Home to some of the world's largest and fastest-growing banks, competition among lenders in Asia-Pacific was tough, with only the most innovative and profitable players picking up honours in this year's Bank of the Year Awards.

Asia-Pacific winners:

 

Afghanistan: Afghanistan International Bank

Afghanistan’s banking sector has not had an easy year. Tumultuous presidential elections and political instability in 2014 did not make for a stable business environment. Elections first occurred in April last year only to be unravelled in June with a run-off between the two leading candidates. The country’s Independent Election Commission named a winner only in September, which was followed by more political impasse as opposing parties failed to collaborate.

Very strict anti-money laundering regulation was a further challenge to Afghanistan’s banks. Regulators’ increasingly hardline stance has made international clearing banks heavily scrutinise correspondent relationships with Afghan banks. Major international banks closed their US dollar accounts with all Afghan banks except Afghanistan International Bank (AIB) on the back of the country’s proximity to Iran and history of corruption.

Notwithstanding critical political and business conditions, AIB’s net profits grew year on year by 100.2% to $8.57m in 2014 – a considerable recovery after a 55.41% drop from 2012 to 2013 to $4.28m. AIB’s assets also improved, with a 12.2% year-on-year increase to $964.2m in 2014. Key to the bank’s stability is a large proportion of assets – 75% – in the form of cash or investment-grade international bonds and a capital adequacy ratio of 15%.

Digital innovation played a strong part in AIB’s positive performance. In 2015, it launched a ‘home equity’ loan targeting retail customers. This product allows clients to generate equity from their wholly owned properties, which sometimes also translates into purchasing a second property. 

AIB also experienced strong demand for its prepaid MasterCard and China Union Pay cards. Customers of AIB’s debit cards now number 60,000.

Despite Afghanistan’s difficult economic conditions, AIB also set up a ‘banking for small business’ department, which will help smaller firms become involved in Afghan exports, import substitution and to strengthen their position in the global marketplace.  

Australia: Westpac

A reinvention of its core businesses and a rethink of its geographical focus and digital offering has allowed Westpac to win the Bank of the Year award in Australia for the second year running. 

Part of this rethink involves Westpac’s renewed focus on wealth management services that cater to customers over 50 years of age. At present, 22% of Westpac customers have wealth or insurance products, which is well above the industry average. The lender also developed a funds platform to increase its market share for superannuation and insurance. 

At the opposite end of the banking spectrum, Westpac also set up a commercial and business banking division in June 2015, focused on servicing small and medium-sized enterprises (SMEs), commercial and agri-business sectors, and asset and equipment financing.  SME lending alone has increased by 9% in the past 18 months. According to the lender, SMEs have found the new video conference capabilities in 575 of Westpac’s sites particularly useful. A new mobile internet banking platform targeting business customers – which already has 300,000 clients – also attracted SME clients.

Beyond Australia’s borders, Westpac is building its presence in Asia-Pacific to capitalise on the growing connectivity among different markets in the region. Westpac recently opened a sub-branch in Shanghai’s free-trade zone and launched an automated cross-border payment system with faster end-to-end payment processing.

In neighbouring New Zealand, Westpac’s advancement has been mainly technological. In 2015 it launched Westpac New Zealand’s online and mobile banking platform, Westpac One. More than 500,000 of the bank’s customers have already migrated to this new platform.

All these transformations are being supported by Westpac’s strong performance overall. The bank’s total assets grew year on year by 10.7% to A$770.84bn ($628.7bn) in 2014. Net profits also experienced double-digit growth of 10.9% to A$7.56bn in 2014. Even Tier 1 capital, which dipped between 2013 and 2014, showed signs of recovery in the first half of 2015, having increased by 7.3% over annual 2014 data.

Bangladesh: Standard Chartered Bangladesh

Standard Chartered Bangladesh – the largest foreign bank in the country – stood out for facilitating cross-border investment, as well as being in touch with the local real economy while maintaining strong growth. 

Maintaining this positive performance has not been easy for the lender, considering the volatility and uncertainty in external markets in the past year. “Overall, there was substantial liquidity surplus in the financial sector. There were instances of operational control lapses for several banks here, but we still managed to keep non-performing loans at a much lower level compared with the industry,” says Abrar A Anwar, chief executive of Standard Chartered Bangladesh.

Nonetheless, net profits grew year on year by a chunky 41% to Tk12.61bn ($158.5m) in 2014 and Tier 1 capital increased by 15% to Tk26.22bn in the same period. 

Digital innovation is a big part of the bank’s development. The lender became the first in the country to introduce iBanking, e-statements and SMS banking to all customers. Between 2013 and 2014, there was a 48% increase in iBanking transactions. SMS banking customers and e-statement penetration grew by 23% and 16%, respectively, in the same period. 

Reinvesting in the country is a priority for the bank, says Mr Anwar. Focusing on Bangladesh’s small and medium-sized enterprises (SMEs) is part of this strategy. Ever since starting to work with small businesses in 2004, the lender has accumulated 7000 clients, $130m in lending exposure and a $64m deposit base. The bank now offers SMEs collateral-free lending, such as long-term working capital loans of up to $125,000, among other products.

“The economy is at an inflexion point, and the banking industry will be the catalyst to help the economy grow at 7% or more. Standard Chartered will play a key role to help the local companies and entrepreneurs succeed,” says Mr Anwar.

Brunei: Baiduri Bank Group

Baiduri Bank’s strong performance over the past year is particularly significant considering new tricky banking regulation and the drop in oil prices affecting Brunei’s economy. 

In 2013, regulators introduced an interest rate cap on credit facilities and fixed the minimum interest rate on Brunei dollar savings and deposits, narrowing banks’ net interest margins. This followed the squeeze in credit card interest rates, which increased competition in an already saturated market.

In addition, the drop in oil prices in the past 12 months has hit Brunei’s economy. “As Brunei’s economy is largely driven by government spending with revenue mainly derived from oil and gas activities, oil prices remaining low and the government cutting spending may delay some infrastructure developments and affect the private sector,” says Pierre Imhof, chief executive at Baiduri Bank.

Notwithstanding these shocks, Baiduri’s non-performing loan ratio dropped to a meagre 0.01% in 2014.

In April 2014, Baiduri became the first Brunei bank to be rated by an international rating agency, with a Standard & Poor’s rating of BBB+/A-. “Baiduri Bank Group has continuously enjoyed good operating results despite challenges. This is due to a well-balanced set of core businesses: retail banking, corporate banking and consumer financing. This model helps cushion us against losses when one or more business lines are not performing well,” says Mr Imhof.

Baiduri also launched Baiduri Capital in June, which offers securities trading in international stock markets via an online portal. 

Baiduri acquired United Overseas Bank’s Brunei retail bank in October 2015. “This buyout gave us an opportunity to strengthen our retail business, in line with our long-term strategy of playing a leading role in the development of Brunei’s financial sector and in serving the people of Brunei,” says Mr Imhof.

Cambodia: Cambodian Public Bank

Cambodian Public Bank’s (Campu) strong performance this year, though starting from a large base, is significant. Campu experienced 23 years of uninterrupted profitability and in 2014 hit record pre-tax profits of $50.6m – up 36.5% from the previous year. 

Interestingly, overseas operations in Laos, Sri Lanka, Hong Kong and Vietnam accounted for 27% of the record pre-tax profits. “Excellent co-operation among the companies within Public Bank Group [in Asia-Pacific] creates better synergy, stronger Public Bank branding and customer satisfaction,” says Tan Sri Dato’ Sri Dr Teh Hong Piow, chairman of Campu.

At home, Campu performed strongly in terms of deposits and lending. Low-cost current account deposits increased annually by 21% to $285.1m by the end of 2014 and total gross loans expanded by 15.4% to $855m in the same period.

In addition to traditional banking, Campu also succeeded in increasing fee-based income, including bills and remittance services, credit card issuance and acquiring, e-banking and e-commerce to strengthen its revenue stream, according to Mr Teh. 

Digitisation has also been important for Campu. “The bank has invested heavily in technology by customising and upgrading IT systems to introduce new products and services to stay ahead in the competition,” says Mr Teh. Internet banking transaction volume grew by a chunky 40.7% year on year in 2014.

Campu’s work with small and medium-sized enterprises (SMEs) is also significant, considering they account for 99% of Cambodian firms. Campu’s initiatives include preferential interest rate loans, education programmes for SMEs, a new SME credit scoring sheet, online payments and roadshows to find new clients.

“The opening of new branches by other banks, targeting almost the same customers [as us], has led to more challenges in the banking industry,” says Mr Teh. 

China: ICBC

ICBC remains one of the strongest and largest banks on a global scale. This year, it led The Banker’s Top 1000 World Banks ranking by Tier 1 capital for the third year running. Not only that, but the year-on-year growth of Tier 1 capital in 2014 was an outstanding 20.1%.

ICBC’s performance is remarkable considering the squeeze on Chinese banks’ net interest margins by a combination of low interest rates and the implementation of deposit insurance. And relative to international peers, Chinese lenders have not built a strong non-interest income base over the years.

Diversifying revenue sources has therefore become key for banks in China to stay profitable. Pushing to grow fee-based income through investment banking and advisory, for instance, has been key to ICBC’s reinvention. 

Expanding operations abroad has also characterised ICBC’s strong performance. Some of the bank’s existing products now have a more international dimension. ICBC extended its global cash management product line – which reaches more than 4300 customers – to almost 70 countries and regions. The bank is also taking advantage of its leading role as a renminbi business lender. In 2014, ICBC’s cross-border renminbi business volume totalled Rmb3660bn ($595bn), up 65.7% from 2013. The bank’s renminbi clearing system now covers 75 countries and regions.

Significant to ICBC’s transformation is its renewed focus on small and medium-sized enterprises (SMEs). China’s top banks have historically focused on more lucrative, larger clients, argue analysts. ICBC also established an independent small and micro enterprise business management system and banking centre. It also launched products based on market research including ‘chain financing’ for SMEs. At the end of December 2014, ICBC’s balance of loans to micro firms and SMEs totalled Rmb4530bn. SMEs accounted for Rmb2800bn of the total. 

Hong Kong: Bank of China (Hong Kong)

At a time when mainland China is gradually opening up its financial markets and relaxing regulation to allow more foreign money and investors in, Bank of China (Hong Kong) is well placed to be a strong intermediary between the mainland and the overseas investor community.

But achieving this strong performance was not easy in current market conditions. “In the past year, we witnessed a sluggish global recovery and weak loan demand. We also saw continued volatility… due to market expectations of an imminent increase in US interest rates and changes in the renminbi exchange rate policy,” says Yue Yi, vice-chairman and chief executive at Bank of China (Hong Kong).

Originating from the mainland, Bank of China offered an entry to foreign buyers in business related to key projects being promoted by the Chinese government, namely the One Belt One Road infrastructure initiative, the internationalisation of the renminbi and China’s increasing outward direct investment. In this light, Bank of China (Hong Kong) established relationships with new RQFII – renminbi qualified foreign institutional investor scheme – applicants from Greater China and other countries.

“Leveraging our competitive edge and close collaboration with our parent company, Bank of China, we are committed to providing better financial services for Hong Kong, the Association of South-east Asian Nations countries and global customers as well as sustaining our business development and profit growth,” says Mr Yue.

Bank of China (Hong Kong) also participated in a number of syndicated loans for mainland corporates involved in overseas mergers and acquisitions through the parent bank’s Asia-Pacific syndicated loan centre. 

A burgeoning renminbi clearing network worldwide also supported Bank of China’s growth this year. The lender is the sole renminbi clearing bank in Hong Kong.

“By capturing the opportunities from the robust development of the offshore renminbi market, we were able to expand our business scope and continue our leadership in the offshore renminbi business,” says Mr Yue.

On the digitisation front, Bank of China (Hong Kong) launched initiatives including the WeChat banking service, the largest chat app in China, which allows clients to monitor their account and transactions remotely.

India: Yes Bank

Yes Bank demonstrated a multi-faceted growth path that not only carried strong socio-economic value in India, as demonstrated by the bank’s involvement in green financing, but also proved to be healthy and sustainable. 

In a country where public sector banks are struggling with high non-performing loan (NPL) ratios and poor capital, privately owned Yes Bank has demonstrated stronger fundamentals.

“While the reform process initiated by the government has picked [up] momentum, the economic environment in India was less sanguine than anticipated and the expected deleveraging of corporate balance sheets did not take place. Public sector banks in particular have been saddled with stressed assets, impacting the overall risk appetite in the system for fresh growth and capital formation,” says Rana Kapoor, managing director and chief executive at Yes Bank.

Yes Bank’s NPL ratio, though increasing slightly year on year, remained at a low 0.42% in 2015. Tier 1 capital also showed signs of health with a year-on-year 17.6% increase in 2014. An important factor in maintaining this sustainable performance was Yes Bank’s cautious approach to lending. In March 2010 loans accounted for 94.7% of Yes Bank’s portfolio; by March 2015 this figure had dropped to 64.7%.

“Yes Bank has maintained the best asset quality among Indian banks, while capitalising on opportunities for growth. This is through a robust risk management culture underpinned by a differentiated ‘knowledge banking’ approach focused on sunrise industry sectors,” says Mr Kapoor.

Yes Bank also played a strong role in spearheading green financing in India. It became the first Indian lender to issue a green rupee-denominated infrastructure bond in February 2015 and was involved in the International Finance Corporation’s debut green offshore rupee bond, printed in August 2015.

Indonesia: Bank Rakyat Indonesia

In a year when the macroeconomic and currency environment in Indonesia was volatile, Bank Rakyat Indonesia (BRI) played a strong part in supporting the real economy through its work with small businesses.

“The past year was a challenging one for Indonesia’s economy. The country is adjusting to global dynamics as the global economy slows down. Following the end of the commodity boom, domestic gross domestic product grew 4.7% for two consecutive quarters and the rupiah’s volatility also put pressure on business,” says Asmawi Syam, president director and acting chief executive at BRI. 

Notwithstanding this volatile environment, BRI continued to sustain the real economy in Indonesia through microfinance. BRI’s micro loans have more than doubled from 2010 (Rp75,400bn, or $6.05bn) to 2014 (Rp153,300bn). Today, they account for 30% of BRI’s loan portfolio.  

“Having a population of over more than 240 million in Indonesia, domestic consumption is still relatively stable, making our micro banking business the most resilient segment. With core expertise in micro banking, we maintained growth in this segment at 15% year on year,” says Mr Syam. 

BRI is particularly strong in tapping unbanked areas with branchless banking. Indeed, its staff can often reach and bank remote areas with just a van. 

To reach even more unbanked Indonesians, in 2014 BRI became the first bank in the world to own and operate a satellite. This aims to improve communication in a disjointed country such as Indonesia. 

“To maintain our position as the best bank in Indonesia, we need to continuously improve our competitiveness on the liabilities side by improving our funding structure. Therefore, we have concentrated our efforts on transaction banking. One of our innovations was to establish BRILink, an agent banking channel to capture transactions among the unbanked,” says Mr Syam.

Japan: Mitsubishi UFJ Financial Group

Japan’s banking sector is facing a tough time. Interest rates have hit record lows, interest margins are minimal, but lending demand has not picked up significantly in an economy that is struggling to regain momentum due to structural shortcomings and two-decade-long deflation. 

Nonetheless, Mitsubishi UFJ Financial Group (MUFG) has maintained its long-standing top position in the market by increasing fee-based income, aggressively expanding abroad and diversifying the scope of its financial group.

This year, MUFG has again come top of Japan’s banks ranking by Tier 1 capital. The bank’s capital base remained strong notwithstanding its overseas mergers and acquisitions to expand its scope and boost non-interest income. 

MUFG has operations in almost 50 countries. In the US, it has completed seven acquisitions since 2008 (when it acquired 22% of Morgan Stanley), some of which occurred by collaborating with the Federal Deposit Insurance Corporation, the independent US government agency designed to maintain stability in the country's banking system.

MUFG’s expansion efforts in the Asia-Pacific are also significant. The Association of South-East Asian Nations represents a key region for the bank. Growth in this area is spearheaded by Thailand, where MUFG acquired 72% of Bank of Ayudhya in 2013. It then integrated its Bangkok branch to form the fifth largest bank in the country. In Indonesia, MUFG already has a significant presence and a 12% foreign currency lending market share.

The lender has also climbed the rankings in terms of project finance at a time when infrastructure financing is very much needed in the Asia-Pacific region. MUFG has been one of the strongest banks in global project finance league tables for the past three years.

At home, the lender also stood out for offering yield-hungry clients new investment products such as mutual funds, annuity insurance, equity and wrap accounts in US dollars, euros and even emerging markets currencies. To reinforce fee income further, MUFG is focusing on increasing assets under management. 

Kazakhstan: JSC Halyk Bank

The Kazakh government’s pension reform of 2013 has put a strain on its banks, raising questions over the country’s plans for the sector. Despite these significant pressures, JSC Halyk Bank succeeded in fending off plans for it to purchase the government-owned BTA Bank and chose its own path with its acquisition of HSBC’s Kazakh operations.

“The pension reform has greatly hurt us, because the group has owned the country’s largest pension fund with a market share of 33%,” says Umut Shayakhmetova, chief executive at JSC Halyk Bank.

Yet, despite the negative backdrop, Halyk managed to increase its profits over the past two years, even boosting return on equity from 24% in 2012 to 27% in 2014. Assets also grew by 12% in 2014 on 2013’s figure, while the bank’s Tier 1 capital was 24% higher. 

In 2014, Halyk Bank acquired SB HSBC Bank Kazakhstan, the operations of which it is not merging with Halyk but running as a subsidiary. Halyk Bank is focusing its efforts on the integration of the new subsidiary bank into Halyk Group as well as planning a boost in funding for small and medium-sized enterprises under government programmes. The bank plans to continue to reduce its non-performing loan (NPL) ratio through write-offs as well as by transferring NPLs to its distressed asset managers, Halyk Project LLP and the JSC Fund for Problem Loans. It has also reduced NPLs with the help of the other instruments provided under the current legislation.

At the end of 2014, NPLs had already declined significantly to 12.9%, from 18% in 2013. Halyk Bank is targeting a ratio of 10% by January 1, 2016.

Kyrgyzstan: Demir Kyrgyz International Bank

In a banking sector challenged by the devaluation of the local currency, Demir Kyrgyz International Bank continued lending and innovating, making it The Banker’s bank of the year in Kyrgyzstan.

“The main challenge was the devaluation of the Kyrgyz som, [which] affected the market and lending,” says Demir Kyrgyz International Bank general manager L Sevki Sarilar. “In spite of this, our bank continued lending in the national currency to keep customers stable, not increasing interest rates.”

The devaluation of the local currency started in 2014 and was still showing its impact in 2015. The som fell from Kgs49.33 per $1 at the end of 2013 to as low as Kgs70.49 at the end of September 2015.

Demir Bank is encouraging an increase in non-cash payments, in line with the Kyrgyz central bank’s strategy. Demir Bank was the first lender in the country to offer its customers the option to make tax payments through internet banking. The solution was launched with a special campaign allowing tax payments to be executed free of charge in the first three months, while standard prices remain lower than other banks’ payment options through branches or payment terminals.

The bank also introduced the innovative Campus card, a single pre-paid card with all the functionalities of a student identity card, bank card, identification card, proxy card, library card and e-wallet. 

“Providing high-quality customer service, developing technology and increasing security [have been our] main principles for more than 18 years,” says Mr Sarilar. “[Next year] will be the year of mobile banking, new and more comfortable internet banking, account replenishment via payment terminals and other big projects. We still keep lending and for 2016 we are planning [to introduce a] 10-year mortgage programme.”

Laos: Australia and New Zealand Banking Group Laos

Australia and New Zealand Banking Group (ANZ) Laos had a mixed experience in 2014. Assets and net profits both deteriorated year on year, but they did so at the expense of a year-long, multi-million-dollar upgrade of the bank’s technological capabilities and platforms linking it to ANZ’s headquarters in Melbourne. But despite hits on net profits and assets, ANZ Laos’s Tier 1 capital increased year on year by a chunky 68.1% in 2014. 

“Investment in technology was a key focus for ANZ Laos, and as a result we have better connectivity to our 33 other ANZ country operations and can service our customers more efficiently,” says Tammy Medard, chief executive at ANZ Laos.

Last year, the bank also invested to expand in a new Laos region, Savannakhet, where multinational corporations are entering the country’s special economic zone. 

As lending demand in Laos falters, ANZ has been proactive in diversifying its revenue sources away from its loans business. There was double-digit growth in the acquisition of new clients in payments and cash management, and the bank’s global markets desk has grown more than 40% in the past year.

The lender also set up programmes close to the local community. In 2014 it launched a two-year graduate programme to help develop internationally minded local bankers as international banking in Laos started only seven years ago when ANZ acquired Vientiane Commercial Bank. ANZ Laos was also the first Laos-based company to sign up to the UN Women’s Empowerment Principles. 

To continue developing, ANZ Laos will focus on further investment in technology. “We are committed to upholding that standard by continued investment in the latest tools and technologies. We will continue to focus on capturing the growth in international trade to and from Laos with easy-to-use trade products that assist our clients in being as cash-efficient as possible,” says Ms Medard.

Macau: ICBC Macau

ICBC Macau continued growing sustainably in 2014 despite the economic slowdown in the special administrative region and in mainland China, home to ICBC’s headquarters.

“During the past year, Macau’s economic slowdown challenged our bank due to a dramatic decline in local gaming revenue,” says Zhu Xiaoping, chairman of ICBC Macau. “As one of the Chinese-funded banks, ICBC Macau was directly influenced by the transformation adjustments under the new normal in mainland China. Moreover, banking regulation from both local and mainland Chinese authorities became stricter.” 

Nonetheless, net profits and assets for ICBC Macau both grew 26% year on year in 2014 to 1.7bn patacas ($208m) and 177.22bn patacas, respectively. The lender’s Tier 1 capital also grew by 17% in the same period.

ICBC Macau offset the local economic slowdown by ramping up its cross-border business. The development of the Guangdong-Hong Kong-Macau free trade zone and a series of favourable policies created more opportunities for the bank to build its cross-border franchise.

ICBC Macau also grew in the e-banking space through its mobile and online banking channels. In 2014, it launched a 24/7 online customer service – the first time for any bank in Macau. To mark another debut, ICBC Macau also launched the first online product in the Macau market.

Developing the e-banking business and capturing the renminbi’s internationalisation will lie at the heart of ICBC Macau’s future growth. “For the next year, our bank will mainly focus on developing the asset management business and the online financial business further. Meanwhile, the bank will also seize opportunities from the internationalisation of the renminbi and from the One Belt One Road [infrastructure initiative] to maximise its regional advantages,” says Mr Zhu.

Malaysia: Maybank

Sustained by a strong performance in growth and Tier 1 capital terms, Maybank has experienced well-rounded development in the past year, including a rebalancing of its portfolio, spearheading innovation in the Islamic finance market and increasing digitisation and attention to local small and medium-sized enterprises (SMEs). 

To offset slow lending growth in Maybank’s key markets – Malaysia, Singapore and Indonesia – the lender has reshuffled its portfolio to increase fee-based income. It is now more focused on strengthening higher yielding business including high-net-worth clients, credit and debit cards, retail SMEs and banking for mid-sized corporates. 

Expanding Maybank’s overseas business is also part of this strategy. The bank wants international operations to contribute more to group profits, especially in countries such as Indonesia, Philippines and Cambodia, where margins are better and growth is stronger.

On the capital markets front, Maybank continues to be the global leader in the Islamic finance and sukuk markets, both as a borrower and as a deal manager. The bank has led the marketing and distribution of Basel III-compliant bank capital instruments in the Malaysian bond market. 

Investing in digitisation also contributed to Maybank’s performance. The bank has built on its Maybank2u internet banking platform and has introduced a ‘pay-and-sell’ function for small traders and retailers. The lender also launched a MasterCard digital wallet, Visa Pay Wave and Mobile POS. Maybank also introduced a cardless ATM withdrawal service. 

As SMEs represent a large part of Malaysia’s economy, as with other countries in the Association of South-East Asian Nations region, Maybank has renewed its focus on smaller firms. Its mortgage and business banking arms are now more tailored to these companies and the lender now offers unsecured products requiring no collateral for weaker SMEs.

Mongolia: Khan Bank

Khan Bank was the only lender among those who submitted entries for Bank of the Year in Mongolia whose net profits increased in 2014, which they did by 11.7%. Such struggles are attributable to Mongolia’s dependence on commodity prices and China’s economy.

“Low commodity prices and the slowdown of China’s economy hit Mongolia. Gross domestic product growth slowed to 2.3% in the first half of 2015 from 7.8% in 2014. Mongolian banks’ problematic loans increased while market liquidity was still tight. Developing business [while] controlling credit risks has been the main challenge this year,” says Norihiko Kato, chief executive of Khan Bank. 

Nonetheless, Khan Bank has continued to push for innovation while remaining profitable. Its Tier 1 capital even grew by a remarkable 34.6% in 2014.

In 2013, Khan Bank started revamping its operational and IT platforms. It replaced and updated its key production system hardware and disaster recovery hardware while building a new internal data centre.

Externally, Khan Bank focused on developing its retail offering. “This year, we successfully replaced our card system with an upgraded system. We also introduced state-of-the-art cash note recycling ATM machines, which are new to the Mongolian market. These strategic investments set a strong base for product development, customer service enhancement and the further growth of our business,” says Mr Kato. 

Khan Bank says it has the largest footprint in the country by serving about 80% of Mongolia’s households through a network of 539 branches and 372 cash machines.

Retail will continue to characterise Khan Bank’s plans. “The bank plans to strengthen the delivery channels of retail banking services further, such as electronic banking, ATMs, branch services and [our] call centre,” says Mr Kato.

Myanmar: Kanbawza Bank

Performing well in Myanmar’s banking sector over the course of the past 12 months has been far from straightforward, with the country looking to build a financial sector and the first democratic elections in 25 years being held. But Kanbawza Bank (KBZ) endured this volatility.

The slowdown in China’s economic growth was among the external shocks that exacerbated market volatility for Myanmar’s banks. “Market risk arising from the slowdown in the Chinese economy and the appreciation of the US dollar against the local kyat has been a challenging issue as this has impacted trade flow as well as funding. The dollarisation challenge in Myanmar is another hurdle given the increasing demand for physical US dollar requirements,” says U Aung Ko Win, chairman and chief executive of KBZ Bank. Nonetheless, net profits and total assets both grew in 2014, by 13% and 43%, respectively.

The introduction of new products strongly characterised KBZ’s development in the past year. In the corporate banking space, the lender launched KBZ QuickPay, which helps corporate customers collect ticket payments, bill payments and subscription fees over bank counters in any KBZ branch. Since its launch in September 2014, revenue from this new product has increased 300%.

KBZ also launched digital banking initiatives KBZ iBanking and KBZ mBanking in March 2015. These allow customers to access self-service banking on the internet, mobile phones and apps. This is the first time a Myanmar bank has launched a mobile and internet bank platform simultaneously.

Despite the bank’s strong performance, Mr Ko Win expects an even more eventful year in 2016. “The next financial year will be a more challenging and exciting one. The financial sector will witness further growth in tandem with higher investment flows, while the establishment of the capital market will add a further boost,” he says.

Nepal: Standard Chartered Nepal

Standard Chartered Nepal won the bank of the year award in the country thanks to its significant involvement in helping the local community and economy in the dire aftermath of the two earthquakes that hit the country in 2015. These efforts were that more remarkable considering the lender is a non-local entity. 

The macroeconomic and banking market backdrop was already tricky before the disasters. “In the backdrop of highly liquid money market rates and a suppressed interest rate regime, we had faced the challenge of compensating margin erosion through increased volumes in keeping the balance sheet capital accretive. The big earthquake subdued business sentiment and personal consumption, necessitating the launch of products that reflected current market expectations,” says Joseph Silvanus, chief executive at Standard Chartered Nepal. But none of the bank’s net profits, Tier 1 capital or assets deteriorated.

The lender did not lose a single business day following the first earthquake of April 25. As the main conduit for distributing donor funds, Standard Chartered provided non-stop services, including moving cash to remote locations for relief programmes.

As the only non-local bank in Nepal, Standard Chartered accumulated $2.8m from across the globe for post-earthquake relief, money destined for the Prime Minister Disaster Relief Fund account held with the bank.

Elsewhere, Standard Chartered broke new ground in arranging the first Chinese yuan account for Nepal’s central bank with the bank’s offices in China.

New client solutions also strengthened the lender’s development. “Our focus on efficiency, digitisation and having the ability to provide customised solutions to our clients through effective relationship management techniques helped us remain successful. Analytics drove a rise in multi-product holdings introducing a stickiness factor and better overall client experience. Our attempt to control costs through re-engineering processes has started paying a rich dividend creating positive Jaws [ratios, the difference between cost and revenues],” says Mr Silvanus.

Strengthening the bank’s retail, trade and payments arms is key to Mr Silvanus’s plans regarding future growth. “We are looking at enriching our retail product suite. Our ambition is to become the top bank in trade and payments by providing online solutions to clients and automating transaction processes in different areas for seamless execution,” he says.

New Zealand: ASB Bank

ASB Bank has received the Bank of the Year award for New Zealand for the second year running on the back of continued growth and strengthening fundamentals. Net profits before tax increased by a notable 13.5% year on year in 2014. Tier 1 capital and assets also grew, though at a slower rate, by 1.9% and 2.7%, respectively. 

According to Barbara Chapman, chief executive at ASB Bank, adjusting to disruptive technologies was the largest challenge faced by the lender. “Customers’ ever-increasing preference for mobile banking is changing the face of financial services, transforming business models and redefining our market. Against this background we have maintained a strategic focus on building our digital capabilities to provide faster, better and more seamless experiences for our customers,” she says.

One of the bank’s digital initiatives involves its mobile app. In April 2015, ASB became the only bank in the country to allow customers to fully block or unblock a misplaced card or a range of payment types (contactless, online or global payments) through its mobile app. Just 10 weeks after launch, more than 10% of ASB cardholders had chosen to apply a lock on their cards.

ASB also continued its transformation from a bank historically focused on retail to one venturing into commercial banking. The lender invested in its corporate, commercial and rural division and increased staff by 9% in the past year. 

For the future, mobile banking will continue to drive ASB’s innovation efforts. “Customers’ expectations for mobile banking are continually increasing so we must respond to their needs and continue to improve on the service we offer both online and on mobile. ASB has a long-held reputation for leadership in innovation and the coming year will see us continue to build on this with new products, services and experiences for our customers,” says Ms Chapman.

Pakistan: National Bank of Pakistan

Although National Bank of Pakistan (NBP) could arguably have a more sheltered growth path as a government-owned bank, the lender has shown innovation as both the country and its banking sector continue to modernise. The bank even recorded an impressive increase in net profits of 173.2% in 2014.

These results are even more significant when framed in the competitive banking sector that is present in Pakistan. “Pressure on interest margins and the extremely competitive banking landscape of the country were the major challenges in the past year. Internally, the bank required realignment of its business strategy in view of changing market dynamics, enhancing its technology platform, exploring new avenues of revenue growth and introducing new technology-based products,” says Syed Ahmed Iqbal Ashraf, president of NBP.

In connection to the local community, NBP partnered with cellular operator Mobilink and Waseela Microfinance Bank to develop its mobile cash project, Mobicash, as well as new NBP digital banking initiatives in the microfinance space. 

The lender is also working with cellular operator Ufone to offer branchless banking to NBP account holders. Services will include withdrawal and deposit-taking through the more than 27,000 Upaisa agents across the country. Upaisa is a Ufone bank account, linked to a Ufone connection, which offers bill payments and money transfer facilities.

“The bank realigned its strategy for a more focused approach towards its target market, enabling the launch of new products, cross-selling and capacity-building… The bank [also] achieved growth in low-cost deposits and its high-yielding, low-risk lending portfolio. The bank spearheaded the roll out of a lending programme for small businesses with a positive multiplier effect on the economy through greater financial inclusion,” says Mr Ashraf.

NBP has a 13% market share in the small and medium-sized enterprise (SME) financing market in Pakistan. The sustainability of its SME business is also relatively strong. The ratio of non-performing loans to total loans is at 20%, 10.5% below the industry average. 

To continue growing, the bank will explore growth in retail, agriculture and SME credit, says Mr Ashraf. Being involved in energy and infrastructure financing as well as increasing banking penetration will further help Pakistan’s economic development. Broadening NBP’s Islamic banking operations is another of Mr Ashraf’s goals.

Philippines: Security Bank Corporation

Focusing on its strengths and building competitive advantage in specific niche sectors has allowed Security Bank Corporation (SECB) to sustain strong growth in 2014. And to also venture into new territory with retail banking. 

SECB’s net profits, assets and Tier 1 capital all showed strong improvement. Their year-on-year growth rates in 2014 were 45.8%, 14.3% and 17.8%, respectively. 

“Our main challenge is to execute our strategy of growing our three core businesses [retail banking, wholesale banking and financial markets] in a backdrop of a competitive industry and growing market. We are growing our retail banking business to become a third pillar complementing our strengths in the other two businesses,” says Alfonso L Salcedo, president and chief executive at SECB, whose background as a consumer banker is best-placed to carry out this new initiative.

SECB’s good work allowed it to deliver the highest shareholder returns among listed universal banks in the Philippines in 2014 at 16.3%. 

Key to this positive performance is the bank’s efficiency. Its branch network is one fourth that of the country’s top three banks and its cost-to-income ratio sits at 50% or lower. The ratio of the top three banks is at least 60%. SECB’s health is also at the heart of its sustainability. In 2014, its deposits increased by 20% year on year while its non-performing loans ratio stood at 1% – one of the lowest in the industry.

“This year, our customer loans and deposits grew faster than industry and net interest margin from this business further improved. Consumer loans increased 81%, led by mortgages. Fee-based income grew 48%, with strong contributions from retail businesses (bancassurance, credit card and deposit transactions), investment banking and asset management,” says Mr Salcedo.

Singapore: United Overseas Bank

United Overseas Bank (UOB) demonstrated strong capabilities in fulfilling one of the key trends for banks in Asia-Pacific – building a significant network across the region to capitalise on the numerous high-growth markets in this jurisdiction. 

UOB now has a remarkable 500 branches and offices across Asia, with a particularly strong focus on south-east Asia – arguably one of the fastest growing parts of the world. The bank recently opened a branch in Myanmar as one of the first nine foreign lenders to be given a licence when the country opened up its financial sector after 25 years of military rule. 

This strong network allows UOB to play a key role in foreign direct investment (FDI). The lender set up nine FDI advisory units across Asia, partnering with government agencies and business associations. Since their launch in 2011, these units have acquired 600 FDI accounts with a total deposit flow of more than $20bn. 

This extensive footprint also lent itself to building a new renminbi solutions team. “We established a specialised team to help more enterprises take advantage of managing their cross-border business in renminbi,” says Ee Cheong Wee, deputy chairman and chief executive at UOB. The team provides advisory as well as cash management, foreign exchange, investment and hedging solutions. 

In terms of cash management across more currencies, in the first six months of 2015, UOB’s revenue in this space rose 42% year on year. “Our focus on supporting companies expanding and investing in Asia has fuelled the bank’s cash management business,” says Mr Wee.

Significantly, UOB is also developing its private banking offering – a business with strong potential in Asia-Pacific, which records the fastest growing high-net-worth wealth in the world. UOB’s wealth management assets under management (they include private banking) grew from S$48bn ($37.34bn) in 2010 to S$80bn in 2014. Private banking income and net profit after tax both grew by 31% year on year in 2014. “We have hired more private bankers to meet the rising demand for wealth management advisory services,” says Mr Wee.

South Korea: KEB Hana Bank

This year marked a significant milestone for Hana Bank as it finally completed a momentous merger with state-owned Korea Exchange Bank (KEB), which started in 2012.

“In September, Hana Bank finalised the integration processes with KEB earlier than scheduled and launched the single-entity KEB Hana Bank, becoming the biggest bank in Korea, with total assets of $254bn. Diverse client portfolios were combined from two banks, offering comprehensive services in both retail banking and corporate finance,” says Young joo Ham, chief executive of KEB Hana Bank.

This successful deal was particularly significant since mergers and acquisitions opportunities in the Korean banking sector are dwindling. The market is heavily saturated.

The merger also brightened up an environment otherwise tough to navigate for Hana Bank. Korea’s gross domestic product growth is faltering despite strong quantitative easing by the central bank, which is squeezing net interest margins for lenders while failing to revitalise the economy.

“With interest rates likely to remain at depressed levels for years, profitability of Korean commercial banks has decreased compared to previous years due to low net interest margin. Despite the growing importance of non-interest income sources such as fees, alternative revenue drivers so far have not provided much support for the profitability,” says Mr Ham.

To beat low profitability at home, KEB Hana Bank is focused on building fintech collaborations with start-ups. It set up a lab to foster these links. The lender also launched a new app, Hana Members, which aggregates users’ loyalty points from schemes associated with e-commerce platform SK Planet, leading retailer SSG Shinsegae and conglomerate CJ, which is in the food, home shopping and entertainment industries, among others. Users can also transform aggregated points into cash.

Sri Lanka: Sampath Bank

Sampath Bank demonstrated a rich mix of initiatives in the past 12 months – ranging from an upgraded mobile application, to a new small and medium enterprises (SMEs) programme catering to youth and women, to measures lowering non-performing loans – which led to multifaceted, healthy growth.

Sampath’s net profits indeed grew by a chunky 43.3% year on year in 2014. Assets and Tier 1 capital also increased, respectively, by 13.1% and 15.8%, in the same period. 

But 2014 was not all easy for the bank. “Continued unsettled gold prices in the international markets and the resultant adverse impact on [the] pawning portfolio were a major challenge. Narrowing net interest margins, stemming from falling market interest rates was another challenge. We also faced the challenge of excess liquidity in the system up to the first half of 2015,” says Aravinda Perera, managing director at Sampath Bank.

But the pawning portfolio challenge disappeared in 2015, allowing Sampath to achieve the best CASA (deposits in current and saving accounts to total deposits) and return-on-equity ratios in the industry in the first half of this year, says Mr Perera.

What is more, Sampath’s asset portfolio growing steadily, and soon overcoming the SLRs500bn ($3.8bn) mark, means the bank will become a “domestic systematically important bank” under Basel III regulation, adds Mr Perera.

The lender’s mobile application, upgraded in 2014, also marked significant progress. The app now combines the bank’s entire range of mobile and telebanking services, and also facilitates real-time connection to social media for customers.    

According to Mr Perera, SMEs will remain an important part of Sampath’s strategy. “We will strategise to optimise the returns on investments made in people, processes and technology to fulfil future demands. We also foresee greater opportunities in retail and SME segments in the future.”

Taiwan: CTBC Bank

CTBC Bank has achieved a number of goals in the past year, starting from growing its international presence to mergers and acquisitions (M&A) both at home and abroad, all the while achieving an impressive 82.39% annual growth in after-tax net profits in 2014.

This year CTBC exemplified Taiwanese banks’ trend of growing overseas. South-east Asia and India are the newest targets in this international strategy. Meanwhile, in North America, CTBC has focused its work on the ethnic Chinese community and on the asset growth opportunities of small businesses engaging in US-Asia commercial ties.

“[We] set up a meaningful regional footprint in Asia, with over 100 outlets internationally and [have achieved] initial success on capturing overseas market growth opportunities,” says James Chen, chief executive of CTBC. “[But] capturing attractive growth potential from overseas markets requires local insights and differentiated capabilities, which takes time to build.”

CTBC has also sped ahead in the M&A space. To expand its scope in life insurance and provide a broader range of products and services to its customers, the bank acquired a 100% stake of Taiwan Life. 

Abroad, CTBC will acquire a 100% stake in China Citic Bank International for T$11.67bn ($367m). This is significant as mainland China remains the key market to CTBC’s foreign expansion. 

“[One of our key successes was] to develop an inorganic growth approach in strategic overseas markets to accelerate our presence and share of the local profit pool,” says Mr Chen.

To continue growing, CTBC will focus on developing ways to target under-served customers, such as small businesses and digital-savvy clients; on connecting its international network to capitalise on growing cross-border capital and trade flows in Asia; and on reinforcing its business in China, Japan and south-east Asia further, says Mr Chen.

Thailand: Bangkok Bank

At a time when the Association of South-East Asian Nations region is developing quickly, catering to these countries’ small and medium enterprises (SMEs) is key for sustainable growth. Bangkok Bank demonstrated strong involvement in this segment while pushing for digitisation and maintaining profitability.

Bangkok Bank’s activities and events catered to Thailand’s SME base are noteworthy. For instance, workshops targeting families help them narrow the generation gap and acquire knowledge to help family-owned SMEs thrive. Workshops more generally also focus on management, finance, tax, business succession and family business practices.

The bank also led business trips for SMEs to neighbouring countries Indonesia, Laos, China, Vietnam, Cambodia and Myanmar to source new commercial opportunities. And it even sponsored television programmes to help SMEs improve their performance.

The lender’s dedication to SMEs seems to be paying off. More than 2000 customers attended Bangkok Bank’s SME events in 2014. On the digital front, the lender developed e-commerce platform Thaitrade.com together with DHL to match Thai SMEs with global buyers and sellers. The website now features more than 200,000 products.

Bangkok Bank also launched a mobile application called Bualuang mBanking in 2014, which achieved 25% market share within a year of launch. The app’s success is allowing the bank to cut costs, increase revenue and increase customer acquisition. Mobile banking revenue grew 55% throughout 2014.

The lender also increased its presence in Thailand with 40 new branches in 2014, mainly set up in provincial areas. By the end of last year, Bangkok Bank had 1230 branches in the country. It also redesigned existing locations. 

Underpinning these interesting initiatives are Bangkok Bank’s positive fundamentals. Net profits grew by 1.2% year on year in 2014 and the bank achieved its fifth consecutive year of record net profits at Bt36.33bn ($1.1bn) in 2014. Assets and Tier 1 capital also rose, by 6.3% and 9.8%, respectively, in the same period.

Turkmenistan: JSC Senagat Bank

As Turkmenistan’s economy continues to grow, its banking system is becoming more sophisticated and competitive. In this environment, Senagat Bank stood out for its strategy of becoming a reliable business bank and constantly developing its competitive advantage.

“The leading private corporates of Turkmenistan, well-known foreign companies and prosperous private enterprises constitute the core of Senagat Bank’s customer base,” says a spokesperson for the bank. “[This] strategy has already delivered a significant improvement in the bank’s performance.”

Senagat’s net profits rose by 50% in 2014, while total assets grew by 15%. Lending also increased significantly, mainly due to new loans to key industry sectors, according to the spokesperson. Senagat also enhanced the bank’s factoring operations, the demand for which increased over the past year.

The bank operates a network of more than 20 branches, which enables it to cover the country’s more remote areas. It is looking at opportunities to open further branches. 

Senagat also successfully launched a new automated banking system recently, which makes it the first bank in Turkmenistan to provide its customers with online banking. 

“The bank has relentlessly continued working on improving the quality of the outstanding loan portfolio and has continued investing significant efforts in developing new financing instruments, including micro loans and loans to support manufacturers,” says the spokesperson. “Our particular focus has been placed on developing the trade finance facilities, which are a common way of ensuring the movement of goods and services across the border.”

Senagat is seeking to step up its mortgage lending over the next three to five years. Mortgages have so far not contributed substantially to the bank’s bottom line, but are set be a key contributor to the bank’s loan business growth in the foreseeable future.

Uzbekistan: JSCB Agrobank

In another year of stable economic expansion of about 8% in Uzbekistan, JSCB Agrobank stood out through the bank’s innovation in mobile banking and solid financial results. Net profits rose from UZS3.04bn ($1.38m as of December 31) in 2013 to UZS9.05bn in 2014, while assets improved in this time by 15% to UZS2899bn.

The fourth largest bank by assets was the first bank in Uzbekistan to introduce mobile payments through its Mobile Savdo payment system, which allows clients to use their mobile phones to pay for goods and services without requiring any apps or the internet. Agrobank is also the leading issuer of plastic cards and payment terminals in Uzbekistan.

The bank focuses on financing the Uzbek economy by carrying out investment policy aimed at modernisation, and technical and technological renewal of production in the agricultural sector. The state-owned bank plays a significant role in the distribution of budgetary funds, financing cotton and grain industries, and delivering payments for agricultural products purchased for public use. Agrobank further funds government projects providing for the expansion of food production by increasing the process and storage of agricultural products, as well as increasing export potential in the agricultural sector.

“Work is under way to strengthen the bank's resource base by attracting resources from international financial institutions, and foreign financial and credit institutions,” says Abdivakhob Tamikaev, chairman of the board at Agrobank. “Today [we have] drawn credit lines and are obtaining trade financing from international financial institutions such as Ziraat Bank in Turkey, Commerzbank in Germany, BCP in Switzerland and Promsvyazbank in Russia, [in total] amounting to more than $85m.”

Agrobank has also become a principal member of Visa International’s payment system.

Vietnam: Vietnam International Bank

After a tough year in 2013, when net profits dropped year on year by 90.4%, Vietnam International Bank (VIB) bounced back spectacularly in 2014 with an annual growth in net profits of 946%, reaching pre-drop profit levels of 2012.

This development is significant considering the external and internal challenges faced by the bank. “For local banks, the [opening up] of Vietnam’s economy to the world market... has [intensified] competition [for] the very limited competent resources of capital, people and technology,” says Han Ngoc Vu, chief executive of VIB, who is also worried about decreasing export demand for Vietnamese goods. But VIB managed to increase profits eight times over in 2014. According to Mr Vu, this boils down to fast growth in asset earning, large increases in current account balances and good closing of investment transactions. 

VIB’s customer base has increased by 50% in the past four years. The bank’s retail lending balance and deposit base grew annually by 22% and 9%, respectively, in 2014. And the current account balance grew by 19% in the same period. Cost management has also been key to finding growth again, with the bank’s cost-to-income ratio dropping from 59% to 56% in 2014.

VIB also proposed digital innovations. It launched a web chat on its websites, which gathered 25,000 chat requests since its launch at the end of 2014. And to offset the shortage of talent in Vietnam, VIB is now sourcing high-skilled labour by posting its vacancies on Facebook.

Even more opportunities are to come for Vietnam’s banks, says Mr Vu. “As a market of close to 100 million people, with growth rates among the highest in the world, and with its full migration into the Trans-Pacific Partnership in the next 12 to 18 months, Vietnam represents a great opportunities for the banking industry in servicing global supply chains and booming personal banking needs.”

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