The best banks of the past 12 months from the Asia-Pacific region.
Afghanistan, Afghanistan International Bank
Afghanistan International Bank (AIB) has won the Bank of the Year award for Afghanistan on the back of strong growth in the bank’s key performance indicators as well as efforts to support the local small and medium-sized enterprise (SME) sector.
AIB’s results were of particular note especially since the bank operates in an environment characterised by political uncertainty and security concerns. While the volume of loans across the banking sector dropped in the year to December 2015, AIB was the only private bank whose deposits and loan portfolios remained at the same level as in previous years.
The bank’s key performance indicators also stood up well. Net profits, assets and Tier 1 capital all improved year on year in 2015 by 5%, 9.64% and 10.68%, respectively.
Meanwhile, the bank also worked to improve financial crimes compliance (FCC) and anti-money laundering (AML) practices, investing 13.92% of its pre-tax profits towards this objective. These efforts paid off when AIB discovered it had already complied with new AML and FCC guidelines recently launched by Afghanistan’s central bank.
At home, AIB was also committed to supporting the SME sector. It introduced a range of sharia-compliant SME loan products as well as a home equity loan product, which has a shorter loan approval time than usual. A portion of AIB’s SME credit facility is guaranteed by the Afghan Credit Guarantee Foundation or the USAid.
The lender also nurtured relationships with foreign investors and banks to further its development. In June 2016, it signed an agreement finalising the International Finance Corporation’s purchase of 15% of AIB’s shares.
AIB, which is the only Afghan bank to have established a correspondent banking relationship with two major clearing banks, Standard Chartered and Commerzbank, also handles more than 50% of all payments or imports into Afghanistan.
Westpac’s strong commitment to technological development and new initiatives to support local small and medium-sized enterprises (SMEs) were key highlights of the bank’s strong performance, helping it scoop the Bank of the Year award for Australia.
Advancements in digital technology remained at the heart of the group’s strategy, which includes reducing its expense-to-income ratio to below 40% by 2018.
Westpac’s investment in technology was significant. In the past 12 months it has launched a range of new digital initiatives, including Westpac Live – a retail and business service – and Westpac One, which is Westpac New Zealand’s online and mobile banking platform. The lender also became the first bank in Australia to allow customers to use ‘tap and go’ functionality on their smartphones.
In terms of digital development for corporate banking, Westpac launched Mobile PayWay – a system allowing businesses to receive payments instantly at any location and at any point in time.
Intensified efforts to develop Westpac’s digital offering paid off, with digital sales contributing to 15% of total retail sales in 2015, up from 10% in 2014.
Westpac also demonstrated a commitment to smaller businesses in its local market. In 2015, new lending to SMEs grew year on year by 10%. In June 2015, Westpac set up a new division (Business Bank) focusing exclusively on SMEs and commercial and agri-business sectors. The division also specialises on asset and equipment finance.
Westpac also launched SME services including 24/7 self-service lobbies in 221 branches across Australia, which allows clients to access banking services at any time.
All of Westpac’s new initiatives and investments did not affect growth as net profits and assets in 2015 were up year on year by 6% and 5.4%, respectively. Tier 1 capital also grew, by 16.6%, in the same time period.
Bangladesh, Islami Bank Bangladesh Limited
Islami Bank Bangladesh Limited (IBBL) has stood out in the market for its performance as well as its dedication to help support Bangladesh’s garments industry and underserved segments of society such as female workers and small and medium-sized enterprises (SMEs).
The bank also registered strong growth in some of its key indicators in 2015. “Total assets rose to Tk859.2bn [$10.9bn], showing a growth of 12.28% over the previous year,” says Mohammad Abdul Mannan, managing director and CEO at IBBL. Tier 1 capital also grew year on year, by 10.35%. “We could consolidate our financial strength through maintaining adequacy in capital,” adds Mr Mannan.
He attributes these results to a strengthening of human development, effective deployment of investable funds, improving customer service, and boosting the bank’s overall risk management system.
Mr Mannan adds that foreign remittances supported the bank’s growth. “Our efforts will continue enhancing brand image in foreign remittances through quality service, [through] exploring potential sectors for widening investment and [our] foreign exchange portfolio,” he says. IBBL collected 26% of Bangladesh’s foreign remittances in 2015, worth Tk321bn.
In addition to remittances, IBBL has shown strong commitment to the country’s ready-made garments industry. The sector employs more than 4 million Bangladeshis, 80% of whom are women. IBBL accounts for 21% of the financing of the garments and textile sector in the country.
SMEs have been at the centre of IBBL’s development. The bank held a 23% SME market share by deploying about Tk220bn, or 43% of its total investment, in this sector.
IBBL also dedicates a chunk of its investment to rural development. This proportion has grown from 15.92% in 2014 to 17.47% in 2015. The lender also offers a scheme involving flexible banking services to female entrepreneurs. As of December 2015, IBBL disbursed Tk6.75bn to support female entrepreneurs.
Baiduri Bank has demonstrated a strong ability to diversify its business in light of a severe drop in the price of oil – a key source of growth for Brunei’s economy – in the past 24 months.
“Brunei’s economy is largely driven by government expenditure. Given the continued low oil and gas prices that have affected government revenue, the government has reduced its expenditure to minimise its budget deficit,” says Pierre Imhof, CEO at Baiduri Bank. As the government scaled back on projects to reduce indebtedness, the bank faced the challenge of limited loan growth.
To counter these trends and boost sales, Baiduri Bank started focusing more on retail. As part of its pivot to retail, it began offering customised mortgage schemes to staff of its existing corporate clients. New sales in mortgage loans grew 94%, from Br$54.5m ($38.5m) in 2014 to Br$105.7m in 2015.
To diversify its revenue sources further, Baiduri Bank set up a new subsidiary, Baiduri Capital, Brunei’s first online securities trading platform. The capital markets portal offers access to international capital markets including stock markets in Singapore, Malaysia, Hong Kong and the US.
Baiduri Bank also prioritised the country’s small and medium-sized enterprises (SMEs) by setting up a special unit called Business Banking and the Merchant Suite initiative, which allows small firms or individuals to issue invoices and receive payments online without needing a website.
Expanding its customer base will remain a priority. “With the downsizing of HSBC here, we continue to attract deposits, [which puts] us in a very strong position to continue to finance more companies and individuals,” says Mr Imhof.
Building business abroad is also important, however, in light of the recent establishment of the Association of South-east Asian Nations Economic Community, he adds.
Notwithstanding a tough economic environment at home, ABA Bank was able to post impressive results for 2015 as well as expand its presence in Cambodia.
“The main challenge we experienced in 2016 was unfavourable weather conditions [extreme drought followed by floods], which negatively affected our customers in the agricultural sector,” says Askhat Azhikhanov, CEO at ABA Bank. This is problematic in a country where agriculture contributes to 30% of gross domestic product.
Despite this hardship, in 2015 ABA Bank announced an impressive 113.68% year-on-year growth in net profits to $16m. Total assets and Tier 1 capital both grew by almost 60% in the same time period.
Part of this impressive performance is due to National Bank of Canada buying up 90% of ABA Bank’s shares. This is the first time a North American bank has bought into a Cambodian bank. “This brought along a bunch of benefits and puts ABA in a stronger position to sustain its robust growth rates, and further accelerate its geographical expansion while maintaining adequate capital levels,” says Mr Azhikhanov.
The capital injection generated by National Bank of Canada’s acquisition supported ABA Bank’s aggressive branch expansion, which is aimed at boosting lending to micro, small and medium-sized enterprises. The bank opened eight branches in 2015.
In the next 12 months, ABA Bank will focus on boosting its digital banking platforms. “In particular, our existing iBanking and mobile banking solutions will be upgraded with complementary social media banking services to be deployed soon. Innovation is in our DNA, and this next-level banking is just another example of how we are ahead of the curve in offering client-centric approach to our clients,” says Mr Azhikhanov.
China Merchants Bank (CMB) stood out as a bank that was able to maintain a strong performance while diversifying revenue sources in a market grappling with economic slowdown.
“With China’s macroeconomic growth slowing and the economic restructuring, overall profits of the banking industry are reduced and the bad debt rate is increased. In addition, with the liberalisation of interest rate controls and increasing market competition, direct financing instruments and fintech have encroached on traditional business fields of commercial banks,” says Tian Huiyu, CEO and president at CMB.
In this tricky environment, the lender succeeded in finding new sources of revenue.
“CMB developed the light assets business, deeply [boosted] retail finance, and vigorously promoted strategic emerging businesses such as investment banking and asset management, so as to achieve a higher income growth rate with less capital consumption as well as ensure healthy structural indicators,” says Mr Tian. At the end of the third quarter of 2016, retail accounted for half of the bank’s total income.
At the time, non-interest income accounted for 37.16% of the bank’s overall income. This growth is partly due to an expanding investment bank unit. “In the past three years, CMB has provided financing services for more than 300 merger and acquisition transactions, and more than half were cross-border mergers. The latest privatisation of Chinese-funded enterprises [Qihoo 360 and Wanda], initiated by the New York Stock Exchange and Hong Kong Exchanges and Clearing Limited, were completed by CMB,” says Mr Tian.
Meanwhile, the bank’s digital offering also expanded significantly. CMB was one of the first Chinese lenders to co-operate with Apple Pay. It has also established collaborations with technology companies including Microsoft, Didi Taxi, China Mobile and China Unicom.
The bank set up a Luxembourg branch in 2015 and a London branch in 2016.
Hong Kong, Standard Chartered (Hong Kong)
The past few months have not been easy for Standard Chartered as it suffered from the underperformance of emerging markets – the key economies it focuses on. But although in 2015 Standard Chartered group results were weak, the bank says items that contributed to the overall loss were one-offs, such as divestments and commodity de-risking actions.
“It’s been a challenging year with an uncertain global outlook, a subdued local economy with a decline in retail spend, slower corporate activities and a tightened regulatory regime,” says May Tan, CEO for Hong Kong at Standard Chartered.
But in Hong Kong, Standard Chartered has showcased a variety of innovative initiatives to boost revenue sources. “Standard Chartered has achieved good income growth in retail banking, especially mortgage and wealth management. Effective alliances with strategic partners such as Asia Miles and Manulife have brought tremendous benefits to our clients,” says Ms Tan.
The bank set up an exclusive alliance with Asia Miles to offer its first co-branded card. Applications in the first two months after the launch reached 80,000. A second collaboration involved a 15-year distribution partnership with Manulife, which can now offer its Mandatory Provident Fund product to Standard Chartered’s customers in Hong Kong.
Standard Chartered Hong Kong also set up the territory’s first mobile branch, to reach the more remote parts of Hong Kong.
To add to its digital offering, the bank will offer Apple Pay to its customers. The lender was also the first to launch a joint peer-to-peer payment platform, O! ePay, with electronic payment system Octopus.
“Standard Chartered will continue to drive new-to-bank clients through alliances and ecosystems, pursue our digital main bank strategy, and leverage the opportunities coming from renminbi internationalisation and the One Belt One Road initiative,” says Ms Tan.
Efforts to support small and medium-sized enterprises (SMEs), expand its retail business and innovate the bank through digitisation are why Axis Bank landed the Bank of the Year award for India.
Shikha Sharma, managing director and CEO at Axis Bank, points to the lender’s new digital initiatives as the key achievements of the past 12 months. These new offerings involve both corporate and retail banking.
“The major achievements for the bank included the launch of mobile- and tablet-based solutions including Pay Connect, TF Connect and FXConnect Mobile,” says Ms Sharma.
In retail, the bank’s key achievements include the PayWave Contactless multi-currency foreign exchange card, the BMTC smart transit card, and enabling almost 50,000 merchant terminals with near-field communication-based contactless acceptance, she adds. BMTC is a government agency operating the public transport bus service in the city of Bangalore.
Axis Bank also launched Ping Pay, an app that allows users to transfer funds to any bank customer in the country via Facebook, WhatsApp, SMS and Twitter.
Axis Bank’s microfinance loans can be originated directly on tablets, which is crucial as recipients are often based in areas without bank branches.
In terms of branches, Axis Bank modernised these traditional banking outlets with a credit processing system, automating high volumes of appraisals and credit origination processes in both the retail and SME segments.
To achieve its strategy, reshuffling the corporate banking business was an essential task. Ms Sharma says: “Redefining corporate banking was a big exercise and required utilising a digital mindset in every process and customer interface across solutions and capabilities. In a competitive market for digital payments, intuitive design, speed to market and customer education have been key challenges and will continue to be prevalent market dynamics.”
In the past 12 months, Bank Mandiri has demonstrated the ability to sustain growth while expanding its business to take advantage of Indonesia’s economic strengths.
“Bank Mandiri is aiming to be Indonesia’s best and the Association of South-east Asian Nations’ most prominent [bank] by 2020. Our focus is to deliver sustainable growth by leveraging our strong presence in corporate business to accelerate consumer banking business to payroll customers, a segment with attractive growth in controlled risk and stable yield supported by Indonesia’s demographic profile,” says Kartika Wirjoatmodjo, president director at Bank Mandiri.
Indeed, if retail today accounts for 32% of Bank Mandiri’s portfolio, the lender wants that figure to be 45% in the next five years. The bank has 16.9 million customers and more than 13.2 million debit cards outstanding. Throughout 2015, it opened 4.1 million new deposit accounts and 609,000 new loan accounts.
The bank plans to achieve its retail target in several ways. It is focusing on offering one-stop solutions to its customers. It also wants to leverage its wholesale business to grow retail by increasing the cross-selling of the bank’s products.
The lender’s significant presence in the country could help it achieve its retail target. Bank Mandiri has 2457 branches, 3100 micro outlets and 17,388 ATMs across Indonesia.
Strong loan growth (12% year on year as of December 2015) has also supported performance. A gross non-performing loan (NPL) ratio of 2.2% suggests the expansion of the lending portfolio was healthy. The highest NPL ratio in Indonesia’s top 10 banks is 2.3%.
Bank Mandiri has also launched brand new initiatives such as Mandiri Capital Indonesia (MCI), a venture capital operation. MCI aims to give young entrepreneurs, especially in fintech, seed funding as well as allowing them to share their ideas through the bank’s existing network.
Japan, Mitsubishi UFJ Financial Group
Despite a subdued domestic economy, Mitsubishi UFJ Financial Group (MUFG) has pursued a multitude of strategies to diversify its revenue sources and sustain growth both domestically and overseas.
“Among the adverse factors the banking sector is now compelled to confront are the deceleration of the global economy, a resulting rise in credit costs, a lingering worldwide trend towards low interest rates, and in some cases, negative interest rates. Difficult challenges notwithstanding, MUFG has enjoyed steady growth in the past several years under a policy of maintaining a strong domestic base while seeking out growth opportunities overseas,” says Nobuyuki Hirano, president and group CEO at MUFG.
In Japan, the bank has worked to tackle the issue of negative interest rates. In retail, MUFG is set on providing a wider range of products, including investment in foreign currency. In asset management, the lender is looking to push customers away from saving and into investing through investment education. In corporate lending, product offerings for small and medium-sized enterprises now include lending, advisory, asset management and business succession.
Beyond domestic borders, MUFG has expanded its business significantly.
“In fiscal [year] 2015, MUFG’s overseas business generated a net operating profit of approximately Y460bn [$4.2bn], double that of fiscal 2010 (about Y230bn). Over the same period, our overseas business has grown from [accounting for] 20% to 36% of the earnings of MUFG’s customer facing business, with the proportion attributable to our core commercial bank BTMU similarly rising from 30% to 51%,” says Mr Hirano.
Initially, foreign business focused mainly on serving Japanese companies. But now, MUFG is looking to follow new trends. “We have also shifted to a cross-selling business structure involving transaction banking, including cash management,” says Mr Hirano.
Kazakhstan’s economy, which is tightly bound to the economies of Russia and China as well as to the oil price, saw some turbulence in 2015. The devaluation of the currency in 2015 was partly responsible for a significant slowdown in economic growth to 1.2% in 2015 and an expected recession in 2016 (-0.8% according to the IMF).
Despite the difficult environment, which brought with it a growth in funding costs for banks, ATFBank boosted its earnings from Tg3.5bn ($10bn) in 2014 to Tg7.3bn in 2015, reported further growth across indicators and slashed its non-performing loans (NPLs) by 21 percentage points to 10.3%.
“Transformations made by the new team since the purchase of the bank in 2013 helped us survive that difficult period and demonstrate a good performance by all financial indicators,” says Anthony Espina, chief executive of ATFBank.
He adds that the lender’s strong performance was reflected by efforts to decrease operational expenses, a focus on increasing service quality and improving banking products as well as the bank’s dedication towards improving its NPL situation. ATFBank has recovered more than $1bn of NPLs since 2013, according to Mr Espina.
In 2015, the lender managed its liabilities by repaying debts in foreign currency and issuing long-term tenge liabilities such as its Tg56.6bn of senior notes and Tg61.8bn of subordinated bonds. This allowed the bank to strengthen its long-term tenge liquidity and regulatory capital.
ATFBank further introduced ATF24 internet banking for individuals, which allows account management as well as payment and transfer functions.
Across its network, the bank transformed its branches from retail to bank service centres, expanding their functional capabilities to include a new transactional model. ATF also opened two new bank service centres in Almaty in July 2015.
Kyrgyzstan, Demir Kyrgyz International Bank
Despite a difficult environment for Kyrgyz banks in 2015 (including a significant depreciation of the Kyrgyz som, which increased the country’s debt burden), Demir Kyrgyz International Bank cautiously continued lending while most other banks stopped, which is why it is The Banker’s Bank of the Year for Kyrgyzstan.
Demir Bank sought to continue extending credits, while widely keeping its lending interest rates stable, which led to a 29.3% rise in assets to Kgs15.6bn ($225.6m) in 2015. The lender also boosted its Tier 1 capital by 40.7% to Kgs1.28bn and while profits fell, return on equity still reached 20.4%.
To avert issues related to the depreciation of the currency and the lender’s credit portfolio, Demir Bank asked its customers with foreign currency loans to convert them into national currency.
In 2015, Demir Bank became the first Kyrgyz bank to accept tax payments of individuals through its internet bank. The project was realised together with the state tax service of the Kyrgyz Republic.
Demir Bank has been targeting salary projects for companies and employees to further boost its customer base, supporting the more transparent non-cash payment system, which the National Bank of Kyrgyzstan is also promoting.
As retail banking is the largest part of its business, Demir Bank increased the number of branches and outlets in 2015, mostly in remote rural regions. It further started implementing mobile banking as well as contactless card technology through the issuance of Visa PayWave cards.
To support small and medium-sized enterprises (SMEs), Demir Bank is co-operating with a range of institutions. Among others, it works with TurkEximBank to provide SME loans related to import of goods from Turkey, while its co-operation with the European Bank for Reconstruction and Development is actively promoting energy sustainable loans. It is also developing a programme lending to SMEs in the agricultural and apparel sectors.
Banque Franco-Lao (BFL) shone as a bank providing innovative services both at home and abroad while operating in an increasingly competitive local banking sector.
“In the past year, an increase in competition in the banking market brought the number of banks to more than 40 while market growth was slowing down. Furthermore, government regulation capping interest rates has [affected] margins. As a young bank, BFL needed to structure its activities,” says David Parrott, managing director at BFL.
The lender showed particular strength in catering to segments of society that tend to be underserved: small and medium-sized enterprises (SMEs) and women.
“Given the challenging environment we operate in, our network expansion and differentiation strategies on SMEs and women banking allowed us to increase our market share and increase our net profit by 200%. Most importantly, with our work in supporting women banking, we received a significant grant from the UN Capital Development Fund to further grow our women banking division,” says Mr Parrott.
In 2016, BFL launched new SME loans that are more flexible and have faster approval times. The bank also offers SMEs finance training. Together with the International Finance Corporation, BFL launched the Banking for Women initiative, which targets women who run SMEs. The programme offers both lending and deposit products.
BFL is also building its insurance offering by collaborating with the largest insurer in Laos to offer car and motorbike insurance.
Looking ahead, BFL already has new initiatives in the pipeline. “Customers will see an improved website [launching in November 2016], new products aimed at promoting women in business and services designed to make banking with BFL easier. In addition, we are spending more than $1m on an upgrade to our core banking platform, [which] will give the bank capacity to grow its Laos banking business significantly over the next five to 10 years,” says Mr Parrott.
Despite close proximity to the slowing Chinese economy, ICBC Macau has shown continued strength in terms of performance indicators and new business initiatives.
“With complex, uncertain and turbulent international political and economic situations, China’s economy recovered gradually, but with increasing downside risks. The continuity of Macau’s economy adjustments led to inefficacy of market-effective demands. Meanwhile, market risks, compliance risks and exchange rate risks became [more] severe, which has resulted in a significant rise of operational difficulties,” says Wu Long, vice-chairman, CEO and executive director at ICBC Macau.
Nonetheless, in 2015, ICBC Macau’s net profits, assets and Tier 1 capital all grew year on year, by 25%, 8% and 38%, respectively.
“Under an unfavourable external environment, ICBC Macau’s main successes were sustainable developments of business structure, moderate improvements of business performance, and [maintaining an outstanding] asset quality position. Additionally, ICBC Macau’s localisation and diversification strategies achieved positive effects, which laid a foundation for further operational transformations and innovative developments,” says Mr Wu.
ICBC Macau set up a new asset management department to capitalise on the deep pool of high-net-worth clients in its home market. Asset management, as well as internet finance, will help ICBC Macau capitalise on business opportunities generated by the Chinese government’s One Belt One Road initiative.
In the mobile finance sphere, ICBC Macau launched an optimised mobile banking system as well as the Macau e-Mart platform (the autonomous region’s first e-commerce platform launched by a bank).
Looking ahead, the bank is seeking growth opportunities both at home and abroad in Portuguese-speaking countries.
Public Bank has won the Bank of the Year award for Malaysia thanks to its efforts to pursue innovative growth strategies at home while continuing its expansion abroad. However, the bank has faced challenges while working on its development.
“The operating environment was challenging, emanating from the weak global economic conditions and domestic headwinds. The current subdued business and consumer sentiments are taking a toll on banking business, weighing down on growth and asset quality, in addition to the ongoing intense competitiveness in the banking industry,” says Tan Sri Dato’ Sri Dr Teh Hong Piow, founder and chairman at Public Bank.
However, the lender was still able to deliver. In the bancassurance space, Public Bank set up a partnership with AIA Group that provides life, health and investment-linked insurance products to customers in Malaysia and Hong Kong.
Beyond its home borders, Public Bank received a 100% foreign-owned bank licence from the State Bank of Vietnam, after acquiring VID Public Bank’s remaining 50% equity capital.
Public Bank’s profitability trend and growth momentum are attributable to continuous commitment to prudent banking practices, strong corporate culture and superior customer service, says Mr Teh. “The trust and confidence from customers have enabled the bank to maintain its pole position in retail banking in Malaysia, and in having the best asset quality and cost efficiency, even in this time of challenges,” he adds.
By the end of 2015, the bank had strong domestic market shares of 19.2%, 29.6% and 33.8% for residential mortgages, passenger vehicles and commercial property, respectively.
In the next 12 months, the lender will continue to focus on organic growth strategies for the retail business, effective risk management and sound corporate governance, according to Mr Teh.
At a time when the Mongolian economy was slowing down sharply, XacBank not only managed a complete rebranding but also sustained strong profit growth.
“Mongolia’s economy today is highly dependent on commodity markets. When copper, gold, coal and iron ore prices went up a few years ago it brought an economic boom, an increase in spending in public and private sectors, an asset price bubble and so on. When the market went down, the value chain economy went bust, [almost] reaching its bottom last year. As a result, loans in arrears have been increasing,” says Bold Magvan, CEO at XacBank.
Nonetheless, in 2015, XacBank’s profits grew by a healthy 93% year on year and Tier 1 capital grew by 17% in the same period.
“The economic slowdown [gave] us an opportunity to revisit and refine our medium-term strategy and internal processes, focus more on strengthening human resources capacity and IT systems. We have managed to reinforce our resilience to possible economic shocks. [Our] liquidity ratio, loan life coverage ratio and capital-to-assets ratios are at 45%, 80% and 18%, respectively,” says Mr Bold.
XacBank also found business opportunities in the struggling commodities sector. “We started providing receivables discount funding to the local procurement companies supplying the Oyu Tolgoi mine, one of the world’s largest gold and copper [mines]. XacBank became an accredited entity of the Green Climate Fund [GCF], thereby making it the first private entity from a developing country to receive accreditation,” he adds.
What is more, in December 2015, the National Bank of Canada became XacBank’s new strategic investor in what was the first investment by a foreign commercial bank in the Mongolian market.
“XacBank will leverage on newly opened access to funding from the GCF to unleash long-term loans,” says Mr Bold.
KBZ Bank set up one of the widest range of new collaborations, products and initiatives in Myanmar yet maintained growth in its performance indicators. In 2015, net profits, assets and Tier 1 capital all grew year on year by 13%, 38%, and 32%, respectively.
“[The past year] has been exciting as well as challenging. The continuing liberalisation in the banking sector has witnessed many changes in the approach of Myanmar banking. The need to embrace new technology, the digital approach to banking and fast-changing customer demand has opened a new dimension to banking,” says U Aung Ko Win, chairman at KBZ Bank.
KBZ Bank completed a rebranding exercise in the past 12 months to strengthen its name at home and abroad. Domestically, the bank added 44 branches to its network and almost doubled its number of ATMs.
Aside from the traditional bricks-and-mortar growth, KBZ Bank also established new internet and mobile banking platforms in 2015. In co-operation with Myanmar Payment Union (MPU), it launched a new payment channel to process e-commerce transactions for MPU cards. The bank’s collaboration with Microsoft to optimise cloud and mobile IT services was a further commitment to technological development.
In addition to targeting small and medium-sized enterprise (SME) clients, technology will be key to the bank’s future growth. “KBZ will be focusing on the SME segment, on consumer banking particularly in card and transactional services and on capacity building. KBZ will continue investing in building its capacity in people and technology pillars while strengthening its governance and risk frameworks,” says Mr Ko Win.
“Specifically, it is the most opportune time for several businesses in Myanmar as there is a significant progress in economic liberalisation through improved political landscape and positive approach to the peace settlement throughout the country.”
Nepal’s economy and banks have not had an easy couple of years as the effects of 2015’s two earthquakes are still weighing on the country. But Nepal Investment Bank has supported both the economy and the people in the post-earthquake recovery while expanding its business and footprint.
“The main challenge was the April 2015 earthquake and its aftermath. The following winter, Nepal was subjected to an economic blockade [triggered by India] for 135 days. We were also challenged to become the first private commercial bank in Nepal to meet the central bank’s directive of increasing paid-up capital to more than NRs8bn [$73.7m],” says Jyoti Prakash Pandey, CEO at Nepal Investment Bank.
Nonetheless, the lender succeeded in arranging a public offer to boost its capital further, resulting in a 74.28% growth in capital to NRs17.08bn in 2015.
The lender succeeded in strengthening its capital base without sacrificing new projects and loan growth. Despite a tough local environment, the bank’s loan book outstripped its peers.
The bank also expanded its national network to help support Nepal after the 2015 natural disasters, and collaborated with the World Food Programme, local non-governmental organisations and Nepal’s National Reconstruction Authority, among others, to reach out to victims.
“We have enjoyed success in growing our branchless banking network, deprived sector lending and remittance payments for earthquake victims,” says Mr Pandey. “Moreover, we also acquired payment card industry data security standard certification and implemented the EMV [Europay, MasterCard and Visa] card.”
Nepal Investment Bank is also set to grow through the acquisition of domestic lender Ace Development Bank. “Other acquisitions are possible. We see opportunity in increasing our existing branch network,” adds Mr Pandey.
New Zealand’s ASB Bank has won its award for the unique programmes and initiatives it has launched in the past 12 months while preparing to comply with local regulation.
“By acting in advance of specific regulation, we have avoided complacency and ensured we develop a sustainable response to the concerns of supervisors and regulators,” says Barbara Chapman, CEO at ASB Bank.
Meanwhile, the lender has also worked to support local small and medium-sized enterprises (SMEs) by embedding its services into its online applications and upgrading its accounting software and cashflow management systems.
In the digital space, ASB Bank launched a digital ‘money box’ called Clever Kash. This financial literacy tool helps younger customers develop money management habits as society becomes increasingly cashless. The bank believes it is one of the first products of its kind globally.
“We are proud to be delivering a product that is highly relevant for teaching practical financial literacy skills to children in the digital era. This customer-focused innovation extends ASB’s long history of solving customer problems using technology,” says Ms Chapman.
At the opposite end of the customer spectrum, ASB Bank offers a retirement savings calculator and the opportunity to switch pension funds within the national retirement savings scheme, KiwiSaver.
ASB Bank ranks fourth in the world by percentage of active customers in digital channels. “As our customers’ preference for using digital channels continues to accelerate, our focus will remain on providing unbeatable experiences for them,” says Ms Chapman. “Increasingly, we will be using the insights we have about our customers to really understand them and then use this knowledge to design simple and easy solutions which can be delivered to them in a way that suits them best, whether digitally or face to face.”
HBL has experienced a number of changes in the past 12 months. The Pakistan government completed a secondary sell-down of its remaining stake in the bank, and HBL itself acquired other financial entities – all while operating in a tricky environment.
“The main challenge faced by HBL during the past year has been a continued low interest rate environment, coupled with a lack of credit demand. This has led to severe spread compression and an environment where lending rates are not appropriately reflective of underlying economic realities,” says Nauman K Dar, president and CEO at HBL.
Nonetheless, the government’s secondary sell-down was a success. The issue was 1.6 times oversubscribed and it grew to become the largest equity offering in Asia’s frontier markets, at $1bn.
In addition, HBL acquired Barclays’ Pakistan operations in June 2015 and a 51% stake in First MicroFinance Bank, the oldest microfinance bank in the country.
HBL also focused on diversifying revenue sources. “We have successfully continued to diversify our business. We have a strong position in consumer, agriculture and small and medium-sized enterprise lending; robust growth in our low-cost deposit book; and increasing leadership in fee income. There has been a revitalised push towards technology leadership and HBL became the first bank in Pakistan to offer biometric-enabled sign-on to its mobile banking application,” says Mr Dar.
Building ties with China will be HBL’s new growth frontier, he adds, saying: “The single largest opportunity for HBL is the China-Pakistan economic corridor (CPEC) and the growth prospects it provides, both for the bank and the country, where energy and transport infrastructure is the greatest need. HBL’s upcoming branch in Urumqi, China, and our strong links with major Chinese banks put us in an excellent position to leverage this project.”
Philippines, Security Bank Corporation
Ensuring sustainable wholesale lending, broadening the bank’s physical network and digital offering, and receiving a chunky investment from Japan’s Bank of Tokyo-Mitsubishi UFJ (BTMU) are just some reasons why Security Bank Corporation won the Bank of the Year award for the Philippines.
BTMU invested 37bn pesos ($749.2m) in Security Bank Corporation, in what was the largest equity investment in a Philippine financial institution by a foreign investor. Security Bank Corporation’s capital base grew to 94bn pesos after the investment, which also gives the lender access to BTMU’s relationships with Japanese corporates. “We will operationalise our collaboration with [BTMU] to service the Japanese ecosystem in the Philippines,” says Alfonso L Salcedo, president and CEO at Security Bank Corporation.
But Security Bank Corporation’s performance was strong even before BTMU’s investment. “In 2015 through to the first quarter of 2016, we had the highest return on equity pre-BTMU’s capital investment. We did this by sticking to profitable segments in wholesale banking and financial markets, and gaining strong traction in retail lending. We maintained our cost discipline, keeping our cost-to-income ratio at 50%,” says Mr Salcedo.
Security Bank Corporation was also noteworthy for its new digital products, such as Human Switch Kit, which has cut down the time needed to set up a deposit account.
Meanwhile, the bank also aims to almost double its number of branches by the end of 2016. Together with the lender’s new products, this will help grow the bank’s retail business. “With our higher single-borrower’s limit, we will capture larger loan ticket amounts and project finance transactions,” says Mr Salcedo.
Some challenges remain, however. “Our main challenge continues to be execution of our strategy to grow our three core businesses. We are also investing for scalability of our business, making major investments in IT, people and branches,” says Mr Salcedo.
DBS continues to be at the centre of the development in Singapore’s financial markets. It has demonstrated commitment to fintech development as well as strong growth in private banking.
Today, DBS has the largest base of digital banking customers in Singapore at 4 million. The bank launched new services including digital account opening for small and medium-sized enterprises (SMEs) and consumers – a first for Singapore’s market. The bank also launched DBS FasTrack, an app that provides ordering and payments services to businesses, another first launched by a bank in Singapore.
Digital banking development, however, was not easy. “Fintechs are attacking parts of the banking value chain and large platform companies such as Alibaba are growing rapidly. To succeed and accelerate transformation, banks will need to work with fintechs, and marry safety and banking expertise with technology,” says Piyush Gupta, CEO at DBS.
DBS also scaled up its wealth management business to diversify revenue sources. “DBS has consistently grown its wealth management business and is today among the top five private banks in Asia. Acquiring the wealth management and retail banking business of ANZ in five markets will help cement the bank’s position as a leading wealth manager in Asia. This will also enable rapid scale-up of our digital strategy in markets such as Indonesia and Taiwan,” says Mr Gupta.
Consumer banking, together with wealth management income, grew year on year by 23% in 2015 to S$3.55bn ($2.5bn), and DBS Private Bank is among Asia’s top six private banks.
Central to DBS’s future growth will be harnessing the “digital opportunity”, says Mr Gupta. “DBS will continue to collaborate with fintechs to cross-learn and identify potential opportunities and become a connector or gateway to fintechs in the region,” he adds.
Woori Bank stood out in the South Korean banking sector for its aggressive international expansion as well as strong digital banking development.
In June 2016, it became the South Korean bank with the largest international network, boasting 234 networks in 24 different countries.
The lender focused its expansion on high-growth markets in south-east Asia either via mergers and acquisitions or by setting up operations of its own.
Woori Bank finalised the acquisition of Indonesia’s Bank Saudara and set up 131 Bank Woori Saudara retail outlets just in the first half of 2016. The lender also acquired microcredit institutions in Myanmar and Cambodia, and received regulatory approval to acquire a Philippines savings bank.
Woori Bank also became the first South Korean lender to open an office in Iran after sanctions were lifted. It began offering banking services together with Islamic lender Qatar Islamic Bank. In the Middle East more generally, the lender is aiming to enter the aircraft financing market.
At home, Woori Bank launched South Korea’s first commercial mobile-only banking application, WIBee Bank. The app drew 600,000 subscribers in its first year and extended Won120bn ($102m) in loans in the six months after launch.
WIBee Bank customers can use the app for banking services including remittances, foreign exchange, depositing funds, loans and insurance. The app also includes mobile messenger app WIBee Talk, games and music downloading.
More broadly, Woori Bank is focusing on digital banking to cut costs, and has been reducing its domestic network by 40 branches a year. To customers with little access to bank branches, Woori Bank is offering banking on tablets as well as WeBus, a moveable branch in a shuttle bus.
Sri Lanka, Commercial Bank of Ceylon
Commercial Bank of Ceylon has won the Bank of the Year award for Sri Lanka thanks to the launch of innovative banking products in its domestic market and its strong expansion in Asia, Africa and Europe.
In the past 12 months, the lender has launched a special savings account for micro entrepreneurs, the Divisaru micro entrepreneurs savings account. Aimed at including micro entrepreneurs across sectors in the formal financial system, the micro loan extends up to 25 times the agreed value of monthly savings.
Super Leasing is another new Commercial Bank of Ceylon product and the first of its kind in Sri Lanka. It gives customers the chance to split the high price of a vehicle in lower, monthly rental payments. The monthly payments are based on the residual value of the asset, meaning the payments are lower than the rental volumes for normal leases.
Commercial Bank of Ceylon also launched a green development loan, which offers businesses concessionary interest rates to address costs associated with reducing energy consumption, meeting environmental guidelines or purchasing eco-friendly equipment.
On the digital front, the lender registered a 200% growth in digital banking customers up to 400,000. Commercial Bank of Ceylon also became the first bank in Sri Lanka to offer an e-Passbook, which provides access to savings and current accounts on mobile devices.
Beyond domestic borders, Commercial Bank of Ceylon became the first Sri Lankan bank to acquire a licence from Myanmar’s central bank to open a representative office in Yangon. Commercial Bank of Ceylon is also the third largest foreign bank in Bangladesh, where it operates 18 fully fledged branches.
Elsewhere, the bank set up a subsidiary in the Maldives and has obtained a licence to launch a fully owned money transfer operation in Italy.
E.SUN Commercial Bank is notable in the Taiwanese banking sector for its impressive expansion abroad and its innovative digital offering and partnerships.
Navigating the market environment was not always easy. “The global economy has been full of volatility and uncertainty in the past year, bringing many challenges to banks on their capabilities to capture trends. The tightened regulatory environment also demands banks to adapt to stringent corporate governance and compliance,” says Joseph N C Huang, president at E.SUN Financial Holding.
But the bank has achieved important milestones in its international growth. “E.SUN is the first and only Taiwanese bank granted to set up a branch in Myanmar. With the development of E.SUN’s overseas expansion, including subsidiaries in China and Cambodia, it currently runs 25 sites across seven countries and has built an international platform in Asia,” adds Mr Huang.
The lender also established branches in Vietnam and Australia, and is looking to establish a Tokyo branch and a Jakarta representative office. As at the end of 2015, overseas profits accounted for almost half (46.4%) of the bank’s total profits.
E.SUN Commercial Bank has made digital advancements too. It became the first financial institution in Taiwan to receive an e-payment licence; it acquired fintech company BankPro E-service technology; and established a digital business development division. The lender also boasts external partners such as PayPal, Alipay and Tencent.
Despite these significant achievements, E.SUN’s commitment to the digital area is far from over. “E.SUN will further expand its leadership in digital banking, making it the pioneer of financial innovation. It will continue to implement digital transformation at branches, and focus on providing convenient financial services to customers through development of digital payments, digital channels and digital marketing,” says Mr Huang.
Bangkok Bank has won the Bank of the Year award for Thailand thanks to its efforts to grow its international presence, digital banking and domestic network.
Bangkok Bank achieved these results despite a rocky 2015. “The sluggish domestic economy [added to] external challenges from the global economy, contributing to weak loan growth and deteriorating loan quality. Nevertheless, we continue to manage our asset quality and grow our assets in a safe and prudent manner,” says Chartsiri Sophonpanich, president at Bangkok Bank.
“More importantly, as Thailand moves into a new phase of development, driven by government structural reforms and initiatives, another challenge is to prepare ourselves for the new, value-based economy.”
In 2015, Bangkok Bank became the only Thai bank with a branch in Myanmar. In January 2016, it opened a branch in Pakse, Laos.
The bank also capitalised on the strong trade relationship between Thailand and China and other south-east Asian countries. Subsidiary Bangkok Bank (China) became a renminbi clearing bank in 2015 while Bangkok Bank became a cross-currency dealer for settlement of Malaysian ringgit and Thai baht.
In terms of digital growth, Bangkok Bank introduced a peer-to-peer service that became the foundation for state-backed programme PromptPay, which aims to encourage electronic payments.
The lender also expanded its more traditional ATM network by almost 500 machines in 2015. Indeed, development has been multi-faceted. “Our management and staff continually seek to enhance our customer experience and improve our services. For example, our credit card service has connected with partners such as Air Asia,” says Mr Sophonpanich. “Furthermore, our mobile platform, Bualuang mBanking, has won several international awards as the best mobile banking platform in Thailand.”
As Turkmenistan’s economy has been significantly affected by the lower prices for oil and natural gas, the recession in Russia and the cooling of the Chinese economy, its gross domestic product growth has declined significantly, from 10.3% in 2014 to 6.5% in 2015.
Yet Senagat Bank, our Bank of the Year in the country, has a solid customer base, consisting of Turkmenistan’s leading private sector companies, as well as foreign corporates and private enterprises. This enabled the lender to grow net profits by 11% to TMm129.9m ($37.1m), total assets by 63% to TMm2.3bn and Tier 1 capital by 58% to TMm319.8m.
Lending to key industries increased, while the quality of the loan portfolio remained high, and the bank continued diversifying both lending and other financing instruments it offered to micro enterprises, as well as large corporates.
Senagat Bank is at the forefront of integrating Turkmenistan into the international financial system through its membership of the international payment systems and the active promotion of bank card services. It has started issuing cards while continuing the expansion of the Altyn Asyr card (which is tied to the Turkmen national payment system), contributing to the development of the banking system and helping ordinary people to get better access to the financial system. To help customers, the bank is also expanding its network of cashpoints and payment terminals.
Senagat Bank has recognised the advantages of online banking and is the country’s first bank to offer this to its clients, hoping this will give it the opportunity to expand its service geographically.
Going forward, the bank aims to develop its electronic and cashless payment services through the introduction of more advanced technologies.
Uzbekistan, Asia Alliance Bank
Blessed with stable economic growth of about 8% for the past six years, Uzbekistan’s gross domestic product in 2015 was again estimated at 8% by the International Monetary Fund, although 2016’s forecast dropped to 6%. In 2015, the country’s banking sector had to adapt to a phased-in introduction of Basel III standards by the country’s central bank from 2016, something Asia Alliance Bank, The Banker’s Bank of the Year in Uzbekistan, has achieved.
Having reported an 8.25% increase in Tier 1 capital in 2015 to UZS154.7bn ($49m), the bank reached a Tier 1 capital adequacy ratio of 15.2% as of January 1, 2016, 6.7 percentage points above regulatory requirements.
According to Ikram Abdukakhorov, chairman of the board at Asia Alliance Bank, favourable conditions and the bank’s ability to generate capital ensured “a smooth transition to the new requirements of Basel III” and contributed to maintaining “a strong reserve of capital” to further expand the bank’s activity.
“All these new requirements are kept by our bank with a large margin,” he adds.
Going forward, Asia Alliance Bank will seek to further enhance stability through implementing measures to strengthen its resource base.
Other key focus areas include an emphasis on attracting deposits from corporates and individuals, broadening the range and quality of banking services as well as information and communication technologies and extending the bank’s branch network, according to Mr Abdukakhorov.
The bank’s objective to build a “highly efficient branch network” is seen as a cornerstone to further strengthen its market position in the city of Tashkent and to support its expansion in the region and to further improve the bank’s customer service quality.
Asia Alliance Bank also offers mobile and internet banking and was one of the first Uzbek lenders to provide such services.
Vietnam, Vietnam International Bank
Vietnam International Bank won the award for Vietnam because it demonstrated strong commitment to innovation while also dealing with state-led reforms aimed at boosting the capitalisation of the country’s banking sector.
“Restructuring the banking sector will continue and the problems will be revealed more clearly, [with] more transparency, which enables appropriate solutions to address key issues of the industry such as bad debts, cross-ownership, risk management and corporate governance,” says Han Ngoc Vu, CEO, director and management board member at Vietnam International Bank.
But Mr Vu is more optimistic when it comes to 2016. “Specifically, Vietnam will deeply integrate into the world market through greater co-operation agreements. Capital inflows are expected at higher level, creating conditions for the growth of investment, especially foreign direct investment [FDI],” he says.
Indeed, Vietnam International Bank has set up a new FDI department to capitalise on growing investment flowing into the country. The team has dedicated Greater China and South Korea desks, since these two countries are driving most of the FDI into Vietnam.
In terms of digital banking, Vietnam International Bank has made a big commitment to technology investment, having launched a mobile banking application and a new website. The bank was also one of the first to offer online current accounts and term deposit accounts in the country.
“The inevitable trend of digital banking and financial technology companies creates more choice and utilities for customers and forces the banks to invest more aggressively in powerful technology, using innovative models to compete if they want to survive. This trend will create a fair and healthy playground for banks,” says Mr Vu.
