KBZ had focused on upgrading its technology as well as its product offering. Improved technology has allowed the bank to respond to corporate clients’ demand and start offering trade financing, treasury management and cash management services for the first time. 

On the retail side, KBZ has introduced card services, retail loans, hire purchase, deposits and workers’ remittances.

As a result of KBZ’s innovations, between 2012 and 2013, deposits grew by 63.5% to Kt3.71bn ($3.6m), loans increased by 60.62% to Kt2.51bn and fee income grew 52% for the 2013 financial year.

Nepal: Global IME Bank

The Nepalese banking sector is not an easy one in which to thrive. The central bank’s abrupt axing of real estate financing squeezed market liquidity and sent deposit rates soaring to 13% towards the end of 2014. The Nepalese banking sector is also over-banked, suffering from slow growth because of some inefficient market reforms.

Global IME Bank has steered its way through this choppy market by upgrading its retail operations and completing four financial institution acquisitions in the past two years. “While things were still settling, beginning and completing yet another merger with a commercial bank was a huge challenge to accomplish. Generating sustained return on enhanced equity and ensuring proper employee integration was another test we faced,” says Ratna Raj Bajracharya, CEO at Global IME Bank.

These acquisitions have increased Global IME’s Tier 1 capital and assets significantly. The latest mergers with Commerzbank and Trust Bank Nepal raised Tier 1 capital by NRs2.08bn ($20.86m) and assets by NRs 13.4bn.

These transactions also helped reinforce the bank’s positioning domestically. “It was instrumental in hugely enhancing brand value. We have positioned ourselves among the top five banks in Nepal with greater reach and the highest paid-up capital. Profitability has grown by 117% despite difficult market conditions,” says Mr Bajracharya.

Meanwhile, the bank has worked to boost its retail business. It has tapped less banked, semi-urban Nepalese areas where credit demand is quite small but high-yielding. Global IME Bank is also the Nepalese bank with the highest number of branches. 

Despite its achievements, Global IME is still in the delicate consolidation process in the aftermath of its acquisitions, and further reinvention is ahead. “Refining our portfolios with particular focus on small and medium-sized enterprises and increasing involvement in infrastructure projects will be next. We are poised to expand our presence globally. The registration of representative offices in some countries, including Australia, has already been completed,” says Mr Bajracharya.

New Zealand: ASB

ASB has demonstrated an impressive ability to maintain operational stability while shifting to more digital-focused banking services and venturing into new domestic customer pools. 

Despite these changes, the bank has continued growing. Net profits, Tier 1 capital and assets all increased in 2013. Growth on 2012’s figures was 6.9%, 18.6% and 4.8%, respectively.

“ASB has a core strategy of doing the basics well and maintaining a strong customer service culture, even as the shift to digital channels accelerates. ASB has been working collaboratively to integrate digital technologies and align internal data with ASB staff capabilities to explore how it can best meet customer needs and deepen customer relationships,” says Barbara Chapman, CEO and managing director at ASB.

There have been more than 100 million log-ins across ASB’s retail internet and mobile channels – a significant figure considering New Zealand’s population is just over 4 million. Over the past year, the bank has also invested in a series of cross-sell data experiments, which generated a 16% growth in product conversion after just five weeks.

“Known historically as a strong retail bank, ASB has achieved significant success in non-traditional markets through targeted growth in the underpenetrated commercial, corporate and rural markets,” says Ms Chapman. ASB’s lending growth in these areas is two-and-a-half times that of its overall business. This success came after the bank deepened staff specialisation in industries such as manufacturing, wholesale trade and health.

In terms of corporate social responsibility, ASB has set up school collaborations via its ASB GetWise scheme. This has become the country’s leading free financial literacy programme for primary and intermediate schools, reaching 400,000 students. The bank has also set up a programme with charitable trust Poutama, dedicated to creating an environment for Maori business ventures and economic growth.

“ASB believes that working collaboratively with partners and stakeholders to build a new digital ecosystem, based on a ‘bridges not walls’ approach, will deepen its capability to meet customer needs more quickly,” says Ms Chapman.

Pakistan: HBL

HBL has expanded significantly in the past 12 months through attracting new customers and building branches and ATMs across Pakistan. This has generated a 30% profitability increase, which, according to CEO Nauman K Dar, is well above the local industry’s average.

This growth is even more significant when considering that despite its first-ever democratic political transition in 2013, Pakistan’s economy remained largely stagnant due to energy shortages, a sub-optimal tax-to-gross domestic product ratio and a challenging law and order climate. Banks faced an unfavourable regulatory environment with low discount rates and increases in the minimum rate for savings accounts. However, HBL deposits grew by Rs186bn ($1.83bn) between 2012 and 2013, reaching an unprecedented Rs1400bn in volume. 

HBL has become the largest private sector bank over the years, with 1594 branches and 1450 ATMs, servicing a domestic and international customer base that exceeds 6.5 million individuals. Acquiring Citibank Pakistan’s consumer business and card portfolio contributed to HBL’s network expansion.

“With the largest number of branches and distribution channels in the country, HBL provides the requisite coverage for increasing home remittance flows, the balance sheet strength to finance large projects and the ability to structure complex trade transactions,” says Mr Dar.

Away from Pakistan, HBL operates in 25 countries via branches or subsidiaries. It has offices in the US, the UK, Singapore and Bahrain, though China is of particular interest for the bank. “HBL is well positioned to capitalise on overseas investments opportunities, especially from China in the field of energy, infrastructure and logistics,” says Mr Dar.

HBL lending to small and medium-sized enterprises and the rural or agriculture sector grew by 7% and 20%, respectively, between 2012 and 2013. HBL also has mobile vans to access remote, unbanked areas in Pakistan. In addition, the bank is targeting younger customers via universities and colleges, and looking to improve women’s inclusiveness through targeted deposit schemes.

Philippines: Landbank of the Philippines

In a year when the Philippines was disastrously hit by Typhoon Haiyan, Landbank of the Philippines exemplified how financial services can be crucial on the ground in a natural disaster scenario while maintaining a strong performance in net profits, assets and Tier 1 capital.

Year-on-year net profits increased by 16% in 2013, while assets grew 24% and Tier 1 capital by 16%. All these figures represent Landbank’s best performances since at least 2011.

Despite its new programmes, Landbank’s cost-to-income ratio has dropped, from 62.6% in 2011 to 52% in 2013.

In the southern areas where the typhoon hit the hardest, Landbank immediately deployed its mobile ATMs, which typically support the Conditional Cash Transfer (CCT) government programme providing cash grants to poor households facing education and health problems. This allowed financial services to be extended promptly in the aftermath of the disaster. Landbank was also the first bank to restore services in the typhoon-hit areas.

Its impressive work during the natural disaster led to Landbank’s collaborations with the United Nations Development Programme for a ‘cash for work’ programme and with the World Food Programme for a ‘cash for assets’ initiative. In the former, beneficiaries are paid via mobile phones for clearing rubble, debris removal and waste management amid the typhoon aftermath. In the latter, beneficiaries are given cash in exchange for work on new infrastructure.

Separately to its work in typhoon-stricken areas, Landbank has also developed mobile apps and ATMs for those underserved by financial institutions in the Philippines. By the end of 2014, it will launch Landbank Easy Access Facilities – a banking office tailored to those living in unbanked areas. The bank has also launched the Philippines’ first mobile service offering electronic salary loan applications, processing and releasing, which comes with an auto-saving component – the Landbank Mobile Loan Saver. 

Singapore: DBS

DBS broke new records through its performance in 2013, which is remarkable considering its business has historically been correlated with interest rates – which have been very low in Singapore in recent years – and taking into account the macroeconomic softening in two of DBS’s key business areas.

“Against the backdrop of a more complex regulatory environment, we saw a slowing Chinese economy which dampened growth in the region, and impacted the offshore renminbi and regional trade flows. We also saw continuing headwinds in India’s macro economy,” says Piyush Gupta, CEO and director at DBS Group.

However, DBS 2013 earnings hit a record S$3.5bn ($2.7bn) – the highest among Singapore banks. In the first half of 2014 alone, DBS earnings were equal to the whole of 2009.

DBS has focused on establishing its name further in Singapore, by supporting the market-leading Singapore Airlines, for instance. Meanwhile, DBS’s Hong Kong operations, which have close business links with mainland China, achieved record earnings of S$851m in 2013.

DBS is also prioritising expansion in India. “We are bullish on an India turnaround. We will continue to grow our transaction banking and debt capital markets there,” says Mr Gupta. DBS is the fourth largest foreign bank in India.

DBS is also undergoing a digital revolution. In May 2014 it launched its DBS PayLah! App, with which a user can transfer funds using a mobile phone number. Within six weeks, it became the top finance app on Singapore’s iTunes.

The bank also launched the HomeConnect app in 2013, where homebuyers can discover a property’s valuation or recent transaction prices by pointing their mobile device at the building.

In 2014, DBS announced it will invest S$200m over the next three years in its digital services, in addition to an annual S$600m budget. “We have embraced the digital revolution wholeheartedly and believe that we have what it takes to delight our customers and make banking joyful,” says Mr Gupta.

South Korea: Hana Bank

The South Korean banking sector has not had an easy 12 months, with a number of scandals involving financial institutions’ Japanese operations, as well as accusations of rate colluding at home. However, Hana Bank was one of the few South Korean banks to record profits by the end of the financial year in 2013. Indeed, the lender’s net profits rose by 14.13% from 2012 to 2013, reaching Won655.2bn ($596.4bn). Total assets, deposits and loans also showed positive growth of about 4% each.

Hana Bank has undertaken significant expansion abroad, focusing on Indonesia and China. In March 2014, PT Hana Bank merged with PT Bank KEB Indonesia to form PT KEB Hana Indonesia. This new entity combines KEB’s grasp on Indonesia’s domestic retail banking and Hana Bank’s corporate finance experience.

In China, Hana Bank currently operates 20 branches, is licensed to carry out yuan-based transactions and has a debit card business. It also has an equity partnership with China’s Bank of Jinlin, giving Hana a boost in the regional credit card business. 

Hana Bank also has the most extensive overseas network among South Korean financial institutions, with 128 networks including 12 local subsidiaries.

The lender has also worked to reinforce its business ties with South Korean small and medium-sized enterprises (SMEs). Hana Bank is in fact collaborating with the Korea Technology Finance Corporation to help SMEs harness new technologies. As part of the collaboration, Hana is allocating Won2bn-worth of funding to help some 1000 SMEs.

The financial institution has also invested in its clients’ data protection. In April 2013, Hana Bank launched its financial customer protection division to safeguard its clients. This investment proved useful during the enormous data leak in South Korean banks earlier in 2014. Hana Bank was one of the few banks whose client information remained secure. 

Sri Lanka: Commercial Bank of Ceylon

Sri Lanka’s banking sector has faced numerous problems in the past few years, especially as the economy it services is still commodity-based, and thus potentially volatile. However, Commercial Bank of Ceylon (CBC) has undertaken varied initiatives in the past 12 months to sustain strong performance.

The bank has had to face a number of obstacles in this time period. “Our main challenges were managing the drop in credit demand and the resultant excess liquidity. The international trade sanctions imposed on some major Sri Lankan tea-buying nations had a compounding effect,” says Ravi Dias, managing director at CBC.

Nonetheless, the bank has retained a robust, healthy structure. CBC currently has the highest market capitalisation among Sri Lanka’s banking, finance and insurance sector (SLRs95.65bn, or $729.87m). This figure is double that of the nearest competitor.

“I would say our main success was the very fact we were able to maintain the growth rates that we were targeting despite falling margins,” says Mr Dias.

In addition to Sri Lanka, the bank has grown its presence in Bangladesh further. CBC has 18 branches and service points in the country and has recently launched internet banking in the market.

However, Mr Dias is aiming for further internationalisation. “Having achieved quite a strong presence in Sri Lanka and Bangladesh, we are looking at regional opportunities for expansion. We will also grow into new markets by targeting customer segments through a recently acquired consumer financing subsidiary. This will give us better returns without compromising our risk-reward policies,” he says.

At home, the bank has revamped its own branches by carrying out refurbishments, operating system upgrades and by relaunching its internet banking service. It has also allocated investment to staff training and reinstated its internship programme.

Taiwan: Cathay United Bank

On the back of support from the government and regulator Financial Services Commission, Taiwan’s banks have started to increasingly expand abroad in an effort to escape their home market’s excess liquidity. Cathay United Bank (CUB) has ridden this expansionary wave while reinforcing its domestic operations to support internationalisation. 

CUB has strengthened its presence in both mainland China and the Association of South-east Asian Nations region on the back of economic growth in these regions. CUB’s overseas income increased significantly from T$2.9bn ($94.2m) in 2011 to T$6.9bn in 2013. The percentage of pre-tax profits it accounted for also grew from 23% to 42% during the same period. Indeed, CUB’s Shanghai branch has been the most profitable branch of all Taiwanese banks in China for three consecutive years since opening in 2011.

Elsewhere, in Cambodia, CUB attained full ownership of Singapore Banking Corporation and its 16 operations in the country. The institution was renamed Cathay United Bank Cambodia in January 2014.

The bank’s expansion has the aim of ultimately transforming CUB from a local, Taiwan-based institution to a pan-Asian bank with a deep, extensive network in the region connecting various markets and operations. This trend is very strong within Taiwan’s banking sector. In fact, CUB peer China Trust Commercial Bank recently acquired Japan’s Tokyo Star Bank in 2013.

As well as doing well internationally, CUB’s performance has been strong in its domestic market. It recently won the sought-after deal of becoming the credit card issuer for retailer Costco (China Trust was the incumbent). CUB received 800,000 credit card applications between the card launch in August 2013 and the end of 2013.

CUB’s own credit card business has been booming too. Its cards’ retail sales volume increased from T$15.06bn in December 2012 to T$25.8bn in December 2013. 

Tajikistan: Amonatbank

Tajikistan’s Amonatbank made substantial progress in 2013 in a number of key areas, most notably in bolstering its Tier 1 capital, which saw a 125% increase. This builds on two consecutive years of Tier 1 growth for the banks, with 129% and 125% increases recorded in 2012 and 2011, respectively. Beyond this, the bank has also been successful at introducing innovative new products and services, as well as achieving digital connectivity between its key operational centres in the country for the first time. 

While Amonatbank’s assets saw only marginal growth in 2013, with an increase of 0.3%, its net profits rose by 110%. Meanwhile, return on equity remained relatively stable at 12.68%, down slightly from the 12.72% recorded in 2012. 

In 2013, the bank successfully completed its programme to transfer pension payments via bank cards. This was rolled out across a number of the country’s largest cities, including Aini and Konibadam. This follows a similar initiative in which Amonatbank has negotiated agreements with some of the largest public agencies and organisations to administer staff payments through bank cards. Moreover, it also introduced a number of new products and services accessible exclusively via card for its standard retail customers.  

In a further nod to the bank’s commitment to innovation, Amonatbank has worked to improve the payment options for public utilities through online and associated channels. Not only has this improved the service quality for individuals when paying utilities, it has also increased the volume of utilities payments by about 10% for existing customers. 

Amonatbank is also working to enhance its physical presence across Tajikistan with the development of new branches taking place in Yavan, Vakhsh and Khujand to meet greater customer demand and improve its penetration in the domestic market. 

Thailand: Krung Thai Bank

Thailand’s economy has struggled of late. Slowing economic growth, high levels of household debt and political conflict have all posed challenges to Thai banks. However, Krung Thai Bank (KTB) achieved record-breaking net profit earnings in 2013 while providing some interesting programmes to assist its local communities.

KTB’s net profits in 2013 rose by 45.2% year on year, to Bt33.93bn ($1.04bn). “This was far beyond any goal we had set ourselves, and it mainly derived from our five strategic objectives. This has led KTB to achieve a sustainable leap together with [our] stakeholders… employees, customers, society, the environment and shareholders,” says Vorapak Tanyawong, president of Krung Thai Bank. 

KTB’s work is also very diverse, with it offering a wide array of loans to support Thailand’s rural community and the environment. The bank offers small and medium-sized enterprise (SME) loans for the government’s ‘One Town One Product’, which encourages local entrepreneurs to improve the quality and marketing of a specific product in every Thai sub-district.

In addition, KTB partners with the Kasetsart Energy and Technology Management Centre to offer green term loans for schemes that support energy saving and that use alternative, renewable or clean energy.

Regionally, KTB is capitalising on inter-linking within the Association of South-east Asian Nations (Asean) region while supporting migrant workers. The Asean Payment Gateway is a service that allows KTB retail customers to transfer accounts to its Asean partner banks. 

“We aspire to become a top-tier bank in Thailand and a second home for our employees by capturing new growth opportunities through digital consumers, SMEs, rapid urbanisation, disruptive technology, growing capital markets, government infrastructure projects and the upcoming Asean Economic Community,” says Mr Tanyawong.

Turkmenistan: The State Bank for Foreign Economic Affairs of Turkmenistan

Impressive growth figures coupled with an ambitious expansion plan and ongoing commitment to digital and mobile innovation all ensured that the State Bank for Foreign Economic Affairs of Turkmenistan landed this year’s country award. 

The bank’s net profits surged by 163% in 2013, following similar increases in the two previous years, while total assets grew by 119.5% to complete a remarkable development story for the year. Meanwhile, the bank’s management has been conscious of shoring up its capital levels, and as such Tier 1 capital expanded by 118% last year. 

Accompanying this growth, the bank achieved a number of notable milestones in 2013. An agreement was signed with MasterCard Worldwide for the issuance and servicing of cards, a first for Turkmenistan. Moreover, the bank also engaged a new small and medium-sized enterprises initiative, in support of a government programme to extend additional credit to this sector, which has involved the roll-out of credit services tailored specifically to support the growth of these businesses. 

Other notable advances were achieved in the field of mobile and internet banking. A new service covering SMS and email alerts notifying customers when money is transferred to or from their accounts has been introduced, while both retail and corporate clients are able to request an account balance via SMS. To complement this progress, investments in the bank’s branch infrastructure were also executed in 2013. Two new branches were opened to cater to the retail market in the capital as well as faster growing provincial regions of the country.

Looking ahead, the bank has prioritised growth among the country’s younger population profile and this will include greater opportunities for cashless payments as well as services tailored to meet the demands of this more tech-savvy group.

Vietnam: Sacombank

Though Vietnam is one of the many south-east Asian countries undergoing strong economic growth, it is also home to a stuttering banking sector. Yet despite these challenges faced by domestic banks, Sacombank has expanded both domestically and abroad.

“Vietnam’s economy has not fully recovered from the recession which is leading to slow credit growth, low quality loans and limited growth of chartered capital,” says Sacombank CEO Phan Huy Khang.

Indeed, Vietnam’s financial market is still immature. “Due to the low diversity of the financial market, those seeking medium- and long-term financing still rely on banks, while deposits are mainly short term. This could cause instability and an unsustainable liquidity situation in the long term,” says Mr Phan.

However, Sacombank has performed well and has an ambitious plan to take it up to 2020. Its aims include growing assets by 16% a year; increasing equity by 15% a year; raising capital from economic entities and residents by 16% a year; increasing loans by 16% a year and increasing profits before tax by 22%, annually.

 The bank has also restructured its capital make-up. In diversifying capital sources, especially focusing on residents’ deposits, Sacombank is seeking to further stabilise its business. 

“By targeting the correct [areas], and providing a broad range of services and products, Sacombank has been growing steadily in terms of total assets, total deposits and it has maintained good credit quality and sustainable financial indicators,” says Mr Phan.

Sacombank has also expanded its international network, which now consists of 427 transaction offices. The bank is present in 48 of the 63 Vietnamese provinces and cities as well as in Laos and Cambodia. Sacombank also became the first Vietnamese bank to establish a fully owned operation in Cambodia. 

“Sacombank will continue to strengthen retail banking, boosting long-term fund mobilisation, lending and services – with particular emphasis on cards, electronic banking and payment utilities – and cashless payment,” says Mr Phan. Increasing Sacombank’s scale via mergers and acquisitions and raising equity from strategic investors is another objective.